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Buying Put Options as Protection against Omicron Amid DivergenceOmicron continues to amaze with the speed and scale of its spread. The numbers are really terrifying. In Europe, the number of cases has increased by more than 50% in just a week (in America, the figure is about 30%). As a result, the number of new cases in France is already under 200K (almost three times higher than a couple of weeks ago). A similar figure (180K) in the UK. The United States has approached the 500K mark (a new absolute record) and it is likely that already at the start of 2022, after the successfully celebrated Christmas, the country will exceed the previously unthinkable number of one million new cases of the disease per day. In this light, as well as in anticipation of a tightening of the Fed's monetary policy, more and more traders are trying to at least partially insure themselves against a possible fall in the US stock market. That is, it has not yet come to open massive sales, but put options are flying like hot cakes. SentimenTrader estimates that in the week ended December 17, approximately 23% of new retail options were put contracts, up from 16% in early November. It should be noted that 2021 was a record year for the options market. On average, 39 million options contracts were traded daily this year, up 35% from 2020. At the same time, retail investors account for 25% of all trading activity. Which only confirms the idea expressed in yesterday's review. In general, summing up the results of 2021, let us once again note their ambiguity. That is, on the one hand, this is a super successful year for risky assets. The S&P 500 Index added almost 30%, which is a lot. But at the same time, 40% of the companies included in the index not only did not grow, but generally decreased in price by a two-digit amount, and a good half of these two hundred companies lost over 20%. We have already written about Katie Woods and her “successes” in 2021. That is, growth cannot be called uncontested. Such divergences are a sign of internal market weakness. So in 2022, despite the rally of Santa Claus, we prefer to enter not with long, but short positions in the US stock market.
NASDAQ:NDXShort
by Trade24Fx
3
Pandemic's Breaking Records, Lemmings, and Gas in EuropeGas prices in Europe continue to crash. If a week ago quotations exceeded $ 2,000 per thousand cubic meters, then after five consecutive days of decline, quotations dropped to the $ 1100 region. The reasons are an increase in the supply of liquefied gas to Europe from the United States, as well as the expectation of warmer weather. This, of course, is not the end of the energy crisis, but a reason to reduce the upward pressure on oil. In general, our recommendation to sell oil has not lost its relevance, but, on the contrary, has added. In general, this behavior of gas prices is largely synchronous with the general behavior of financial markets, which are very changeable in their moods and are ready to change their point of view rather quickly and strongly. So risky assets grew yesterday by inertia, but then they somehow deflated. And again, there was no reason to change the mood. Rather, on the contrary, according to Omicron, the news could be interpreted in favor of risky assets: the CDC reduced the isolation period for the omicron from 10 to 5 days, those who had recovered from the omicron receive immunity from the delta. However, all this does not negate the rapid growth of diseases: over 1.2 million people fall ill every day around the world, which is almost 2 times (!) Higher than just a couple of weeks ago. Well, there is no need to say that this is a new absolute record for the entire pandemic. The strain is becoming dominant throughout the world. In the US, already under 60% of new cases are omicron. It is hard to recommend buying risky assets after looking at the graph of the number of diseases around the world. Note that the pandemic has caused a natural boom in retail investors and traders. As a result, the markets were flooded with an army of incompetent participants, due to which the behavior of the prices of financial assets was greatly detached from the fundamentals, and this must be taken into account when making trading decisions. According to brokers TD Ameritrade and Schwab, in 2021 they opened six million new accounts for two. But this is just the tip of the iceberg - Robingood and others like him, cryptocurrency exchanges and brokers - tens of millions of retail investors have become a real new force. In the meantime, our favorite indicator of the behavior of extreme forms of risky assets - investments by Katie Woods - shows that the year actually turned out to be not so uniquely successful for the US stock market. All of Woods' key investments in 2021 are in the negative, and quite deep (over 10%): Block, Coinbase, Unity Software, Zoom Video.
