My TOP10 project list - pick number 1/10 (new set up)Hello my friends,
This was my first top 10 crypto pick back in November 1st 2023 !
I personally entered this trade on 25th September 2022 (at 0.015 cents) but felt sufficiently confident to publish it only 1 year later.
It had a great run in April this year, it even touched 10 cents. However the best is yet to come.
TODAY it has reached the same price level as 9 months ago (white circle) !! God or bad ?
Now it is a great time to buy with a better risk reward level.
From the 10 cents level, it has crashed all the way back to 0.023 cents.
However the breakdown was recently confirmed as F A L S E breakdown (blue circle), similarly as it did in March 2024 before the run up.
This is an extreemely bullish price action !
I personally think that we could see the 0.3186 level this year (which would be a 10 x from here).
Not financial advice. It is just my personal view on the current set up.
Middleeast
Crude Oil (CL1!): Why We’re Still Expecting Lower LowsAt the end of last week, we fine-tuned our Crude Oil outlook, and we are still expecting lower lows to take out the sell-side liquidity below. Our limit order at $63.23 remains valid, even after last week’s pump, which was driven primarily by rising tensions and the ongoing war in the Middle East. Oil gained 13% over five sessions following Iran’s attack, as traders feared Israel’s response might target Iran’s oil infrastructure, potentially cutting into the country’s 1.7 million barrels per day of exports. There are also concerns that a broader war in the oil-rich Persian Gulf could threaten nearly a third of global oil output. However, the geopolitical risk premium may be fading due to Israel’s delayed response.
The geopolitical risk premium has an unclear and unpredictable expiration. When that moment comes and is not supported by real, fundamental factors—such as a substantial supply shortage due to the conflict—the upward movement in oil prices will not be sustainable. The longer this takes, the more the price increase will slow and potentially reverse, which is exactly what we are starting to see in the chart. While Crude Oil respected the 61.8% Fibonacci level almost perfectly, it found stronger resistance at the POC just above that level. Given the bearish RSI divergence, we continue to expect Oil to move lower, provided the conflict in the Middle East does not escalate further.
Will geopolitical tension support oil prices?
Kazakhstan planned to cut its oil output, while Russia reported lower production in Sep, restricting the supply.
Meanwhile, the heightened geopolitical tension in the Middle East increases concerns over oil production and transport.
At the same time, market participants remain optimistic about the US economy, which could support oil demand. Today's NFP release may provide insights regarding the US job markets.
USOIL has significantly recovered from its low last month. The price retested its support at 67.50 USD per barrel before closing above its psychological support at 70.00 USD per barrel.
If USOIL sustains its upward momentum, the price may retest the following resistance at 75.00 USD per barrel.
On the contrary, USOIL may return to 70.00 USD per barrel if the price retraces before its continuation.
Is Global Oil Demand the Key to Energy Market Stability?In the intricate landscape of global energy markets, the question of oil demand remains a central enigma. Driven by a confluence of geopolitical tensions, OPEC+ production strategies, and economic dynamics, global oil demand is a complex tapestry that shapes the future of energy markets.
Geopolitical events, particularly in the Middle East, have historically been a significant driver of oil price volatility. The recent escalation of tensions has once again underscored the delicate balance between geopolitical stability and global oil supply. As geopolitical risks rise, so too does the price of oil, impacting investors in oil-related securities like the United States Oil Fund (USO).
However, geopolitical factors are just one piece of the puzzle. The Organization of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+, play a crucial role in regulating global oil supply. Their production decisions, often influenced by economic considerations and geopolitical pressures, can significantly impact oil prices and, consequently, global oil demand.
Beyond geopolitical tensions and OPEC+ dynamics, economic factors also play a vital role in shaping global oil demand. The global economy, with its cyclical nature, influences energy consumption. During periods of economic growth, oil demand tends to increase, while economic downturns can lead to reduced consumption.
The interplay between geopolitical risks, OPEC+ strategies, and economic factors creates a complex and dynamic environment for the global oil market. Understanding these intricate relationships is essential for investors seeking to navigate the challenges and opportunities presented by the oil sector.
XAUUSD | Trade ideaDuring morning trading, the XAU/USD pair is holding around 2500.00. At the end of last week, gold demonstrated a confident upward trend. It was partly supported by expectations of the US Fed’s imminent transition to a “dovish” monetary policy cycle. Analysts have revised their estimates of a possible interest rate cut of 50 basis points, and now, its probability is no more than 28.0%. At the same time, the American regulator may adjust the value by –25 basis points at each of the three meetings scheduled this year, leading to a sharp reduction in the borrowing cost from the current 5.50%. Traders will discuss the possible steps of the financial authorities all week since the annual symposium in Jackson Hole will be held on Thursday, August 22. The representatives of the world’s central banks will speak, giving assessments of the current economic situation, as well as the timing of changes in monetary parameters. A day earlier, the US Fed will publish the minutes of the July meeting, which ended with the interest rate maintained at the current level. In addition, investors will pay attention to business activity data. The service PMI may fall from 55.0 points to 54.2 points, and the manufacturing PMI from 49.6 points to 49.4 points. Another factor supporting gold prices is the continuing risks of military conflicts in the Middle East and Eastern Europe. Despite conflicting reports in the media about the Iranian authorities’ imminent response to the death of Hamas political bureau chief Ismail Haniyeh, no active measures have been taken against official Israel so far, which, on the one hand, only increases uncertainty, preventing market participants from counting on the parties concluding a peace agreement.
