THE TRADERS CLUB WEEKLY REPORT: 07/10/16

Transcription

1 THE TRADERS CLUB WEEKLY REPORT: 07/10/16

2 CONTENTS: FX Majors Traded Pairs Summary P.5 US Dollar Index Watch P.6 FX Majors Currency Strength P.7 FOREX FX Major Charts P.8 FX Emerging Markets P.9 FX Emerging Market Chart of the week P.10 FX EM Driver Charts: GSCI, USD Index, MSCI Index P.11 FX Big Impact News P.12 Index Watch: UK FTSE100 P.14 Indices Index Watch: US S&P500 P.15 Index Watch: Far East: Nikkei 225 & Hang Seng P.16 Index Watch: US Market Sentiment Dashboard P.17 Equities US and UK Equities Short Lists P.19 US and UK Sector Analysis P.20

3 CONTENTS: Commodities to Watch P.22 COT & Seasonality Hot List P.23 Commodities Chart of the Week P.24 Commodities China Watch P.25 Precious & Base Metals P.26 Energy P.33 Crude WTI Watch P.34 WTI Brent Spread Strategy P.35 RBoB Gasoline Watch P.36

4 Forex:

5 FX Major Traded Pairs Summary: Comment: A possibly quieter week ahead with not particularly any big impact scheduled economic events to shout about. The two big drivers of the majors and related pairs at the moment looks to be Brexit rumour, speculation and news and the US presidential elections. Wednesday sees FOMC meeting minutes come out at 19:00 and US unemployment figures earlier in the day at 13:30. Friday could also be a busy week for the US Dollar with Retail sales figures, consumer sentiment numbers and Janet Yellen speaking. Further GBP weakness is certainly one area to keep an eye on over the coming weeks and whether JPY can sustain the high levels of strength it has shown over the past year. Most of the other majors are quietly building up some strength momentum.

6 US Dollar Index Watch: US Dollar Index Daily Chart: How to use: The US Dollar index is a basket of key currencies against the USD. The Index gives a good guide to the strength or weakness of the USD versus these other currencies. (JPY,CAD,GBP, SEK,CHF,EUR). NB. It can also be traded as a futures contract. Comment: A stronger week for the USD Index but coming into resistance around 97. Momentum still favours more bullishness but longer term resistance may slow this down.

7 FX Majors Currency Strength: Weak Neutral Strong How to use: Data is based off weekly and daily currency strength quantitative analysis to present a feel for the longer term sentiment, strength and weakness levels in the major currencies. GBP, EUR, CAD, CHF, NZD, JPY, AUD, USD, Currency Strength Analysis: GBP sinking. JPY losing some strength. The rest of the majors picking up some minor strength.

8 FX Majors Charts: Charts of interest this week the longer term view: CADJPY : CADJPY: Following on from last weeks CADJPY analysis, prices have now got to just under the cloud on the daily chart and this area could prove to be a key turning point if JPY can regain some strength. If oil continues to push upwards and JPY remains weaker then we could see the cloud broken to the upside. If not, and the pair becomes over bought, the first down target could be 75.4 then 73.5 then 72. Upside targets: 82.6 then 83.2 then 87.

9 FX Emerging Markets: Comment: Oil and Soft commodity price increases have certainly aided the EM currencies over the last few weeks. The brakes have been put on though by further gains seen in the USD. TRY, MXN and PHP stand out as the weaker links versus the USD. How to use: The left side of the table gives a fundamental economic view of where the Emerging Market currencies stand measured in an Overall Health rating. This analysis is then married up to the technicals: price and momentum to draw a conclusion as to the overall direction of the individual currency in the medium to longer term. All Emerging Market currencies are versus the USD. The Technical Indicators and Overall assessment are from the point of view of the USD vs the EM currency, eg if BRL showed Bearish in its overall assessment, this means that the BRL is strong against the USD, but bearish for the chart. The final column combines both the fundamentals and technicals to try to give an overall weighted chart perspective.

10 FX Emerging Markets Chart of the week: TRY Comment: TRY (Turkish Lira) one of Europe's weaker economies, the Lira has been struggling of late versus the USD and prices are reverting back to record highs at the 3.09 area. The question is - does the USDTRY pair have the strength and momentum to go through these levels? If it does it will be into new territory. A reversal from the highs could see the Lira retrace back to the 2.89 zone.

11 FX EM Driver Charts: GSCI, USD & MSCI Index: How to use: These are 3 key drivers of the Emerging Market currencies that can be easily monitored. The GSCI Index is a basket of commodities (heavily energy weighted) commodities are a key component of a lot of these countries economic development. The MSCI Index is a basket of emerging market equity indices. This can paint an overall picture of health in the EM stock markets. The US Dollar Index: almost all the debt of the EM countries are denominated in USD. So the US economy, changes in interest rates etc can play a pivotal role on the movement on any of the underling EM currencies.