NASDAQ:NDXShort
by Trade24Fx
2
Risky Assets Rise on Retail Sales, Lira StormsThe last week of the year started on the most positive note for risky assets. The US stock market has reached new all-time highs and the impression is that it does not want to wait for the start of next year. Once again, we note that this is not the specificity of a single US stock market, but part of the general rally in risky assets, because cryptocurrencies were also growing yesterday, adding about 21%, and oil with almost 4% growth. Markets have clearly gone into berserker mode, where all negative aspects are ignored. Both current news, such as the cancellation of thousands of flights in the United States alone due to the outbreak of the pandemic, and promising news, such as a change in the vector of US monetary policy, are ignored. The expectation of a milder course of the disease caused by the omicron, as well as the figures for retail sales in the United States during the holiday season, which, according to Mastercard, grew by 8.5% compared to last year, were already chosen as reasons for growth. And since 2/3 of the US GDP is generated by the consumer sector, the news is extremely good for the economy as a whole. Of course, in such conditions, going against the market is an extremely dangerous idea. But all this does not negate the fact that the dynamics are too one-sided for such a versatile fundamental background. It is still volatile in pairs with the Turkish lira. As soon as the Central Bank of Turkey stops intervening, the lira begins to pour in. According to some estimates, last week the central bank burned about $ 8 billion in reserves to support the national currency. In general, a sharp increase in confidence in the national currency, which Erdogan had hoped for, did not happen - people did not run to banks with lira in order to put them on deposits, or with dollars to exchange for lira. In this light, we remind you about the sale of the lyre after its most powerful and, as it turned out, exclusively steroid growth last week.
NASDAQ:NDXShort
by Trade24Fx
2
Week in a Glance: Santa Claus Rally, Energy Crisis and LiraThe past week has been extremely successful for risky assets. The US stock market, represented by the SP500 index, reached historic highs, bitcoin went above 50K, and oil added 5% +. The reasons for this, on the one hand, were the belief that the omicron leads to a much less serious form of the course of the disease. On the other hand, the overall positive attitude due to the holidays. The year 2021 as a whole can be called a year of unbridled fun among risky assets. So the end of the year in this light looks quite natural. Interesting things were happening in the energy assets market. A new wave of panic swept over Europe, driving gas prices above $ 2,000 per thousand cubic meters. But by the end of the week, the bubble deflated (within 3 days, gas prices in Europe fell by more than 40%). Oil in this light was in high demand and was growing almost all week. But in light of such a rapid fall in gas prices, there is a feeling that without further replenishment from the side of risky asset lovers it will not be easy for oil to grow. In general, the current prices are quite promising in terms of sales. The Turkish lira looks very interesting now. Interesting things happened to her last week. The markets sincerely believed that the measures proposed by the Turkish authorities to stabilize the situation will be successful, all economic problems are behind and in general a bright future is literally around the corner. As a result, the lira, which was trading at 18 per dollar on December 14, strengthened to 11 by the end of last week. In our opinion, this is a typical overreaction and a correction is inevitable. So selling a little lira at the start of the week is an extremely rewarding and promising occupation. A festive week is ahead of us. In theory, everyone has no time for financial markets. But there is an element of danger in this - a thin market and potential flash crashes, which are quite likely in the presence of a large number of price bubbles.
NASDAQ:NDXShort
by Trade24Fx
4
Santa Claus Rally Amid Lockdowns in China and Booze SalesThe US stock market this year clearly intends to demonstrate what the "Santa Claus Rally" calendar anomaly is. Rally Santa Rally is a price pattern in which stocks rally in the last seven trading sessions of the year plus the first two trading days of the New Year. Over the past 92 years, the S&P 500 has risen 77% of the time during the Santa Claus rally, according to Sundial Capital Research. Average growth over this nine-day trading period was 2.66%. So the last three days in a row of growth fit well with this pattern, but poorly correlate with common sense. Common sense refers to the fundamental background that currently surrounds the US stock market. In general, markets live in the omicron-took, omicron-dal paradigm. And now is just the phase when the omicron gives rise to growth. The reason for this hopes for its milder course, confirmation of which are in the form of preliminary studies (the latest study from South Africa showed that the probability of being hospitalized, picking up an omicron, is 80% less than in the case of the same Delta). And the answer to the question of what to do with the omicron is news, like the approval of a magic pill from Pfizer, by drinking which you can overcome the virus inside yourself. At the same time, the markets do not pay attention to 100K per day of sick in Britain or, even worse, news from China, which continues to remain faithful to its principle of zero tolerance to a pandemic and on this occasion sent 13 million residents of Xi'an to lockdown. Meanwhile, the worst is yet to come: a new peak of the pandemic is expected by the end of next month. While retail investors buy whatever is bad, American billionaires continue to sell stocks. By early December 2021, they had sold $ 42.9 billion in shares, more than double the $ 20.2 billion sold for all of 2020. Why? According to their financial advisors, it's simple: customers look at prices and believe the market is at the top.