Title: Geopolitical Tempest Navigating the EUR/ILS Currency PairThe EUR/ILS exchange rate is a crucial indicator of Israel's economic and geopolitical stability in relation to the Eurozone. Recently, it has been under substantial pressure due to escalating tensions between Israel and Iran. This dynamic interplay of geopolitical risks and economic factors creates a complex environment for the Israeli shekel (ILS) against the Euro (EUR).
Key Points
1. Geopolitical Background: The conflict between Israel and Iran, fueled by nuclear ambitions, proxy wars, and direct military engagements, has deep historical, religious, and political roots.
2. Economic Implications: Investor confidence, economic sanctions, and increased military expenditures are critical factors influencing the ILS. Geopolitical instability can reduce investor confidence, cause capital flight, and strain Israel's fiscal budget.
3. Impact on EUR/ILS Exchange Rate: Geopolitical risks lead to a flight to safety, with investors seeking stable currencies like the Euro. Inflationary pressures from supply chain disruptions and military spending can erode the ILS, while the Bank of Israel's interventions may be limited by persistent tensions.
Conclusion
The Israel-Iran conflict casts a long shadow over the Israeli economy and the strength of the ILS. As geopolitical tensions persist, the EUR/ILS exchange rate is likely to experience significant volatility. Investors and policymakers must remain vigilant, monitoring developments closely to mitigate risks and capitalize on opportunities in this uncertain environment.
Gold trade with Israel-Iran in Focus Gold temporarily surged past $2,474 per ounce on Friday, marking a new record high, as a weak U.S. jobs report bolstered expectations of a dovish shift by the Federal Reserve. The U.S. economy added 114,000 jobs in July, significantly below the anticipated 175,000 increase.
Gold prices have since pulled back slightly but are still trading just above the 100-hour moving average. Analysts foresee potential for another upward trend toward $2,490, though the MACD indicator, with its signal line crossing the MACD level, may suggest otherwise.
Meanwhile, heightened tensions in the Middle East have continued to drive demand for safe-haven assets. The conflict between Israel and Iran escalated with a strike on the Israeli-occupied Golan Heights, resulting in the deaths of 12 children and teenagers.
Subsequently, the Israeli military reported killing a senior Hezbollah commander in Lebanon, prompting several countries to advise their citizens to leave Lebanon amid fears of a broader regional conflict.
In a further development, Hamas chief Ismail Haniyeh was assassinated in Iran while attending the inauguration of Iran’s new president. Iran's Supreme Leader, Ayatollah Ali Khamenei, vowed a “harsh punishment” for Israel in response.
Israeli Prime Minister Benjamin Netanyahu described the situation as a “multi-front war” with Iran and its proxies. The recent assassinations have likely undermined efforts to reach a ceasefire and a hostage release agreement between Israel and Hamas in Gaza.
Options Trading is Not about the GreeksCME: E-Mini S&P 500 Options ( CME_MINI:ES1! )
On March 24th, I published a trade idea, “Buckle Your Seatbelt for a Market Correction”, where I suggested that the US stock market was due for a major correction. Buying a Put contract on CME E-Mini S&P 500 Futures would be a trade to express this market view.
How is this trade panning out?
• On March 24th, the June S&P futures contract (ESM4) was settled at 5,289.75. The out-of-the-money (OTM) put strike 5,100 was quoted at 63.
• To purchase a Put, a trader would pay an upfront premium of $3,150 (= 63 x 50).
• On April 18th, the S&P has been down for five straight days, and ESM4 was settled at 5,49, losing about 4.6% since we first placed the trade on. Meanwhile, the 5100 put is now trading at 150.75.
• Our put position is valued at $7,537.50 (= 150.75 x 50). If we were to close the trade now, we would realize a hypothetical return of +139.3% (= 150.75/63 -1) in less than a month, excluding transaction cost.
While the underlying stock index is lowered for less than 5%, and the put strike is barely in-the-money (5049 is 51 points below 5100), the value of the put contract has been more than doubled. This trade showcases the attractiveness of an options strategy.
Firstly, there is time value on the put contract. We have two more months to trade until the options expire on June 21st, the 3rd Friday of the contract month. The probability that the S&P could go significantly lower than 5100 makes the put options very valuable.
Secondly, there is a multiplier of 50 built into the options contract. Each index point that the S&P moves in-the-money, the Put position will gain $50 per contract.
Thirdly, the volatility of the S&P 500 index has increased 50% in the past month, from 12-12.50 to 18-19.50. Higher volatility makes options contracts more valuable.
Options Greeks are Lagging Indicators
My trade idea did not price in volatility increase. In fact, it did not even mention any of the options Greeks – Delta, Gamma, Theta, Vega, and Rho.
In my opinion, the Greeks are concurrent indicators or lagging indicators. Take the VIX index as an example. It captures historical volatility about the S&P 500. However, options are priced by the implied volatility. It is the market consensus, or collective sentiments from all the buyers and sellers, about what volatility would be in the future. In this case, historical volatility is not very useful in gauging future volatility.
All sophisticated options pricing models eventually bog down to a subjective estimate of the implied volatility. The Greeks are precise about what the market has been, but they are not useful in assessing how market sentiment will be a month from now.
We could illustrate this with CME Group’s FedWatch Tool, which shows real-time market sentiments in Fed rate cut probability.
• On March 24th, it indicated the probability of a 25-bp cut in June at 75.5%. There was a 77% chance that Fed Funds move to 4.50%-4.75% by year end, indicating a total of three rate cuts in 2024. Four total rate cuts, which would be a full percentage point lower, was priced at 43% probability.
