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Macro Monday 30~U.S. Net Treasury International Capital FlowsMacro Monday 30 U.S. Net Treasury International Capital Flows In essence the U.S. Net Treasury International Capital Flows (US TIC Flows) refer to the movement of funds into or out of the United States through the purchase or sale of U.S. Treasury securities by foreign investors and governments. These flows of capital are an essential component of the overall balance of payments, reflecting the financial transactions between the United States and the rest of the world. What does the data represent exactly? The U.S. Treasury International Capital (TIC) system is compiled by the U.S. Department of the Treasury and provides information on cross-border financial transactions. The TIC data include details on purchases and sales of various U.S. financial assets and liabilities, such as Treasury securities, corporate bonds, equities, and banking flows. In simple terms the Foreign Purchases of U.S. Securities (inflows) are taken away from the U.S. Purchases of Foreign Securities (outflows) to present a overall net figure. The net result of these two components determines whether there is a net inflow or outflow of capital. What are the drivers of positive & negative flows? Positive Flows (>0 on chart) POSITIVE FLOWS in U.S Net Treasury International Capital result from factors such as attractive U.S. interest rates, a stable domestic economy, and global uncertainty that drives foreign investors to seek the safety of U.S. Treasury securities. During these periods, there is a net inflow of capital into the United States pressing the number higher above zero. Negative Flows (<0 on chart) Conversely, NEGATIVE FLOWS occur when other countries offer higher returns, there are concerns about the U.S. economic outlook, or global risk aversion prompts investors to repatriate funds. Exchange rate movements also play a role, as a stronger U.S. dollar can make U.S. assets less appealing. The interplay of the above mentioned factors influences the direction of international capital flows, which impacts the balance of purchases and sales of U.S. Treasury securities by foreign and domestic investor. Now that we have a general sense of what’s driving the data, and what makes an overall net positive and or net negative flow, let’s have a look at the chart. The Chart ✅ Since Jan 2019 there has been an upward trend in Treasury Inflows into the U.S (Black Arrow). ❌This upward trend had one sudden interruption causing a decline from Mar - May 2023 going from positive inflows of $114B to negative outflows of $159.4B, the timing of which coincided with the 2023 U.S Banking Crisis where three small-to-mid size U.S. banks failed. ✅ Since the Banking Crisis in May 2023 Treasury Capital flows have moved from overall negative outflows of $159.4B to overall positive inflows of $260.2B. A major turn around and reversion to the long term trend. ✅The recent surge in positive inflows to $260.2B are the highest recorded since August 2022 ($275B) In summary inflows to U.S Treasuries have been in an general uptrend since January 2019 with one brief interruption from Mar – May 2023 and inflows have increased significantly in recent months and look like they may be about to take out the Aug 2022 highs. Recession Patterns 1. More isolated recessions that were not globally systemic events led to positive net inflows into the U.S. Treasury however larger global events led to outflows from U.S. Treasuries, particularly if those global events involved the U.S. engaging in foreign conflicts. ▫️ During the DotCom Crash (No. 3 on the chart) – The tech sector was badly hit but it was not necessarily a global recession with the associated geopolitical turmoil. Foreign investors sought safety in the U.S. Treasury Market during this time. ▫️ Similarly during the brief Gulf War Recession (No. 4 on the chart) you can see that initially, there was increased net inflows however in Jan 1991 inflows sharply turned to outflows which coincided with the U.S. led invasion of Kuwait (a response to Iraq’s invasion of Kuwait). This was considered a global event and thus led to an exodus of outflows and repatriation of funds from the U.S Treasury Market. ▫️ More recently during the Great Financial Crisis (no. 2 on the chart) and the COVID-19 Crash (No. 1 on the chart) there was a significant outflow from U.S. Treasuries due to the magnitude of these global events. You can imagine foreign market participants clawing funds back into their respective countries to batten the hatches and get into a defensive financial position with global systemic risks high. Better to have a bird in the hand than two in the bush when the bush is on fire. ▫️One other pattern worth mentioning is highlighted in yellow on the chart with an A, B and C. Prior to the Great Financial Crisis and COVID-19 crashes we first had a reduction in overall U.S. Net Treasuries of $373B (A on chart) and $393B (B on chart), respectively. Within 13 to 16 months of both treasure drawdowns we had a recession. We recently had a drop of $437B (C on chart) which ended in May 2023. If history repeats and we had a recession within 13-16 months of this happening, this would be sometime between June and Sept 2024. An alternative view would be that the increase in declines from $373B (A) to $393B (B) to $437B (C) may correspond with the shortening timeframes