TVC:DXYShort
by Trade24Fx
Lira Explodes, USD Dominates the Foreign Exchange MarketWe mainly viewed the change in the vector of monetary policy in the United States through the prism of the US stock market. But if someone loses, then someone should also win. And that someone is the US dollar. In general, 2021 turned out to be successful for the American currency: the dollar strengthened against all the currencies of the G-10 countries. At the same time, in our opinion, the growth potential has not yet been fully exhausted. In the context of interest rate differentials, its further growth against the New Zealand dollar or the same pound does not look as unambiguous as, for example, against the euro or the Japanese yen. The sale of the Turkish lira looks quite promising after its epic growth at the start of this week. Let us remind you that the economic insanity of Erdogan this year cost the lira very dearly: the currency has depreciated threefold. The sharp rise on Monday is associated with the announcement by the President of Turkey of unprecedented measures to support the national currency. For example, the country's government will reimburse the owners of bank deposits in lira if the Turkish currency falls in price by an amount that exceeds the interest on deposits. In addition, the tax rate on investments in bonds denominated in lira will be reduced from 10% to 0%. And, of course, inflation will decrease in a few months. All this, of course, is great, but how the bloodless Turkish economy will pay for these and other initiatives is not very clear. But it is clear that there is no trust in the lira and will not exist until Erdogan reads at least a couple of basic textbooks on economics. The energy crisis continues in the meantime. Gas prices in Europe have renewed new records, surpassing 2000 per thousand cubic meters. For substitute goods, including oil, this is good news, but last time the rise in gas prices in the 2000 region in Europe was of an exclusively temporary nature, and in just a few days prices then collapsed by more than 50%. So you shouldn't rush to buy oil - on the contrary, its growth is a reason for more expensive sales.
Long
by Trade24Fx
1
A Dirty Trick for Biden's Christmas Tree, Omicron DominatesThroughout 2021, Biden has been desperately pushing his economic agenda and its funding. We are talking about the infrastructure plan, which was cut in the process from 2 trillion to less than 1 trillion, as well as the so-called Build Back Better Act, within which it was assumed 1.75 trillion additional costs for various social and similar items. So yesterday Biden got a giant pig under his Christmas tree. Senator Joe Manchin (Democrat) effectively destroyed President Joe Biden's economic agenda by rejecting the Build Back Better Act, which means he has no hope of a Senate vote. In a sharply critical statement, the White House called Manchin's decision "a sudden and inexplicable reversal." It is clear that this is not the end, the act can be revised, something can be cut, something can be removed, but in any case it is a waste of time. To understand the extent of the damage, we will cite just one fact. As soon as Manchin's demarche became known, Goldman Sachs Group Inc. immediately cut their forecast for US economic growth for next year. Goldman Sachs now expects GDP to grow at an annualized rate of 2% in the first quarter, up from 3% earlier. The bank also cut its GDP forecasts for the second quarter to 3% (from 3.5% earlier) and for the third quarter to 2.75% (up from 3% earlier). In general, it is not surprising that the US stock market was under pressure yesterday, losing more than 1% on all underlying indices. With omicron raging (it has become the dominant strain in the US with a 73% share) and only a third dose of vaccine can stop it, conditions continue to be favorable for sales in the US stock market.
NASDAQ:NDXShort
by Trade24Fx
Week in a Glance: Fed Vector Change, Surprise of the Bank of EngThe past week can be safely called the week of the Central Banks. The meetings were held by the Fed, ECB, Bank of England, Bank of Japan, Bank of Turkey and a number of other central banks. Based on their results, a shift in the global vector of monetary policy is becoming more evident. But if earlier it was about the actions of relatively insignificant central banks such as Poland, now such titans as the Fed and the Bank of England have begun to tighten monetary policy. But first things first. We have already written more than once that inflation is a global phenomenon and has affected almost all countries of the world. But if earlier the majority of central banks tried to pretend that it was not there or that it was temporary, then last week showed that it is no longer possible to hide the obvious. As a result, the FOMC Fed on Wednesday radically accelerated the completion of the bond purchase program, which is now due to end in March. In addition, the Fed now expects 3 rate hikes next year. The Bank of England went even further and on Thursday raised the rate by 0.15%. For the stock markets, this is an extremely wake-up call. Especially when you consider that the Bank of England raised the rate against the background of an uncontrolled increase in the number of diseases due to the raging in the country of Omicron. The World Health Organization said on Saturday that the omicron variant of the coronavirus has been reported in 89 countries. The number of cases doubles in 1.5–3 days where the omicron appears. Well, the saddest thing is that the new strain is rapidly spreading in countries with a high level of population immunity. In general, the pre-holiday week starts in a very negative way for the financial markets. The moment is now very unfavorable for the growth of prices for risky assets, so we continue to recommend selling in the US stock market, the cryptocurrency market, as well as commodity markets.
