The US Federal reserve announced in December that there could be three interest rate hikes in 2017, and the first one is now expected to come this week. This is due to the impressive non-firm payroll numbers that came in last week. The US jobs data posted 235,000 jobs in February thereby beating the expectation of about 200,000 while the unemployment rate was down to 4.7% from 4.8% in the previous month. As such, the US Federal Reserve is expected to increase interest rates for the first time in 2017 thus setting the process on course for three increments before year end. Initially, this might appear to have a negative impact on the lending m...
The US Dollar continued to edge higher as prices retrace losses suffered after last week’s jobs data release. Traders appeared to read that report as just supportive enough to sustain the now status-quo call for a rate hike at this week’s FOMC meeting. It did not advance the case for a steeper tightening path thereafter however, which perhaps accounted for an unwinding of short-term long USD exposure and handed the greenback its largest drawdown in five weeks. The move lower seems to have lost steam however, with traders understandably reluctant to overcommit directionally until after the policy announcement has passed. Tellingly, th...
Short term Elliott wave view in FTSE suggests that the instrument is showing a 5 swing sequence from 2/1 low (7087.67) favoring more upside. From 2/1 low, the Index is rallying as a double three Elliott wave structure where Minute wave ((w)) ended at 7329.56 and Minute wave ((x)) ended at 7192.45. The Index has since broken above 7329.56, suggesting that the next leg higher in Minute wave ((y)) has started. The sub-division of Minute wave ((y)) is also in a double three Elliott wave structure where Minute wave (w) ended at 7394.6 and Minute wave (x) ended at 7262.95. Up from there, a rally is unfolding as a zigzag Elliott wave structur...
A recent article posted at Casey Research trumpets the view that the petrodollar system is on its last legs and that when it dies — quite possibly in 2017 — it will be a massively disruptive event for the US economy and the financial world, leading to an explosion in the gold price. The reality is that the so-called “petrodollar” is probably not about to expire, but even if it were the economic consequences for the US and the world would not be dramatic. According to the “petrodollar system” theory, an agreement was reached in 1974 between the governments of the US and Saudi Arabia for the Saudis to do all of their oil transacti...
The Federal Reserve convenes and is set to raise interest rates. But what comes afterward? The team at Bank of America Merrill Lynch weighs in: Here is their view, courtesy of eFXnews: Fed speakers have already sent a strong signal that the Fed intends to hike this week, notes Bank of America Merrill Lynch FX Strategy. “With the rate decision likely to be a nonevent, attention turns to the Summary of Economic Projections and the press conference at this week’s FOMC meeting,” BofAML adds. In this regard, BofAML believes that the combination of a shift higher in the dots and language changes in the statement will send a hawkish signal, ...
GBP/USD 4 hour The GBP/USD is building a larger bullish retracement within a downtrend. The Fibonacci levels of wave 4 (blue) are potential resistance zones for a bearish turn. 1 hour The GBP/USD could expand the correction within wave 4 (blue) via a WXY (orange) unless price breaks below the support (blue/green) which could trigger a continuation of the downtrend. The 38.2%-50% Fibonacci area is the most likely bouncing spot for a wave 4. EUR/USD 4 hour The EUR/USD has bounced at the 61.8% Fibonacci retracement level of wave 2 (purple) but could retrace to a deeper Fib level such as the 78.6% before building a bearish turn. A break above the...
In this report, I would like to show you a chart pattern that seems to be showing up in a lot of different area’s of the markets, in particular the commodities complex. We looked at some of them in the last Weekend Report which were maturing, but in some cases hadn’t broken down yet. The chart pattern I’m referring to is the bearish rising wedge. Some of the bearish rising wedges have a common theme which is the late 2015 low, when commodities and the PM complex finally bottomed out after that massive impulse move down. At a minimum the price objective for a rising or falling wedge is the first reversal point in which the wedge began to...
Like January 1995, this is one of those rare moments when the S&P 500 is on a cusp of a massive rally. And by massive, I mean 20%, 30%, etc. Here’s my rebuttal to all the doomsayers who think that the S&P will fall at least 10%. VIX being compressed doesn’t mean anything. Some banks like UBS have pointed to the fact that VIX is very low. They believe that such a low VIX foretells a VIX spike and a S&P crash. History proves that their belief is wrong. VIX is never at a historical low when the S&P is at the top of a bull market or before a massive correction. Historically, VIX always rises months before a bear mark...
As discussed over the weekend, despite the seemingly endless retail euphoria which has plowed a record amount of cash YTD into broad market ETFs, the latest CFTC data showed that for the first time since the election speculators turned net negative on the Russell 2000 after hitting an all time high as recently as December. Overnight, SocGen’s Andrew Lapthorne alto pointed out the recent “re-rating” of small caps, and in a note titled “US smallcaps suffer in the face of increasing EPS downgrades”, observes that whilst the S&P 500 is only slightly off its recent all time highs, the smaller cap Russell 2000...
All the kids are raving about Snapchat (SNAP) and so were investors in advance of the company’s IPO which occurred earlier this month. For those who are unfamiliar with Snapchat, it is a mobile app that allows you to send videos and pictures, both of which will self destruct after a few seconds of a person viewing them. Snapchat is also a fun messaging app and is very popular among Millennials and high school students. The stock’s initial public offering was initially priced at $17 per share (a common occurrence for many of the social media stock offerings in recent years). However, after the first day of trading, shares opened a...