• On April 18th, the probability of a 25-bp cut in June is now down to just 15.3%. The probability for total rate cuts in 2024 are: 2 cuts (32.4%), 1 cut (36%) and no cut (15%). We may recall that only four months ago the market consensus was 6-7 rate cuts.
(Link: www.cmegroup.com)
If you measured the market last month based on the Greeks, you would have expected the S&P to go higher. Instead, market sentiment turned upside down as March CPI and Nonfarm payroll data completely destroyed the hope of near-term Fed rate cuts.
Trading with E-Mini S&P Options
In my opinion, the market correction is not over yet. There is a good likelihood that the S&P to move down 10%-15% from its peak of 5,265, to the range of 4,475-4739. Here are the key drivers:
• US stock market had a spectacular run in the past two years on the back on AI revolution. While the seven Big Tech companies gained over 50%, the remaining 493 stocks registered low single-digit returns. We are now at the breaking point where the Magnificent Seven could no longer carry the heavy burden of the mediocre performance of the rest.
• The lowered expectation of Fed rate cuts results in higher-than-expected future interest rates. This puts downward pressure on company valuation. I had several writings explaining how the discounted cash flow (DCF) valuation works.
• Escalated geopolitical tension triggers a flight to safe-haven securities. Gold would gain in value while the stock market would decline.
CME Group E-Mini S&P 500 Options provide leverage and capital efficiency. Options are based on futures contracts. The contract notional is $50 x S&P 500 Index.
On April 19th, the June S&P futures contract (ESM4) is now quoted at 5,031.75. The 4,850-strike put is quoted at 64.75. To purchase a Put, a trader would pay an upfront premium for $3,237.50 (= 64.75 x 50).
Hypothetically, if the S&P lowered 10% from its peak to 4,739, the put position would be 111 points in-the-money (= 4850-4739). The trader could exercise the options to capture the price difference or sell the put at a higher price.
If the S&P ends up with a smaller correction, the trader could lose money, up to the full amount of the upfront premium.
Options traders could find CME’s Options Calculator an easy-to-use tool in structuring their options strategies. The best part, it is free.
www.cmegroup.com
Happy Trading.
Disclaimers
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
Gold & oil volatility grows amid Middle East escalationFinancial markets are bracing for the uncertainty surrounding Iran's recent strike on Israel and the potential for retaliatory measures.
Mohamed A. El-Erian, Chief Economic Adviser at Allianz, remarked that the current situation may lead to elevated gold and oil prices, alongside lower US Treasury yields and stocks compared to what would have been expected otherwise.
In the previous week, investors flocked to gold, driving it to reach new record highs. Will we see more records hit this week? Early trading this Monday Asian session has shown a gap upwards.
Since April 1st, the energy market has been on edge regarding a potential Iran-Israel conflict, hinting at the likelihood of highly volatile oil trading in the upcoming week. Additionally, concerns arise over signs of Iran's inclination towards a soft blockade of the Strait of Hormuz, which could result in supply chain disruptions and increased oil prices.
The escalating tensions may also further prompt the Federal Reserve to exercise caution in interest rate cuts, as higher oil prices could steer inflation away from the Fed's target. On Friday, the U.S. dollar index surged to its highest level since November, while the euro dipped to a five-month low against the dollar following indications from the European Central Bank of potential interest rate cuts. This broad strengthening of the dollar also drove the yen to a fresh 34-year low as investors monitored for potential intervention by Japanese monetary authorities to stabilize the currency.
GOLD, will NFP finally start wave C?Hello everyone,
Gold currently confusing traders as it switches between correctional movements and speculative pullbacks. From a technical point of view the 2067 level is now very important for the next move, which I expect to be a short one. Only a daily candle close above can invalidate the short scenario which would have the targets 1980 , 1920 and 1895 .
The yellow triangle is a possible reversal zone for a wave 2 bottom and bullish move towards new ATH with targets at 2300 and 3000 .
Looking at the big picture of Gold, it has been in a very long consolidation in the 1640 - 1980 range. So far every breakout attempt over the upper boundary has been sold within a few days. But with the break above 2000 related to the middle east conflict Gold was able to stabilize above 1980. Most likely the 1980 will be retested to built liquidity for a bullish move first.
I suggest to go short to anticipate in wave C of wave 2. The reversal zone for this move is the current resistance 2060 - 2067.
I will keep you updated if I see conformation or trading opportunities. If you have any questions feel free to contact me.
MCL: Where is oil price heading amid geopolitical tensions?NYMEX: Micro Crude Oil ( NYMEX:MCL1! )
The price of a commodity is determined by its supply and demand. But in the case of crude oil, which is the lifeblood of the global economy, geopolitical risk carries a bigger impact.
Examples in present time: In February 2022, the Russia-Ukraine conflict sent crude oil up 72% to $124 a barrel. In October 2023, the Israel-Hamas conflict saw WTI price 40% higher to $94.
The rapid price rise following conflict eruption is called an “Event Shock”. Investors price crude oil in the worst-case scenario. Would it be the start of WW3, for the former event, and would the Gulf region oil production get cut off, for the latter event?
Typically, the fear for the worst is overblown. As the conflict progresses, oil prices tend to fall back down if that did not materialize. After the Western nations imposed embargo on Russian oil in 2022, Russia found new customers in India and China. We know that crude oil is a fungible commodity. The more the two countries buy from Russia, the less they will buy from the rest of the world. This helps keep the global oil supply in balance. Without a shortage, oil prices fell.