NASDAQ:NDXShort
by Trade24Fx
Catch 22 and Bank of England, the lira and the Bank of TurkeyYesterday we wrote about the illogical growth of the US stock market on Wednesday following the FOMC meeting. What was happening was very similar to the situation in boxing, when one of the boxers misses a strong blow, but by inertia, the fight continues actively for a couple of seconds. And then the legs give way and the brain gives the command to retreat. So yesterday's drop in the Nasdaq index by 2.5% + is just from this opera. Waving fists on Wednesday night and at the start of Thursday, the US stock market crashed to the canvas. Returning to consistency, once again we note that one of its last havens in the financial markets is the Turkish lira. Yesterday, the Bank of Turkey lowered its rate again, and the lira renewed its historic lows. We have already written more than once that there is one transaction in the foreign exchange market that there is no reason to doubt - this is the sale of the Turkish lira. Yesterday, the interest rate in Turkey was lowered by another 1%, but, however, they noted that for now they plan to stop there. In this light, perhaps, one can begin to fix profits in the sale of the lira. It was a great deal, but falling forever and without interruption - even the lira may not live up to such high expectations. The main surprise of yesterday was the decision of the Bank of England. The country's central bank found itself in a situation that can be tentatively called "catch 22". In the country, inflation and the rate need to be raised to bring it under control. But the country has a pandemic and the economy is on the verge of another failure. So it turns out: if you raise the rate, you will raise the cost of financial resources and harm the economy, if you do not raise the rate, inflation will continue to grow, which again will harm the economy. And if the ECB decided that God bless it with inflation, we will save the economy, then the Bank of England acted differently and raised the rate by 0.15%. Pound on this occasion even perked up a little. And the main thing is a precedent. The first of the leading central banks in the world, whose nerves broke down, and he raised the rate. This is a powerful signal to the markets that the next in line are the Bank of Canada and the Fed. In general, we continue to sell risky assets. The environment for them is becoming more and more toxic.
NASDAQ:NDXShort
by Trade24Fx
New Vector of FRS Monetary Policy, USA Avoids DefaultThe main event of yesterday, and what is there of the day - the whole week, if not the whole next year - is the announcement of the results of the FOMC meeting. Despite the fact that risky assets have reacted with growth, this is a good mine for a bad game. The Fed will not only accelerate the pace of tapering, but will also be extremely aggressive with regard to rates. The FOMC member vote distribution chart shows that the baseline scenario for 2022 is 3 Fed rate hikes. Back in September, the bulk of the votes were in favor of unchanging the rate next year. That is, we are talking about a full-fledged change in the vector of monetary policy. Markets are still at the stage of denying this fact, but the transition to anger, bargaining and depression is inevitable, as is the fall in prices for risky assets. The whole question is only in time. It is worth noting that the Fed has been so careful in its statements over the past year that, God forbid, the bubble does not burst ahead of time, that the markets have come to believe in their invulnerability. We just have to sit and wait for the moment of Minsky. In general, the only unknown in this equation is the time - when the markets realize that the era of ultra cheap money is coming to an end and decide to incorporate it into prices. Against this background, less noticed was the news that the United States had managed to avoid a default. Congress voted to raise the US government debt limit by 2.5 trillion. Naturally, this is not a solution to the problem, but just another postponement. Nevertheless, December 15 has passed, and the US continues to pay the bills, unlike the Chinese developers. Shimao Group Holdings Ltd, the 13th largest developer in China, spooked the markets by announcing that its services division is going to buy another division of the company for $ 259 million - in essence, it is about pumping money from a stronger division to a weaker one, which is obvious is on the verge of default. In total, yesterday's rise in risky assets against the backdrop of the Fed's decision is an excellent opportunity for more expensive sales. Yes, here and now the markets decided that the FOMC results corresponded to the basic expectations of the markets, but the fact of the change in the vector of monetary policy will still have to be taken into account in the price sooner or later.