from 16 months(A) to 13 months(B) to potentially 10 months(C) for the current $437B drop (C on the chart). This would suggest March/April 2024 as a potential recession timeframe (based on the historic reductive time pattern). The U.S. Net Treasury International Capital Flows is a fascinating chart to keep an eye on and should be added to the economic data armory as it will help us interpret what is really going on in the treasury market (there is a lot of false narratives out there ATM). It is also useful in informing us on what the global perspective is in terms of systemic risk vs isolated risk, and also from a historic recessionary standpoint offers value. The best investors in the world call the bond market the market of truth but I have found it hard to find a chart that illustrates this through a global lens UNTIL today. This chart captures that beautifully. Thanks for coming along again PUKA
ECONOMICS:USCFLong
by PukaCharts
2
S&P 500 Daily Chart Analysis For Week of Jan 19, 2024Technical Analysis and Outlook: Spooz's robust movement from our Mean Sup 4745 toward our designated target, Inner Index Rally 4882, is on its way, leaving no fingerprints at the crime scene at the completed Outer Index Rally 4807. The advancement toward a higher target Outer Index Rally 5035 is now in its making. However, once we reach the designated target of Inner Index Rally 4882, we may face a squeeze that could cause prices to drop down to the Mean Support level of 4798 and possibly even the Mean Support level of 4725.
SP:SPX
by TradeSelecter
$RUGRES 'August/2023 Accumulation'ECONOMICS:RUGRES The latest data from the International Monetary Fund’s (IMF) International Financial Statistics (IFS) report shows that Russia’s central bank increased its gold reserves in August, restoring reserves back to previous levels from earlier this year.⁠ ⁠ “IMF IFS data shows gold reserves at the Central Bank of Russia rose by 3 tonnes in August,” according to Krishan Gopaul, Senior Analyst at the World Gold Council. ⁠ ⁠ Analysts reacted positively to the data, but some raised questions regarding Russia's gold production and where the precious metal is going.⁠
ECONOMICS:RUGRES
by Mr_J__fx
Understanding Initial Jobless Claims as a Market IndicatorIntroduction In the complex and multifaceted world of economic indicators, initial jobless claims hold a special place. As a measure of the number of individuals filing for unemployment benefits for the first time, this statistic offers a real-time glimpse into the health of the labor market, which in turn is a vital component of the overall economic landscape. This article delves into how initial jobless claims function as an indicator and their impact on the financial markets. Understanding Initial Jobless Claims Initial jobless claims refer to claims filed by individuals seeking to receive unemployment benefits after losing their job. These are reported weekly by the U.S. Department of Labor, providing a timely snapshot of labor market conditions. A lower number of claims typically signifies a strong job market, suggesting that fewer people are losing their jobs. Conversely, an increase in claims can indicate a weakening labor market, often a precursor to broader economic downturns. Initial Jobless Claims as an Economic Indicator Health of the Labor Market: The primary significance of initial jobless claims is its reflection of the labor market's health. A steady, low number of claims often correlates with job growth and declining unemployment rates, indicating a robust economy. Leading Indicator for the Economy: As a leading economic indicator, jobless claims can provide early signals about the direction of the economy. Spikes in claims can forewarn of economic contraction, while consistent decreases might indicate economic expansion. Consumer Spending: Since employment directly affects consumer income, initial jobless claims can also indirectly signal changes in consumer spending, a major driver of economic growth. Impact on Financial Markets Market Sentiment: Traders and investors closely watch initial jobless claims to gauge market sentiment. Fluctuations in these numbers can lead to immediate reactions in the stock, bond, and forex markets. Monetary Policy Implications: Central banks, like the Federal Reserve, consider labor market conditions when setting monetary policy. Rising jobless claims can lead to a more dovish policy stance (like lowering interest rates), while decreasing claims might justify tightening policies. Sector-Specific Implications: Certain sectors are more sensitive to changes in jobless claims. For instance, a rise in claims can negatively impact consumer discretionary stocks but might be favorable for defensive sectors like utilities or healthcare. Analyzing the Data Understanding initial jobless claims requires context. Seasonal factors, temporary layoffs, and unique economic events (like a pandemic) can skew data. Analysts often look at the four-week moving average to smooth out weekly volatilities for a clearer trend. Conclusion In conclusion, initial jobless claims serve as a crucial barometer for the economy and financial markets. Investors, policy makers, and economists alike monitor these figures for insights into labor market trends and the broader economic picture. As with any indicator, it's essential to consider jobless claims in conjunction with other data to fully understand the economic landscape.