The Israel-Hamas conflict started in October 2023 so far has not dragged major oil producing nations into war. Even the Houthis Militia has been attacking commercial vessels in the Red Sea, they would not strike oil tankers from the Arab nations. Therefore, neither oil production nor its transportation was interrupted, and oil prices fell as a result.
The previous Sunday, three US soldiers were killed, and more than 40 personnel injured in a drone attack at a US base in Jordan. The US vowed to retaliate. Last Friday, it has launched strikes on 85 targets in Syria and Iraq, in response to the drone attack. On Saturday, the US conducted air strikes to 30 targets in Yemen, the homebase of Houthis.
With the US now engaging in military actions to militia backed by Iran, the Mideast conflict could be escalated to a whole new level.
In addition to geopolitical risk, there are other tailwinds to support stronger oil prices: The Organization of Petroleum Exporting Countries (OPEC) cut oil production last month as the group and its allies began a new effort to prevent a global surplus and shore up prices.
Output from the OPEC fell by 490,000 barrels a day (bpd) last month to 26.7 million bpd, according to a Bloomberg survey. About half the reduction came from Iraq and Kuwait. Led by Saudi Arabia, OPEC and its allies pledged to make additional production curbs this quarter, on top of reductions made last year.
In the meantime, oil traders will see headwind ahead: Data on Friday showed that U.S. employers added far more jobs in January than expected, reducing the chances of near-term Federal Reserve rate cuts. High interest rates tend to dampen economic growth and reduce oil demand as well.
Oil prices fell by about 2% on Friday and posted weekly losses after U.S. jobs data release. WTI crude futures settled at $72.28 a barrel, falling $1.54, or 2%. The global crude oil benchmark lost roughly 7% on the week.
Trading with NYMEX Micro WTI Crude Oil Futures
At about $72 a barrel, crude oil price is now below the price level before the Israel-Hamas conflict. It is also lower than oil prices before the Russia-Ukraine conflict. Is there a good reason why the price of the most strategically important commodity goes lower amid intensifying geopolitical tensions?
You may point out that oil demand may be dampened by the weak Chinese growth, but I would argue that the robust US economy would offset that.
Institution traders share my view. Money managers raised their combined futures and options oil position in NYMEX WTI and ICE Brent by 18,082 contracts to 117,226 in the week of January 30th, according to the Commitment of Trader (COT) report published by the U.S. Commodity Futures Trading Commission (CFTC).
To express a view of rising crude oil price, we could consider a long position in NYMEX Micro WTI Crude Oil Futures ( CSE:MCL ). The March contract (MCLH4) was settled at $72.42 last Friday. It declined further to $71.75 at the time of this writing. Each contract has a notional value of 100 barrels, or $7,175 at the current market price. CME Group requires an initial margin of $660 per contract.
Hypothetically, if the US strikes induce Iran retaliation and escalate the Mideast conflict, WTI futures could possibly go up above $90 a barrel. In this case, the $18 price increase (=90-72) would translate into $1,800 for a long futures position in NYMEX Micro WTI Crude Oil Futures (=18x100).
In my view, while the Fed may not cut interest rates immediately, it is still expected to lower rates at least 1 or 2 times, maybe at later meetings in 2024. Lower interest rates are also positive for oil prices.
However, if crude oil price continues to go down instead, each dollar of decline would result in a loss of $100 per contract.
Here are some extended readings on my previous trade ideas on crude oil:
October 9, 2023: Would the Middle East conflict push gold and oil prices higher?
October 16, 2023: MCO: Options Strategy to Capture Crude Oil Volatility
Happy Trading.
Disclaimers
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
AUD/CAD Analysis: Current Outlook plus fundamental Here's a simplified analysis for AUD/CAD:
Long-term view from the weekly chart indicates a bearish trend.
Mid-term perspective on the daily chart shows a broken bullish channel, replaced by a bearish one.
Considering fundamental factors:
Escalating tensions in the Middle East may increase the chance of the Beijing-Taipei conflict, potentially impacting AUD negatively.
Long-term, increased oil prices due to these middle-east tensions may favor CAD.
Given these factors, AUD/CAD is more likely to maintain a bearish trend over the long term.
Stay informed for further developments.
Best regards,
Gold plunges as investors await fresh cues about Fed rate cutsGold price has been hit hard amid uncertainty over US Retail Sales and Industrial Production data.
A strong US Retail Sales data would provide more room for the Fed to maintain higher interest rates.
•Further escalation in Middle East tensions could bring some revival in the gold price.
Gold price (XAU/USD) witnesses a sell-off after failing to reclaim the weekly high above $2,060. The precious metal drops as investors reconsider the timeframe in which the Federal Reserve (Fed) may reduce interest rates. This comes after the release of the sticky Consumer Price Index (CPI) report for December, as well as hawkish comments from European Central Bank (ECB) officials recalibrating broader market expectations.
While markets continue to lean towards a rate cut decision in March, policymakers are in no hurry to endorse a dovish stance on interest rates. The consumer price inflation in the United States economy is almost double the required rate of 2%, labor demand is steady and the chances of a recession are low despite interest rates remaining in the range of 5.25-5.50%. This would allow Fed policymakers to maintain a restrictive monetary policy stance for the time being.
Going forward, monthly US Retail Sales, the Industrial Production data and the Fed's Beige Book are expected to provide fresh cues about the interest rate outlook.