NASDAQ:NDXShort
by Trade24Fx
Oil Goes into Surplus, and Markets Prepare for the Fed's VerdictThe markets were not up for fun yesterday. Traditionally, there were enough reasons for worrying. Omicron made it to China, manufacturing inflation in the United States showed the highest growth on record, and Germany, according to forecasts, will slide into recession by the end of the first quarter of 2022. And all this news came out against the background of waiting for the Fed's decision following the next meeting of the FOMC. Considering that consumer inflation in the United States is at its maximum since 1982, and Powell decided to abandon the doctrine of inflation “temporality”, there is reason to expect an official change in the vector of monetary policy. The whole question is in what form it will take place. The softest option provides for concern in words, but no action, that is, the rate is unchanged, as well as the pace of tapering. The omicron can act as the basis (cover) for this option. A more likely scenario, under which the markets have been discounted since the beginning of this week, is an acceleration of tapering, but without additional verbal interventions in the form of the Fed's readiness to raise rates earlier than planned. Well, the most aggressive of the real options is the acceleration of tapering and the announcement of the first rate hike, say, in April-May, amid deep concern over inflation. In fact, only the first option gives the US stock market a chance to return to growth. Both of the remaining options are reasons for further declines or even sales. How it will actually be, we will see already tonight, and tomorrow we will discuss. In the oil market, buyers have a hard time. The United States is preparing to sell 18 million barrels from its strategic reserves (the sale is scheduled for December 17), the EIA is lowering its forecasts for the growth rate of oil demand in both 2021 and 2022, and S&P Global Platts Analytics predicts that in In 2022, the supply in the oil market will exceed demand. With such a background, I don't want to buy oil because of the word “absolutely”.
NASDAQ:NDXShort
by Trade24Fx
Major Near-term Nightmares for Financial MarketsTomorrow the Fed may crash the US stock market. Or he can continue to pull the cat by the tail. Moreover, here and now you can hide behind Omicron, who confidently walks the planet, having registered in 60 countries. We have already written that this strain is extremely contagious. The number of cases in Denmark, like in Britain, doubles every two days. And although the change in the vector of monetary policy and the omicron are the two most important threats to financial markets here and now, the list of potential nightmares is not limited to this. Recently, Bloomberg published their vision of the main threats of 2022 for financial markets. Naturally, the first places are occupied by the pandemic and inflation, as well as the possible tightening of monetary policies by the leading central banks. But do not forget about the fact, for example, that fiscal incentives have created trillions of holes in the budgets of countries, which can only be patched by raising taxes. We also remember about Chinese developers who, after the default of Evergrande, look extremely vulnerable. But the development sector is a quarter of China's economy, which is already starting to slow down development. Given China's zero tolerance for the pandemic, the omicron could potentially play a very cruel joke with the Celestial Empire and its economy. Do not write off Brexit, which, although it left the front pages of economic publications, continues to be a generator of problems for both Britain and the EU. And we have not yet written about the potential political instability in a number of countries. China versus Taiwan, Russia versus Ukraine, elections in Turkey in 2023, elections in France and Brazil. Much can change in the geopolitical situation. And most importantly, there is no reason to expect positive things. In general, there are enough clouds on the horizon, and even now the sky is far from cloudless.