ECONOMICS:USIJCEducation
by AlgoAlpha
Macro Monday 29 - U.S. Existing Home Sales & New Home Sales U.S. Existing Home Sales & New Home Sales U.S. Existing Home Sales U.S. Existing Home Sales data helps us to gauge the strength of the U.S. housing market and is a key indicator of overall economic health in the U.S. In simple terms U.S. Existing Home Sales is a seasonally adjusted record of previously owned homes that have been sold in the United States (per unit). The monthly data report is released by the National Association of Realtors (NAR) and It is a lagging indicator since people often make housing choices in response to a changes in interest rates (which would lead ahead of this dataset). Decembers report will be released this Friday 19th Jan. I will update the chart then so we can see how the trend is developing. The Chart You can clearly see that we have been in a downtrend since October 2020 where we topped out at 6.73m units. Thereafter from Jan 2022 – October 2023 we fell precipitously from 6.34m down to 3.79m. Sales of previously owned homes in the U.S. went up 0.8% month-over-month to a seasonally adjusted annualized rate of 3.82m units in November 2023 (a turning point?), rising for the first time in five months, and rebounding from 3.79m in October which was the lowest level since August 2010. Whilst we are waiting for December 2023 figures, the Jan – Mar 2024 figures will also provide a good sentiment gauge for the direction in 2024. The chart has that look at present that it is basing here or potentially changing trend. Accessibility to existing homes is clearly low at present and one would think that low existing home sales clogs up the market and liquidity that might flow with it and the economy however, the low existing house sales also appears to create demand for New Homes which we will cover next. U.S. New Home Sales New Home Sales, also known as "new residential sales," is an economic indicator that measures sales of newly built homes (seasonally adjusted for annualized figures). The New Home Sales measure compiles data through interviews with home-builders and analysis of the U.S. Census Bureau's Survey of Construction. Specifically, it utilizes information on building permits issued for new construction projects. A home is considered part of the measure if a deposit was paid for its purchase or if a contract to purchase was signed within or after the year of its construction. The construction of new homes contributes significantly to the Gross Domestic Product (GDP) of the U.S. It involves spending on materials, labor, and various services, which can stimulate economic activity. New home sales data is a critical metric for assessing economic health, understanding employment trends, and gaining insights into the dynamics of the housing market. The Chart You can clearly see that we never really recovered after the 2005 peak of 1.39m units, however bottomed in 2011 and started making a slow climb from 273k to a 1.04m peak in August 2020. This remains the recent peak and has not been recovered. An almost 50% reduction in New Home Sales followed reducing from 1.04m to 543k units over 23 months ending July 2022. We are currently 10% above this level at 590k (for Nov) having rolled over in July 2023 from 728k. The chart looks very concerning. Should we lose the diagonal and horizontal support with this month or next months data release, it could be very telling of a struggling new housing market. We have tested the horizontal support three times and you would hope that this would hold. Time will tell. Comparing the Charts Here is where it gets a little interesting. When you look at both charts and compare them you can see that between June 2022 and Sept 2023 the decreasing EXISTING home sales negatively correlated with the increase in NEW home sales. This would make surface level sense given the lack of existing homes being available creating a need for new housing. In recent months there has been a sharp divergence in the opposite direction, particularly in NEW home sales, which plunged from 717k in Sept 2023 to 590k in Nov 2023. EXISTING Home Sales increased marginally from 3.79m in Oct 2023 to 3.82m in Nov 2023. Is this a turning point? Obviously a combination of factors are at work here and its not just existing supply coming to the market that might be disrupting new home sales or vice versa but its interesting seeing this correlation and its something to keep an eye on for investors and policy makers. Sale of brand new homes creates a lot of economic activity and if sales are declining significantly whilst existing homes are starting to come back onto the market, one would presume it would stress the housing market and the economy. We may need reduced interest rates sooner rather than later to help fan the flames of the new housing market, or maybe its time the market takes a breather? What do you think? It certainly adds to the argument for lower rates sooner from the Federal Reserve to "soften the landing" or that divergence noted today. On Macro Monday 21 we covered the NAHB Housing Market Index and its close correlation to U.S Housing Starts. If you enjoyed this read today, you should take a look at that. They are two useful additions that give another view. I'll throw the link in the comments. Thanks for coming along again 🤓 if you enjoyed this or found it informative please let me know PUKA