Daily Digest Market Movers: Gold price falls sharply as US Dollar, yields recover
Gold price corrects to near the crucial support of $2,040 as the US Dollar Index (DXY) has recovered sharply ahead of crucial United States economic data for December.
A strong run-up in the precious metal that was propelled by firm bets in favor of early rate cuts by the Federal Reserve and deepening Middle East tensions, has stalled for now.
• As per the CME Fedwatch tool, chances in favor of an interest rate cut in March have eased nominally to 66% against 70% recorded earlier.
A gradual decline has come as investors are reconsidering strong optimism for Fed starting the rate-cut cycle from March after getting mixed cues from stubbornly higher headline consumer price inflation and softer factory gate price data.
Investors would get more cues about when the Fed could plan rate cuts after the release of the monthly US Retail Sales and Industrial Producer data, which are due to be released on Wednesday.
• Retail Sales are expected to have grown at a higher pace of 0.4% against 0.3% increase in November. Consumer spending excluding automobiles is estimated to have grown at a steady pace of 0.2%.
• The Industrial Production data is seen stagnant against 0.2% growth in November on a monthly basis.
Upbeat economic data would comfort Fed policymakers for maintaining a restrictive monetary policy stance while a soft report will firm the case of rate cuts in March.
• Before that, commentary from Fed Governor Christopher Waller will be keenly watched by market participants. Investors are eager to know how the Fed is considering the timeframe for the rate-cut cycle after the release of sticky consumer price inflation data.
• The appeal for the gold price has not been impacted on a broader basis as crises in the Middle East region have deepened after the airstrikes from the US and the United Kingdom.
Iran-backed Houthi rebels have threatened to retaliate for attacking groups in Yemen, which will keep risk sentiment on its toes.
• The US Dollar Index has broken to a new high slightly above 103.00 as investors hope that other central banks will also start reducing interest rates earlier than previously projected. Meanwhile, the 10-year US Treasury yield has rebounded swiftly above 4.0%.
Technical Analysis: Gold price corrects to near 20-day EMA
Gold price has faced a sharp sell-off after failing to recapture the weekly high of $2,062. The precious metal has dropped to near $2,040 and is expected to remain on tenterhooks before getting fresh cues about the timing of rate cuts from the Fed. The yellow metal has surrendered entire gains generated on Monday and has corrected to near the 20-day Exponential Moving Average (EMA), which trades around $2,039.
More downside could appear in the gold price if it fails to defend the January 3 low of $2,030, which will expose it towards the psychological support of $2,000.
QATAR stock market QE index. Bullish rising wedge?Following on my previous bullish outlooks on the United Arab Emirates and Saudi index's
I figured why not examine what's going on in other parts of the region.
And lo behold Qatar also appears to be a major bullish stance.
You can see the positive market structure
and also a potential rising wedge in formation.
Let's keep an eye on this index over the coming years.
WAR what is good for ? Absolutely profit say it again. #SAUDI stock market chart.
On the Day that the UK government has authorised military strikes against Yemen.
I take a quick glance at the Saudi stock and see a #HVF in progress.
Saudia Arabia as version of the #UAE, as it reinvents itself
is the investment thesis,
if your morals allow.
We can get upset about geopolitics
But the war machines are powerful and keep grinding...
at least put you and your family in a better position financially is the most practical path for us to take on a personal level.
@TheCryptoSniper
#HVF
Emaar: Buy Dubai Real Estate in Liquid FormEmaar
From Covid Low of mar 2020, it returned 4x in 3.5 years, more than the best real estate deal one could get.
And was liquid all the way.....okay liquid 5 days a week !!
At AED 6.3, its available due to the war like situation in Gaza. Load up at the current levels , the best high beta and liquid way to get exposure to Dubai Real Estate.
US 10 YEAR YIELDS (UPDATE)🚀Despite hitting our target, the US10Y has kept pushing much higher due to economic uncertainty. Biden has requested for an extra $100 billion in Congress to fund the Russia & Ukraine war, to give money to Taiwan & more money to Israel, to carry on their genocide against Palestine.
If this $100 billion is approved, then we can expect Bond prices to carry on crashing, while the US10Y keeps reaching new highs.
How Would a Major War Impact the US Stock Market?CME: Micro S&P 500 ( CME_MINI:MES1! ), CBOT: Micro Dow Jones ( CBOT_MINI:MYM1! )
In the last two stories, I discussed how the prices of crude oil, a strategic energy commodity, and gold, a safe-haven asset, could soar at wartime.
Extended reading: “Would the Middle East Conflict Push Gold and Oil Prices Higher?”
Extended reading: “MCO: Options Strategy to Capture Crude Oil Volatility”
Today, I turn my focus on the U.S. stock market. The following analysis attempts to address this hypothetical question: How would US stocks be impacted by a major war?
While the media constantly blasts breaking news from the Middle East, the US stock market behaves like business as usual.
• On Friday October 6th, Dow Jones settled at 33,408. On the Monday after the conflict started, the Dow rose 197 points, or +0.6%, to 33,605.
• 1-week change: Dow closed at 33,670 on October 13th, up 0.8%.
• 2-week change: Dow closed at 33,127 on October 20th, down -0.8%.
• The S&P 500 had a similar price trend. It settled on 4,308 right before the conflict. Price changes were: +0.6% (1-day), +1.5% (1-week), and -2.0% (2-week).