NASDAQ:NDXShort
by Trade24Fx
Week in a Glance: Omicron, Evergande Default, US InflationThe last week can definitely be written as an asset for buyers of risky assets. US stock indices closed in positive territory in the immediate vicinity of all-time highs. At the same time, the reality was far from so unambiguous. And by and large, everything was determined by the angle of incidence of sight on events. Take a pandemic, for example. If desired (and it definitely was), the positive could be considered. At the start of the week, a study from South Africa was published (very preliminary, on a very small sample), according to which the disease caused by Omicron is milder than in the case of Delta. That is, we can witness the end of the pandemic, when everyone will quickly get sick without consequences and herd immunity will naturally form. Markets liked this idea so much that all other news related to the pandemic ceased to interest them. But there were also studies that showed that omicron breaks through the immune defense, which from it after 2 doses of Pfizer is 40 (!) Times lower than in the case of Delta. They also ignored the statistics from South Africa, which shows not only an explosive increase in the number of cases of the disease, but also in hospitalizations (which in itself hints that the consequences are still there and everything is not so smooth). The markets did not care for the fact that the number of diseases based on Omicron in Britain doubled every 2-3 days (!), as a result of which the country began to tighten social distancing measures. In general, if the markets decide to see the other side of the coin, things can change at any moment. But life is not limited to just one pandemic. There are two other top 3 risks besides a pandemic, according to New York Fed research. This refers to the development sector in China, as well as inflation and a change in the vector of monetary policy by central banks. So in this regard, everything is extremely bad. Evergrande was officially defaulted last week. And along with it, also the Kaisa Group did. The total volume of their issue of bonds exceeds $ 30 billion. Well, consumer inflation in the United States reached its maximum since 1982 (!). Taking into account that the FOMC will announce the results of its two-day meeting this week, everything looks quite alarming for buyers in the US stock market. In general, the week promises to be extremely busy: the results of their meetings will be announced by the Central Banks of the USA, Eurozone, England and Japan, data on retail sales in the USA, China and Great Britain, inflation statistics from the Eurozone, Great Britain and Canada and much more will be published. Let's see if the markets manage to grow further. And to all adherents of the idea that stock markets are only growing, let us remind you that out of more than 50 high-tech companies that went public in 2021, all (!) Are now in the minus relative to the peak values ​​of quotations. Moreover, this is not some 5-10% that can be attributed to local correction. These are full -30% + (Rivian), -60% + (Didi) and even -70% + (Robinhood).
NASDAQ:NDXShort
by Trade24Fx
Evergande Default, World and Pandemic, Italy and AmazonIn yesterday, even with a magnifying glass of heightened optimism, it was difficult to find positive. The epic with Evergande seems to be going according to the worst scenario for China. China Evergrande Group was officially recognized as a defaulter for the first time. Fitch Ratings downgraded Evergrande to "limited default" due to the company's inability to make two coupon payments by the end of the grace period on Monday. A similar story goes for another Chinese developer, Kaisa Group Holdings Ltd., which failed to redeem its $ 400 million bonds maturing on Tuesday. If we sum up the bond issues by both companies, we will get an amount of over $ 30 billion. But this may be just the beginning of a long journey, the movement along which will not end with anything good for the Chinese economy. And the world as a whole can suffer badly due to financial contamination. But the negative of yesterday was not limited to this. Italy's antitrust authority said Thursday it had fined Amazon € 1.13 billion for alleged abuse of market dominance. This is one of the most severe fines imposed on the American tech giant in Europe. Well, pandemic news became the cherry on top of this cake. The UK has decided to remind markets that with a new strain breaking through standard vaccination defenses, the only way to deal with it is with lockdowns and restrictions. So yesterday, Prime Minister Boris Johnson announced tougher government measures to prevent the accelerating spread of Covid-19 in the UK. While we are talking about the recommendation to work from home. In general, according to the Global Health Security Index (GHS), no country in the world is ready for the next pandemic, and most are insufficiently prepared for even small outbreaks of disease. In general, with such a fundamental background, the markets meet the end of the week. Today's data on consumer inflation in the US may well tip the scales to the side of the pessimists, and we will see another change in sentiment in the financial markets.