FRED:EXHOSLUSM495S
by PukaCharts
S&P 500 Daily Chart Analysis For Week of Jan 12, 2024Technical Analysis and Outlook: Spooz's extended movement toward our designated target, Mean Res 4783 and Key Res 4800, is noteworthy. However, the completed Outer Index rally poses a significant barrier to advancement towards higher targets: Inner Index Rally 4882 and the next Outer Index Rally 5035. The current level of tight trading range supports this theory. Despite this, current market conditions suggest we may experience a squeeze that could drive the prices down to the Mean Support level at 4745 and possibly even the Inner Index Dip at 4595.
SP:SPX
by TradeSelecter
EUR/USD Daily Chart Analysis For Week of Jan 12, 2024Technical Analysis and Outlook: The Eurodollar has been trading aimlessly this week, fluctuating below the designated Mean Resistance of 1.098. The current target is the Mean Support of 1.090, with a potential decline towards the established Mean Support level of 1.075. On the upside, the Eurodollar may attempt to surpass the Mean Resistance level of 1.098 and reach the Mean Resistance of 1.104 before showing any significant decline.
by TradeSelecter
Bitcoin(BTC/USD) Daily Chart Analysis For Week of Jan 12, 2024Technical Analysis and Outlook: Bitcoin has surged past January 2, 2024, completing the Inner Coin Rally 45900 and, as a result, also topping our designated Next #1 Outer Coin Rally 47500. In addition, Bitcoin has retraced back to our target Mean Sup 42800 after completing a pivotal squeeze, as shown in last week's chart analysis. Currently, it is regaining its lost ground by revisiting the newly-created Mean Res 47000 and extending beyond it.
BITSTAMP:BTCUSD
by TradeSelecter
Core and Headline Producer Price Index (PPI) Release Core and Headline PPI (Dec 2023 figures) U.S. Headline PPI Prev: 0.8% / Exp: 1.3% Rep: 1.0% ✅ Lower than expected ✅ U.S. Core PPI (excludes food and energy) Prev: 2.0% / Exp: 1.9% Rep: 1.8% ✅ Lower Than Expected✅ What is PPI and why is it important? Producer Price Index is a crucial economic indicator that provides valuable information about inflationary pressures at the producer level. By tracking changes in producer prices over time, it provides insights into inflation trends before they manifest in consumer prices. Difference between Core and Headline PPI The Core PPI aims to provide a more stable measure of underlying inflation, while the headline index reflects all price changes, including those driven by more volatile components such as food an energy. You can see from the chart that Headline PPI in red is the swings more widely up and down due to the inclusion of these volatile components (food and energy). ✅ LOWER THAN EXPECTED PPI TODAY✅ Core and Headline PPI came in lower than expected this month and as you can see we are reaching down into the historically more moderate zone between 3% and -1.5%. This bodes will for inflationary pressures in general and may be an early indicator of lower Core and Headline inflation figures (for CPI) in the coming months. PUKA
ECONOMICS:USCPPYY
by PukaCharts
The US Economy Has Flashed ResilienceThe potential for a stronger dollar looms ahead, driven by the robustness of the US economy, which enables Federal Reserve officials to pursue a more gradual reduction in interest rates compared to other major central banks. Despite the Federal Reserve's assertive approach to raising interest rates, the US economy has demonstrated resilience, with inflation gaining momentum toward the end of 2023. This defies expectations on Wall Street, where some anticipated an earlier initiation of interest rate cuts, possibly as early as March. Additionally, the dollar finds support in the persisting uncertainty surrounding significant global elections, particularly the impending US presidential showdown. By March, the candidates will be revealed, and unlike the scenario in 2016, the likelihood of a victory for former President Donald Trump is expected to be factored into the market well in advance.