12 FX Big Impact News: How to use: About Economic News: Each week major economic news comes out from around the globe that can have a serious impact on the currency markets. The most important news (in our opinion) is listed here..

13 Indices:

14 Index Watch: UK FTSE 100: UK FTSE 100: Got within a cats whisker of an all time high driven on by Brexit talk earlier last week. Retraced from there slightly but still hovering and looking for an excuse to go higher. Looking a bit over bought, timing and patience are key and expect some pull backs to support. Weekly Heikin Ashi chart: 4hr 3 Line Break chart: Daily Kagi chart:

15 Index Watch: US S&P500 S&P500: Still stuck between 2100 and An indecisive market ahead of the US elections. Down side support: 2100 then Daily Heikin Ashi chart: 4hr 3 Line Break chart: Daily Kagi chart:

16 Index Watch: Far East Nikkei 225 & Hang Seng Nikkei 225 same longer term story: a directionless economy has meant the Nikkei still trades sideways between and Currently Hang Seng Looking to break up to area when Chinese markets return to normal next week? Down support: 23400, then

17 Index Watch: US Market Sentiment Dashboard: General Sentiment: Neutral How to use: Data is based off weekly and daily currency strength quantitative analysis to present a feel for the longer term sentiment, strength and weakness levels in the major currencies. VIX (CBOE Volatility Index): The fear gauge. Volatility coming back down and staying in undecided territory giving the S&P500 more of a neutral feel. (>30 = investor fear/uncertainty & <20 = less stressful markets)

18 Equities:

19 US & UK Equities Short Lists: How to use: The shortlist is based on a top down approach on the fundamentals. The list tries to find the strongest and weakest sectors currently and then the strongest and weakest stocks within those sectors. After that, technical analysis should be used to time any trade entry when the / your correct signals arise and a consideration made on the general strength of the Stock Indices in which they trade.

20 US & UK Sector Analysis: Consumer Staples sector (US): (Daily chart): currently one of the weaker US sectors. Energy sector (US): (Daily chart): showing some gains after the recent OPEC meeting: Strong industries: Industrial Conglomerates, Household Goods, Automobile & Auto Parts, Homebuilding & Construction, Containers & Packaging Weak industries: Bio Technology, Renewables, Coal, Holding Companies, Metals & Mining

21 Commodities:

22 Commodities To Watch: The below trend direction analysis is based on an assessment of the daily technicals. Use more detailed technical analysis e.g. indicators, support and resistance, sentiment: COT, Open Interest etc. for possible trade entry, exits and stops. Bullish Opportunities: Not behaving as it should: Bearish Opportunities: FCOJ: Hurricane season, = bullish seasonals, technically still looking strong. Cotton No2: one to watch with Hurricane Matthew approaching - crop damage could see prices rise? Aluminium: Strongest of the base metals last week. Hitting short term highs. Can it break higher? WTI Crude Oil: If it can build a base around $45/46 and OPEC can curb production levels then $57 is not out of the question to the upside. In the meantime poor fundamentals still remain. Lean Hogs: Could surprise to the downside again? Technically and fundamentally weak? Platinum: Technically weak hit $1000 support area has it got the momentum to go any lower?

23 COT And Seasonality Hot list: How to use: The COT Index Assessment is based on a weekly index calculation and net positions of the large speculators category of the CFTC report. Seasonality: historical price data has been analysed over a 20 year period to draw conclusion as to the seasonal direction of price. Technicals: An assessment is made on the current longer term price trend and the current price momentum leading to (and including COT data and seasonality) an overall assessment for the possible price direction of the asset.

24 Commodities chart of the week (Non Metals/ Energy): Sugar No11: Sugar No11: The large speculators still look like they are going longer adding to the increasingly bullish position the hold. Fundamentally the news is of large scale over production / supply working its way back into the market. Could this put the handcuffs on any further upside? Price currently sits on a longer term Fibonacci line at 23c. Downside is to 20c then 16.58c and upside to 26c

25 China Watch: Dashboard: Last week ended up being particularly quiet due to China being out on their Golden Week holidays. Next Thursday sees Trade Balance figures coming out. When China get back in on Monday they will have to digest all last weeks action which could see some market volatility in areas such as metals and Forex. Key: Dashboard: China is a key driver of both Precious and Base Metals sectors. For example nearly 50% of global demand in Copper heads towards this country and it s one of the biggest users of gold. Understanding what China is doing is key to understanding the flow of the market sentiment and what could move price. The dashboard should let you ascertain the current economic situation in China. NB: Updated charts this week are coloured red.