What drive the US stock market are still corporate earnings and the Fed:
• In the first half of October, strong Q3 earnings season drove stock indexes up;
• On October 12th, higher-than-expected US CPI data pushed market indexes down;
• October 18th, stock market plunged after the Fed Chair delivered a hawkish speech;
• October 19th, Tesla’s Q3 underperformance led the decline of the broad market. All three US market indexes ended with a weekly loss.
Time is too young to tell anything about the current conflict. How about the Russia-Ukraine conflict? US stocks were on a downtrend all last year. But I would argue that this was driven by the Fed rate hikes, which pushed interest rates up 525 basis points.
Neither the Mideast nor East Europe saw US direct military involvements. Sending billions of dollars in aids to allies may raise federal budget deficit, but it is not likely to have a material impact on earnings for many of the US companies.
To fully assess the impact of a major war, we need to find one where millions of US troops were sent to the front line. This analysis examines how the Dow index responded to the two World Wars, the Korean War, and the Vietnam War.
World War I (July 1914 to November 1918)
• Phase I: In 1913-14, the U.S. suffered a two-year recession. According to the National Bureau of Economic Research (NBER), U.S. GDP dropped by 25.9%. The Dow fell from 68 points in September 1912 to 52 points in July 1914, down 24%.
• Phase II: The Great World helped end the recession. In the first two years, the U.S. remained neutral. American companies supplied vast quantities of arms and logistic materials to the warring countries in Europe. The Dow gained 106 points, up+104%.
• Phase III: The U.S. declares war on Germany on April 6, 1917. The U.S. military grew from 128,000 to 4 million soldiers. Initially, entering the war produced a shock to the U.S. economy. The Dow fell to 72 points (-32%). However, wartime production helped companies expanded quickly. By October 1918, the Dow rebounded to 86, up 19%.
• Phase IV: After the war ended, U.S. companies actively helped Europe rebuild. The Dow rose 118 points by October 1919, up 37%.
Commentary: WW1 was mainly fought on European soil. Whether as wartime suppliers for Europe or as government contractors, U.S. companies saw expanded production and higher earnings. At the end of the war, the U.S. overtook Great Britain as the No. 1 World Power. The Dow index rose 127% throughout WW1.
World War 2 (September 1939 to August 1945)
• Phase I: In 1937-38, the U.S. experienced a major recession, with GDP falling by 18.2%, according to the NBER. The Dow went from 188 in February 1937 to 98 points in March 1938, down 48%. A year before the outbreak of WW2, U.S. economy was in a slow recovery. The Dow grew to 135 points in August 1939, up 38%.
• Phase II: Germany started WW2 by invading Poland in 1939. Like in WW1, the U.S. remained neutral for two years and acted as a wartime supplier. As the Axis power threatened the very existence of the Free World, both Wall Street and Main Street went into a panic. The Dow closed at 111 points in November 1941, down 26%.
• Phase III: Japan attacked Pearl Harbor on December 7, 1941. President Roosevelt declared war and joined the Allies. The U.S. military expanded from 330,000 to 16 million troops. Once again, U.S. manufacturers transformed into wartime production. Huge government orders helped them grow rapidly. By September 1945, the Dow rebounded to 180 points, a 62% gain.
• Phase IV: The Marshall Plan made the U.S. a major force in rebuilding Europe after the war. U.S. companies benefited from these massive construction efforts. The Dow continued to rise, reaching 212 points, up 18%, by May 1946.
Commentary: From a purely economic point of view, U.S. companies saw rapid growth in production scale, revenue, and profit during wartime. After the war, the U.S. consolidated its position as the No. 1 World Superpower. The Dow rose 57% throughout WW2.
Korean War and Vietnam War
• The Korean War lasted three years from its outbreak on June 25, 1950, to the signing of the armistice on July 27, 1953. The size of the U.S. military was as high as 6.8 million troops during this period. About 480,000 fought in Korea.
• The Dow went from 210 to 277 points during the war, up 32%.
• Vietnam War lasted 10 years from March 1965 to April 1975. The U.S. military stood at 8.7 million troops. About 2.7 million soldiers fought in Vietnam.
• The Dow was 900 in 1965 and ended at 815 ten years later, down 9%.
Commentary: In WW2, the U.S. sent 3 million troops to Europe and 1.8 million soldiers to the Pacific theater. For a comparison, the Korean War had about one-tenth of the fighting forces. It did not have a big impact on the U.S. economy and the stock market.
Troops size in Vietnam was five times bigger. However, in this decade-long war, the stock market was influenced by many other factors, from the Civil Right movement to the Space Race; and from Nixon's historic visit to China to his resignation from the presidency.
Hedging with Micro Dow and Micro S&P Index Futures
In conclusion, my analysis shows that wars did not have a negative impact on U.S. stock market. Contradicting our intuition, U.S. stock market indexes generally rose during a major war and continued to go up after the war. Why is this the case?
All the wars we examined here were fought outside of the U.S. soil. In fact, no war has been fought in continental U.S. since the Civil War, for nearly 160 years.
Even in the two World Wars, the U.S. did not pay the heavy toll of civilian casualty and property destruction most warring countries suffered. Furthermore, the U.S. government has been a “going concern” and the U.S. stock market operate at peace time and in wars. You can’t say the same for Germany, France, Italy, Russia, the Austria-Hungarian Empire, the Ottoman Empire, the Japan Empire, or China.
With two reginal military conflicts fighting simultaneously, the risk of a global conflict increases exponentially. For a rational investor, this is a good time to plan for global asset allocation.