TVC:DXYLong
by Elite_Forex
Core and Headline CPI RELEASED (Dec 2023 figures)Core and Headline CPI (Dec 2023 figures) U.S. Headline CPI Prev: 3.1% Exp: 3.2% Rep: 3.4% 🚨 HIGHER THAN EXPECTED 🚨 U.S. Core CPI Prev: 4.0% Exp: 3.8% Rep: 3.9% 🚨 HIGHER THAN EXPECTED - but still fell from 4% to 3.9%✅ CORE CPI FALLS BELOW 4% FOR THE FIRST TIME SINCE MAY 2021 We have a long way to go before we reach the Fed Target of 2%. Additional info previously shared: Core vs Headline (the difference) You can clearly see how Core CPI is less volatile than Headline CPI on the chart. Core CPI removes the volatile food and energy expenditures to provide the underlying inflation trend. Food and Energy is included in the Headline inflation which as you can see from the chart is much more volatile and changes direction quicker than core inflation. Its almost like an oscillator around the core inflation line. The Feds 2% Target It is clear that we are not at the Federal Reserve’s target inflation rate of 2% on both fronts (purple line). It is critical to understand that we are still not at or below the target 2% level regardless of the FOMC’s determination of a likely hold on interest rates and reductions to interest rates in 2024. Lets see can the target be met first. You can see that since 2002 Core CPI has fluctuated one standard deviation above and below the 2% inflation level between 1% and 3%. It is clear that we are not back into this standardised zone between 1 – 3%.
ECONOMICS:USIRYY
by PukaCharts
The key is whether the four-year cycle pattern can be continuedHello traders! If you "Follow" us, you can always get new information quickly. Please also click “Boost”. Have a good day. ------------------------------------- A new 1-year candle will now be created. Accordingly, we will take the time to talk about next year's movements with the 12M chart. -------------------------------------- We continually say that you cannot create a trading strategy based solely on the information gained from chart analysis. Therefore, you must use the information obtained from chart analysis to suit your trading strategy. Currently suitable coins for long-term investment are BTC and ETH. The next coins that are seen as expanding the coin ecosystem are BNB, Among these, the coins that must be traded by increasing the number of coins held for profit are BNB, XRP, ADA, TRX, KLAY, OP, and WEMIX coins. The coins mentioned above are representative coins that form the coin ecosystem. By checking the coins (tokens) included in this coin ecosystem, you can select additional coins in addition to BTC and ETH to continue investing in the mid- to long-term. It does not matter if the number of items (coins, tokens) that increase the number of coins (tokens) held for profit is large, so you need to think about this. Increasing the number of coins (tokens) held corresponding to profit means selling the coins (tokens) corresponding to the purchase amount and leaving the number of coins (tokens) corresponding to the profit, so if you sell the amount equal to the purchase amount, the average purchase price is 0. Trading in this way is possible because the coin market allows trading in decimals. Therefore, if you trade in the coin market the same way you traded in the stock market, you may feel confused and need to rewrite your trading strategy for the coin market. ----------------------------------------- #BTCUSD 12M The key question is whether the four-year cycle pattern that started in 2014 can continue this time. It displays the Fibonacci ratio formed in the upward trend that started in 2015. The Fibonacci ratio formed in the upward trend that started in 2019 is displayed. If the 3.618 point of the Fibonacci ratio in the uptrend that started in 2015 is applied to the Fibonacci ratio in the uptrend that started in 2019, the 3.618 point is the 178910.15 point. Therefore, the key question is whether it can rise above 1.618 percentage points, or 89126.41 points, next year. Since there is no guarantee that movement will continue according to the past pattern cycle, we must respond according to the situation. Since it has currently touched the 44234.5 point, which is the 0.618 percentage point, if there is a price adjustment before it rises, it is necessary to check if it is supported around 38937.30, which is the 0.5 percentage point. Next, we need to see if it can rise above the 2.618 percentage point, which is 134018.28. End 2023 well, and have a happy new year in 2024. -------------------------------------------------- - The big picture The full-fledged upward trend is expected to begin when the price rises above 29K. This is the section expected to be touched in the next bull market, 81K-95K. -------------------------------------------------- ------------------------------------------- ** All explanations are for reference only and do not guarantee profit or loss in investment. ** Trading volume is displayed as a candle body based on 10EMA. How to display (in order from darkest to darkest) More than 3 times the trading volume of 10EMA > 2.5 times > 2.0 times > 1.25 times > Trading volume below 10EMA ** Even if you know other people’s know-how, it takes a considerable amount of time to make it your own. ** This chart was created using my know-how. ---------------------------------