26 Precious and Base Metals:

27 Base & Precious Metals Market Overview: Base: looked to have swerved any GBP Brexit fall out effect and a stronger USD also put the brakes on any base metals gains. Chinas return on Monday could be crucial to the short term price behaviour of the metals complex. With prices generally down over last week any good news economically from around the world may see some bargain hunters jump on current prices. Aluminium looks stronger, whilst most of the other metals are consolidating. In Precious A stronger USD and funds that looked to have filled their boots with the precious metals have left little room for further short term upside leaving the Precious complex feeling weak. But, with US elections, global financial uncertainty, rate rises etc all just around the corner, again like in the base metals sector this may attract the bargain hunters at these price levels. Sentiment: Base overall feel = Precious overall feel =

28 Key Numbers: Key: S1 = next short technical level etc, L1 = next long technical level etc. built around the current price. R/R = Risk Reward either going long or short based on current price and stops / target at L1 and S1 Longer term trend = determined from weekly charts

29 Chart User Guide for the Metals section: 3 Line 4 hour break chart used for finding shorter term changes with and against the longer term trends. Weekly Heikin Ashi chart with Ichimoku, moving averages (50,100,200) to determine trend direction. Fibonacci's and Ichimoku used for longer term risk and trade management. Stochastics used to determine over bought/ sold areas and possible longer term price reversals. Aroon used to determine trend direction and changes in trend direction. 70/30 areas used to determine this as overbought / oversold areas. Set to 10 weeks. Daily Kagi chart using ATR, Change from Red to black determines trend + moving averages + DMI. Fibonacci's used as targets. Directional Movement Indicator (DMI) set to 14 periods Directional Movement Indicator (DMI) set to 14 periods

30 Copper: LME 3m price: Remains lifeless, compounded by Chinese holidays and a stronger USD.

31 Gold: Broke down and out of a triangle consolidation pattern straight to resistance at $1250. $1250 looks like the magnet price to the downside and if breaks here, $1213 and $1173 could be the next targets especially if a stronger US Dollar continues.

32 Platinum: The sell off continues in Platinum, as the Large Speculators on the Commitment of Traders report also get shorter. Looks the weakest of XAU, XAG and XPT. Coming into resistance at these levels: $1000 to $975 where we may see it stabilise. If it breaks further then $800 isn t out of the question!

33 Energy:

34 Crude WTI Watch: WTI Crude Oil: Remains bullish post OPEC meeting but coming into stronger resistance between $48 and $50. Upside possible to $57 in the short term. Downside support is in at $44 then $40. Rig counts: US: 522 (+11 change), -287 change from last yr. International:934 (-3 change) -206 change from last yr. 6 week change: Key numbers:

35 Crude WTI Brent Spread: The Crude WTI Brent spread trade is the differential between the two crudes. The strategy looks for changes in the spread either for breakouts or reversals. Current level: -1.80(Last week -1.71)(Nov spread CME)

36 RBoB Gasoline: Price continues to move sideways and hanging around the 1.37 to 1.47 level. The sideways price action is possibly being created by bullish price momentum, tapered by negative seasonals. RBoB Gasoline Watch: Key numbers:

37 Author: Stephen Hoad, The STOP HUNTER Stephen Hoad has worked in the City of London for nearly twenty years. He has worked for some of the top Investment Banks and Trading Houses, in a career that has taken him from global risk management (front office, market, quantitative), to successful commodities options trader, to own account proprietary trader. His professional experience in the world of trading and risk management is vast and he has extensive knowledge of financial markets, especially in the fields of Commodities, FX and Equities. He has a strong quantitative background and is a qualified Technical Analyst he is on the elite panel of lectures teaching the STA Diploma in Technical Analysis. He also holds an MSc in Financial Markets & Derivatives and a BA (Hons) in Business & Economics. His career has taken him worldwide and he has lectured in London, the Far East and the USA. He is a leading expert in technical analysis, systematic/automated trading, derivatives products, financial and quantitative theory, risk management and regulatory practices. He also has experience of dealing and trading with China. He founded THE STOP HUNTER in February 2015, which provides quality education, training, mentoring and resources to private investors throughout Kent, London and the South East, who want to learn how to successfully trade the financial markets. He also trades from his offices in Canterbury, Kent. Stephen also undertakes consultancy work in the City and is also a part-time University lecturer. If you d like to get in touch or require any further information please contact us at: w: t: e: info@thestophunter.co.uk For real-time market news, charts & much more follow us on

38 Disclaimer: All rights reserved. This document may not be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system in part or in whole without the express written permission of The Stop Hunter Ltd; except where permitted by law. This document is intended solely for use by the individual recipient (Traders Club Member). It may not be reproduced or distributed for corporate purposes or personal gain without the express written permission of The Stop Hunter Ltd. Commentaries, information and other materials contained in any part of this document are purely educational in nature and are not intended to amount to advice on which reliance should be placed. They should not be relied upon for the purpose of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. We therefore disclaim all liability and responsibility arising from any reliance placed on any information displayed in this document (including without limitation liability and responsibility for any investment decision made), or by anyone who may be informed of any of its contents. Trading and investing involves a very high degree of risk. Past results are not indicative of future returns and financial instruments can go down as well as up resulting in you receiving less than you invested. Do not assume that any recommendations, insights, charts, theories, or philosophies will ensure profitable investment.