Those investors holding assets in foreign countries could consider hedging with U.S. stock market index futures. Whenever the next major geopolitical crisis break outs, assets in foreign markets and in foreign currencies may decline in value faster than that of the U.S. stocks. In the cases we illustrated, U.S. stock index could rise during wartime.
CBOT Micro Dow Futures ( XETR:MYM ) is notional on $0.50 times the DJIX index. At Friday closing price of 33,222, each December contract MYMZ3 is value at $16,611. Each long or short futures contract requires an initial margin of $800.
CME Micro S&P Futures ( FWB:MES ) is notional on $5 times the S&P 500 index. At Friday closing price of 4,244.75, each December contract MESZ3 is value at $21,223.75. Holding one contract requires an initial margin of $1,120.
Investors could consider a “Buy and Hold” strategy for as long as they hold assets that are weaker and/or less safe than the US stocks. For futures hedging, this strategy entails buying the most liquid nearby contract, holding it until contract expiration month, and then rolling it over to the next liquid contract.
Both MYMZ3 and MESZ3 expire on December 15th, the third Friday. By one or two weeks before the expiration, investors could close out the open positions and buy the March 2024 contracts, which are MYMH4 and MESH4, respectively.
Happy Trading.
Disclaimers
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
Gold: Thoughts and AnalysisToday's focus: Gold
Pattern – Breakout/resistance test
Support – 1817.90 - 1918
Resistance – 1944 - 1981
Hi, and thanks for checking out today's update. Today, we are looking at the Gold on the daily chart.
So price has moved rather quickly today to the upside. Earlier, I was watching the consolidation and wondering if buyers might test it. Well, they not only tested it but broke out. We have run over this move and the next resistance levels in today's update.
The key here is influences, and we will keep seeing demand. If tensions continue, we could see 1980/81 retested based on the current buying speed. But also be wary of any changes in influences as it could lead to fast profit taking.
Oil has been another mover today, adding close to 1.5%. It's also a market we are keeping an eye on as we track towards the European session open.
Good trading.
MCO: Options Strategy to Capture Crude Oil VolatilityNYMEX: Options on Micro WTI Crude Oil ( NYSE:MCO ), Underlying Futures: NYMEX:MCL1!
Riding on last week’s story on TradingView, “Would the Middle East Conflict Push Gold and Oil Prices Higher?” let’s explore option strategy to hedge event risk.
Last week, we’ve revisited the event driven strategy and how it could be leveraged to hedge event risk:
• I observe that gold prices usually go up in the aftermath of a crisis, as evidenced by its 24% surge in six months after the start of the Covid pandemic.
• If a crisis results in economic recession, crude oil prices would go down. Proof: WTI dropped nearly 80% one month after Covid, as lockdowns destroyed oil demand.
• In the event of a war, oil prices shot up due to its strategic importance. Example: Crude was up 31% one month after the start of the Russia-Ukraine conflict.
• What’s in store to hedge event risk? We explored long futures strategies on COMEX Gold and NYMEX WTI.
For my original idea on event driven strategies, please read this:
Are these strategies working? We can review them in real time. Micro Gold goes first:
• On October 6th, the last trade day before event date (denoted as T0), Gold Futures (T0) = $1,845 per troy ounce for the leading December contract MGCZ3.
• Price changes by time: at (T+1): $1,864.3, +1.0%; at (T+7): $1,941.5, +5.2%
• Hypothetically, if we opened a long futures position at T0 price and hold it till now, our futures account will gain by $965 (= (1941.5-1845) * 10).
• If we take the $780 initial margin deposit as cost base, our theoretical return would be +23.7% (=965/780-1), excluding transactions fees.
For WTI crude oil futures:
• Futures (T0) = $83.18 per barrel for December contract (CLZ3).
• Price changes by time: at (T+1): $84.60, +1.7%; at (T+7): $86.35, +3.8%
• Hypothetically, a long futures position would gain by $3,170 (= (86.35-83.18) * 1000).
• The theoretical return would be +51.2% (=3170/6186-1), excluding commissions.
• We could replicate this strategy using Micro WTI futures ( CSE:MCL ), which is 1/10 of the standard NYSE:CL contract and requires 1/10 of initial margin.
Today, I would like to explore options strategy on crude oil, and hope to achieve better results in a cost-effective way.
As we know, neither Israel nor Palestine is a major oil producer. So far, global oil supply has not been interrupted by this military conflict. Rising oil price is due to the “price shock” arising from a geopolitical event.
However, if the conflict intensifies, it could drag other oil producing nations from the region into conflict. At wartime, there is a real risk of oil field sabotage or blockage of major shipping routines. Either one could result in an oil supply shortage.
If you can’t buy a bar of gold, you could choose alternative investment options like bonds or bitcoin. But if we don’t have oil, all other energy sources combined are not sufficient to fill the gap. We would not be able to refill the gas tank. Delivery trucks could not ship meat and vegetables to local grocery stores. There will be a real crisis.
Options Strategy with Micro WTI Crude Oil Options
In its first week, the conflict has already resulted in thousands of casualties. With the ground fighting in Gaza due to begin any time, the conflict could quickly get out of control in the coming days and weeks.
For a comparison: Last year, WTI went up 5.7% one week after the start of the Russia-Ukraine conflict. By the end of the first month, crude oil was up 31%.
This time, WTI went up 3.8% in Week 1. Where will oil price be at T+1M? With a “Risk On” scenario like last year, it could go up another 25%, reaching $105 or higher.