INDEX:BTCUSD
by readCrypto
U.S Equity Index’s Overview – A Repeating PatternU.S Equity Index’s Overview – A Repeating Pattern The Bull Thesis – Ascending Triangles The 200 day (blue line on each chart) is squeezing price up towards each red resistance line making each chart look like an ascending triangle (evident on every chart). With the 200 day as underside support for price and the 200 day sloping upwards, things remain positive. The Bear Caution – Throw overs, Transportation Lag and the Hidden Wedge We need to be aware and cautious of a throw over top on each chart which is always a possibility. Price on each chart would need to fall back below the red support line (pricing having only been thrown over the red line to come back down again). The DJ:DJT – Transportation (Chart 1) is lagging behind all the other charts and has not taken out its Nov 2021 or Jul 2023 highs. This relative weakness in Transportation is worrying as this index offers an early indication of potentially less manufacturing and goods being transported, with this chart lagging and failing to take out its highs, it could be an early indication of a more pronounced slowdown in the economy. This chart we need to keep a very close eye on. If DJT fails to rise above its red line and loses the 200 Day, this could be a very bad signal. We also need to be aware of how one important chart is showing a rising wedge pattern (Chart 3 – Major Market Index TVC:XMI ). This old school chart is watched by the OG traders and investors as a more general market chart. Lets keep an eye on the upper diagonal on the rising wedge for resistance on this one. A rejection here could be something of an early warning sign and obviously losing the red support line would confirm this. Charts 4 - 6 4. S&P 500 SP:SPX 5. NASDAQ NASDAQ:NDX & 6. US Small Cap 3000 TVC:RUA All these charts appear to be about to break into all time highs, however they are slightly lagging the Dow Jones Industrials TVC:DJI and the Major Market Index TVC:XMI which have broken all time highs. In the Charts 4 - 6 break out above their red lines (above recent all time highs), this could be another confirmation signal of bullish momentum. Obviously a rejection at this level does not bode well. SUMMARY In this hard to navigate market environment we need to pay attention to DJT (Chart 1) and XMI (Chart3) as they provide clear boundaries that we can watch for hidden bear signal warnings. On the contrary, in the even these charts and charts 4 - 6 breach their respective resistance levels mentioned above we can be assured that the wind is at out back in this currently confusingly bullish market. If you like this overview please let me know and I will complete similar overviews for other markets and indices. Thanks for reading PUKA
TVC:XMI
by PukaCharts
S&P 500 Daily Chart Analysis For Week of Jan 5, 2024Technical Analysis and Outlook: The Spooz extended down movement from our designated target Key Res 4800 and Outer Index Rally 4807 and now rests comfortably at our Mean Support level of 4700. The current market conditions suggest we experience a squeeze that could take us down to the Mean Support level at 4644 and possibly even the Inner Index Dip at 4595. However, the current level of support may provide a rebound to the newly created Mean Resistance level at 4740 before continuing its downward movement.
SP:SPX
by TradeSelecter
EUR/USD Daily Chart Analysis For Week of Jan 5, 2024Technical Analysis and Outlook: The Eurodollar has experienced significant price fluctuations throughout this week's trading session. It has fallen below our Mean Support level of 1.100, indicating a potential decline towards the established Mean Support of 1.075. It is highly probable that the Eurodollar will retest the Mean Resistance level of 1.098. The current violent movement of the Eurodollar around our crucial Mean Support of 1.090 and Mean Resistance of 1.098 is a clear indication of the same.