However, a long-only futures strategy runs the risk of oil price going down. In this rapidly evolving event, senior US officials are in the Middle East negotiating for a cease fire. If peace is achieved, it is good for the world. How do we hedge a long-futures position in a “risk-off” scenario?
We could consider a Call Strategy with the Options Contract ( NYSE:MCO ) on Micro WTI Crude Oil Futures ( CSE:MCL ).
In the following example, I would illustrate the theoretical payoffs between a long futures position on MCL and an out-of-the-money (OTM) Call with MCO.
Market prices and assumptions:
• On October 13th, settlement price for MCLZ3 was $86.35/barrel.
• For a simplified example, assume there are two possible outcomes in one month. Risk-On: WTI goes up 20% to $103.62. Risk-Off: WTI goes down 20% to $69.08.
Futures Trade:
• Buy MCLZ3 at T0 settlement. Upfront investment is the $640 initial margin.
• Risk-On: Position gains $1,727 (= (103.62-86.35) * 100). Return: +270% (=1727/640).
• Risk-Off: Position lost $1,727 (= (69.08-86.35) * 100). Return: -270% (=-1727/640).
• In actual trades, when the account balance drops below 22% of the initial margin to $140.8, the trader will be required to bring the balance back up to $640.
Options Trade:
• Buy a $95 call on MCLZ3 on T0 at $2.02 premium. Total premium is $202, as each contract is 100 barrels of crude oil.
• Risk-On: Call strike will be $8.62 in-the-money (ITM, =103.62-95). At today’s market, the 77.75-strike at futures price $86.35 is $8.60 ITM. It is quoted $9.71. Using this as an approximation, we assume our options value to go up from $2.02 to $9.71.
• Position would gain $769 (= (9.71-2.02) * 100). Return: +381% (=769/202).
• Risk-Off: Call strike will be $25.92 OTM (=95-69.08). Today, the 112.25-strike is 25.9 OTC at current market price. It is quoted $0.58. If we sell the options at the open market, we will realize a loss of $144 (= (0.58-2.02) * 100). Return: -71% (=-144/202).
Unlike the physically deliverable standardized WTI contracts, Micro WTI futures ( CSE:MCL ) and options ( NYSE:MCO ) are both financially settled. To exit the position, the trader will enter a trade at the opposite direction. In our examples, a Short December futures MCLZ3 will offset the Long position. For the options trade, selling the same call options will net out the existing position.
What are the advantages of an options strategy vs. a futures trade?
Firstly, the upfront investment could be much lower with an OTM call. In our example, it is $202, compared to $640 for futures margin.
Secondly, a trader could design more complex trading strategies using options. There are multiple calls and puts to serve as building blocks, compared to only one futures contract for each expiration.
Thirdly, options payoff is nonlinear. When you are on the right side of the market, the return grows exponentially larger as the call strike gets deeper in-the-money. In our illustration, the same price increase results in 380% gain for options, vs. 270% for futures.
Finally, buying a futures contract could incur unlimited losses. If the market goes against you, you could lose more than the initial margin as you may be required to put in more funds to meet margin call. On the other hand, the maximum loss from buying a call or put is capped to the upfront premium.
Happy Trading.
Disclaimers
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
WTI/BRENT CORRECTION AHEADBrent futures rose by $4.89 (5.7%) to reach $90.89 per barrel, while U.S. West Texas Intermediate (WTI) crude increased by $4.78 (5.8%) to $87.69 per barrel, marking their most significant daily gains since April. Brent also saw a weekly rise of 7.5%, its largest since February, and WTI climbed 5.9% for the week.
Despite the Middle East conflict, global oil and gas supplies remain relatively unaffected since Israel isn't a major producer. However, market observers are monitoring the situation for potential regional supply impacts.
Residents in Gaza evacuated their homes after Israel ordered over a million people to leave the northern half of the territory within 24 hours, with Hamas advising against leaving.
Iran's Oil Minister, Javad Owji, predicted oil prices reaching $100 per barrel due to the Middle East situation.
Risk Disclosure: Trading Foreign Exchange (Forex) and Contracts of Difference (CFD's) carries a high level of risk. By registering and signing up, any client affirms their understanding of their own personal accountability for all transactions performed within their account and recognizes the risks associated with trading on such markets and on such sites. Furthermore, one understands that the company carries zero influence over transactions, markets, and trading signals, therefore, cannot be held liable nor guarantee any profits or losses.
$BRN1! -Are you Ready for Winter's Storms ahead ?!- The most recent conflict on the Middle East between Israel and Palestine(Hamas)
has caused TVC:GOLD and Brent Crude Oil (futures) ICEEUR:BRN1! price to jump 4% .
This increase risk on Geo-Political spectrum is messing up with our Short in ICEEUR:BRN1! .
Short Call idea was shared on bingX copy-trade community where 2.000 people saw the Short trade opportunity.
Congratulations to those who took action.
(Calm before Winter's Storm Idea;
Russia & Saudi Arabia two of the largest World's Oil Producers steady keeping production cuts)
We have already partially taken profits off our trade before conflicts occurrence,
leaving the position opened by aiming at full TP profits at Golden Zone
(which may not be reached now due to the conflict)
*** NOTE
This is not Financial Advice !
Please do your own research with your own diligence and
consult your own Financial Advisor
before partaking on any trading activity
with your hard earned money based solely on this Idea.
Ideas being released are published for my own trading speculation and
journaling needed to be clear on different asset classes price action.