by TradeSelecter
EUR/USD Long Against The RetailersLast week the dollar was mostly weak with DXY currently sitting at the 101 area and is about to test the key 100 level most likely after last week's much worse-than-expected Chicago PMI which came at 46.9 versus the expected 51 which was already far lower than the previous 55.8 and now sliding in the below 50 contraction zone. Another negative for the dollar could be the U.S. Navy killing Houthi Rebels in Red Sea. Last week was quiet for the Euro with no economic release so we are left with the overall expectation that the ECB is trying to look hawkish pushing back on cutting rates soon. - This week Tuesday 16:15 we have Euro Manufacturing’s PMIs in Spain, Italy, France, Germany, and the Eurozone which are mostly expected to stay around the previous levels which are still well below the key 50 level for the indicator. - Also Tuesday we have a 1st tier US Manufacturing PMI which is expected to drop from 49.4 to 48.2 but after the sharp decline in last week’s Chicago one, a surprise to the downside can be expected which will weigh on the dollar further. We have an extremely Bearish DXM paired with Institutional traders favouring the euro combined with the 5 year seasonality being slightly bearish sitting at -0.69% but the 10-year one being at positive 0.14% so seasonality can be considered neutral for our potential trade. Potential entry at 0.50 Fib retracement level on the 4H which is also a Big psychological level being at 1.10 area with 0.5R and another 0.5R after a bullish engulfing candle. SL on the first potential entry will be at 1.09240 which is around 88pips which is more than the ATR average at this zone for the whole of 2023 Daily chart.
Long
by Elite_Forex
4
Macro Monday 27 - Headwinds in Europe but Spain thrivingMacro Monday 27 Headwinds for Europe but Spain demonstrating relative strength As it is New Years Eve I wanted to do an early release for tomorrow. This week we are taking a look at another major market Index in Europe and we will also look at one smaller market within this geographical location, Spain, due to its strong chart set up and promising economic data released in December 2023. EURO STOXX 50 Index - $SE5E The EURO STOXX 50 index is known as Eurozone’s leading blue-chip index and is designed to represent the 50 largest and most liquid companies in the eurozone. It was designed by STOXX, an index provider owned by Deutsche Börse Group (which operates one of the world's largest stock exchanges by market capitalization – the Frankfurt Stock Exchange). STOXX have an array of interesting index’s that we might review over coming weeks. The Euro STOXX index is composed of 50 stocks from 11 countries in the Eurozone. These are the top fifty largest and most liquid stocks. The index futures and options on the EURO STOXX 50, traded on Eurex, are among the most liquid products in Europe and the world. The Top Three Holdings (representing 20% of overall EURO STOXX 50 index): 1. ASML Holding NV NASDAQ:ASML : Microelectronics solutions provider that offers semiconductor manufacturing equipment. 2. LVMH Moët Hennessy Louis Vuitton OTC:LVMHF : World Leader in luxury brands such as Tiffany & Co, Christian Dior, Marc Jacobs, TAG Heuer, and Bulgari. 3. TotalEnergies SE EURONEXT:TTE : This is a global multi-energy company that produces and markets energies: oil and biofuels, natural gas and green gases, renewables and electricity. The company has 100,000 employees and is active in 130 countries. Interestingly the EURO STOXX 50 Index typically represents approximately 60% weighting of the STOXX Europe 600 Index, which is derived from the STOXX Europe Total Market Index LSE:TMI which is a subset of the STOXX Global 1800 Index. Talk about a game of Russian dolls. We will look at these other charts at another time, for now we are focused on the arrow head of the commercial European markets, the Top 50 companies in the EURO STOXX 50. The EURO STOXX 50 Index can provide a great overview on how the largest and most liquid companies in Europe are performing in aggregate, thus giving us insight into the European commercial markets direction and the European economy. So lets take a look at the chart. The Chart Whilst the chart is in a general uptrend since 2009 with successive higher lows, we appear to have made a long term pennant breakout however there are a number of concerns that jump out at me. ▫️ We are approaching the July 2007 market highs and if surpassed we will then have another overhead resistance from the March 2000 All Time Market highs. These are significant resistance levels. ▫️ We could be forming a rising pennant at present so even if we breach the July 2007 highs, we have the intermittent pennant ceiling to also contend with. Whilst these are genuine concerns, at present we are trending upwards with the 21 month SMA sloping upwards. What to watch for? Bear Perspective: ▫️ A breach of the 21 month moving average followed by, ▫️ A breach of the rising wedge lower boundary. NOT GOOD Bull Perspective: ▫️ We break above the July 2007 Top and make support on it eventually finding additional support from the 21 monthly moving average as time moves on. Would I trade this chart? No! However, it is an exceptionally interesting chart that offers valuable perspective on the major components within the European commercial markets. It provides us with an interesting perspective on the European Economy and can help us understand the broader opportunity or risks within the market. IBEX 35 Index - BME:IBC We are now going to have a look at the top 35 stocks in the Spanish stock market as this market has proven to be an outlier in 2023. The IBEX 35 Index is made up of the 35 most liquid stocks traded on the Spanish stock market. Between 2000 and 2007, this index outperformed many of its Western peers, driven by relatively strong domestic economic growth which particularly helped construction and real estate stocks. In these bull markets Spain proved to have more volatility to the upside, however that obviously comes with the potential opposite downside volatility also. In any event, we can take advantage of one of Europe’s fast paced markets and consider individual stocks within it. Spain as an outlier I have focused in on Spain as the chart looked more promising than the markets in other European countries, thereafter I found some economic data and narratives that support this potentially strong chart set up. ▫️ Spain is the 4th largest economy of the EU - save for that of the United Kingdom - and the 14th largest in the world. ▫️ Spain is the 13th largest recipient of foreign investments in the world. More than 14,600 foreign firms have set up their business in Spain and this appears to be a continuing trend. ▫️ As recently as the 18th December it was announced that Spanish exports exceeded €320 billion from January to October 2023, an all-time high, according to government statistics. ▫️ Industries leading this boom were the automobile, capital goods and food, beverage, and tobacco sectors. ▫️ The Spanish state also confirmed that the nation has a current account surplus of 3% of GDP, the best figure recorded since 2018. ▫️ Geographically, 61.6% of total Spanish exports were sent to the European Union in October 2023, while exports to non-EU countries accounted for 38.4% of the total, demonstrating Spain’s global reach is versatile and not restricted to Europe. Finally a quote from the Spain's Ministry of Economy, Trade and Business "The Spanish economy ……in the complex international context, has maintained its constant weight in international trade in goods and increased its share of the European market in recent years,". IBEX 35 Index Top 3 Holdings: 1. Iberdola BME:IBE (14%) – A clean energy utility company with 40,000 employees. It constructs, operates and manages power generation plants, transmission and distribution facilities and other assets. The company produces electricity using conventional and renewable energy source 2. Inditex BME:ITX (14%) – One of the worlds largest distribution groups for the likes of ZARA, PULL&BEAR, MASSIMO DUTTI and BERSHKA. These brands are more aligned with mid-range affordability for the middle class. 3. Santander BME:SAN (11%) – The 28th largest bank I the world with 200,000 employees, 166 million customers and 1.7 Trillion in total assets (all global figures). The top three holdings making up almost 40% of the IBEX 35 weighting are actually a nice blend of Energy, Staples and Finance. This adds to my preference to actually invest in the IBEX 35 Index as it appears to be a nicely diversified index from a review of the major holdings. The Chart A long term pennant has made a defined breakout of the range and found support with a bounce off the 21 month moving average. Historically you can see the relevance of the 21 month moving average, once lost after the 2000 and 2007 top it was a clear indication to exit the market. Conversely, once price is established above the 21 month moving average you can see that you typically have good odds of upward momentum. The advantage of watching an index like this, outside of a liquid trade, is that it gives us an indication that the Spanish market has relative strength at present and companies within the index, and potentially outside it, may offer a greater probability of returns than other markets in the Eurozone. I guess being a smaller well diversified and more nimble market in the sunny Mediterranean has its benefits. I highly recommend you review last weeks Macro Monday which looked at how positive four large Global Index’s are looking at present. These were the Vanguard Total World Stock Index ETF - AMEX:VT , iShares Global Energy ETF - AMEX:IXC , Global X FinTech ETF - NASDAQ:FINX and the Global X Blockchain ETF - NASDAQ:BKCH If you enjoy my coverage of these indices or would like me to cover some others, please let me know in the comments, Happy New Year Folks, sláinte 🥂 PUKA
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by PukaCharts