NASDAQ:NDXShort
by Trade24Fx
2
Bank of Canada's Delaying the Inevitable; Britain's on the VergeMarkets on Wednesday continued to follow the news around the omicron. It was very interesting to observe how the seemingly obvious negative they managed to transform into a reason for optimism. As shown by the results of the study, the Pfizer vaccine is 40 times (!) Less effective against Omicron than against Delta. It would seem that this is a failure, complete and categorical. But as it turned out, if 3 doses of Pfizer vaccine are hanging in the body, then it is protected as well as from Delta. And everyone seized on this fact, presenting it as a panacea. Of course, no one asks how many are vaccinated with 3 doses relative to the total mass of people. And if they asked, it would become clear that for 90% + this news is practically a statement of the fact of their vulnerability to a pandemic. That is, we are somewhere in the first half of 2020, when lockdowns were the only means of struggle. By the way, about lockdowns. Since the omicron is marching around the world with might and main, this is not an idle question. In the UK, for example, in light of the exponential growth in the number of cases with the omicron strain (an increase of 10 times per week), the issue of lockdown is already being seriously condemned. And the authorities can be understood, because many picked up the omicron not on a trip, but without leaving Britain, that is, it is already spreading inside the country. In this light, we'd not suggest you to buy a pound at all. If you buy anything, the Canadian dollar is better, ideally against the euro, but it is also possible against the US dollar. Even despite yesterday's decision by the Bank of Canada to leave the parameters of monetary policy unchanged. On the one hand, the markets were somewhat disappointed, as they secretly hoped for an earlier rate hike than April 2022. On the other hand, this decision is quite logical in the light of the omicron. Note that the markets are expecting 5 rate hikes by the Bank of Canada in 2022, the first of which will be in March or April. That is, the Central Bank of Canada will be more aggressive with respect to the FRS, which again plays into the hands of the Canadian dollar.
NASDAQ:NDXShort
by Trade24Fx
Markets Seeing Drawdown, US Avoiding Default, and IPOs HintingYesterday became a continuation of Monday. Apparently, the first day of the week was not enough for the markets to satisfy their passion for buying at a lower price. As a result, Nasdaq showed one of the best days of 2021, and prices were again close enough to historical highs, which in itself hints at not being cheap. In general, the motivation for buying outside the context of all these “buy the dip” and “fear of missing out” looks rather unconvincing. Yes, the markets want to sincerely believe that Omicron is the last round of a pandemic and that we will continue to return to normal life. But this belief is still very weakly supported by facts. From the facts so far, there is a 400% + increase in the number of diseases per week in the province of South Africa where the strain originated. From the facts, there is also an increase in the number of hospitalized by 6 (!) times in the same province (to the question of a milder course of the disease - of course, in the case of a mild runny nose and coughing, hospitalization is urgently needed). And these facts are not in a positive mood. In fact, analysts at Goldman Sachs, after they lowered their forecasts for economic growth rates from 4.5% to 3%, and say that the consequences are obvious: the economic recovery will slow down (at best), supply disruptions will intensify, and the return the usual reality, including the normal functioning of the labor market, is at least postponed. In general, perhaps the only objective factor in favor of the growth in demand for risky assets yesterday was the agreement between the Republicans and Democrats on the solution of the problem of the US government debt ceiling and the potential default of the States. But again, the probability of default was initially close to zero, so this is not a risk that has been pressing heavily on the markets. But from what was pressing, absolutely everything continues to remain relevant and press further. The Fed will remind the markets of inflation and monetary tightening in a week. And Chinese developers today can raise a wave of panic, because judging by the incoming information, both Evergrande and Kaisa cannot make payments on their obligations and are on the verge of default (or even in a state of default). In general, you should not take the extremely successful start of the week for risky assets at face value. Well, there is no proper fundamental background for such a significant growth in demand for risky assets. Another fact in favor of the fact that everything is not as great as it seems is the IPO market. 2021 is a record year in terms of IPO volumes. But everything is not nearly as cool as it seems. Of more than 50 high-tech companies that went public in 2021, all (!) are now in the minus relative to the peak values ​​of quotations. Moreover, this is not some 5-10% that can be attributed to local correction. These are full -30% + (Rivian), -60% + (Didi) and even -70% + (Robinhood).
NASDAQ:NDXShort
by Trade24Fx
1
Markets Fear of Missing out, Early Indicators and Katie WoodsThe markets continue to be dominated by FOMO (fear of missing out) - the fear of missing out or not being in time. Skip the correction or do not have time to buy at a cheaper price. As a result, we have a day of massive sales, or active purchases. Despite the fact that nothing happens in the fundamental background - everything is the same, everything is in the same place. Trying to predict something in such conditions is an almost impossible task. Therefore, we will simply continue to stick to the facts, ignoring the annoying buzz of analysts trying to adjust to a specific price fluctuation. Let's start by explaining why the markets rallied yesterday. The main reason is the hope that the omicron will be less lethal, that is, the course of the disease in his case will be milder than, for example, with the delta strain. Preliminary figures from South Africa have confirmed this. And everyone rushed to buy. At the same time, no one was interested in the fact that the sample was, in fact, unrepresentative: 166 cases. Yes, the States alone now generate more than 100K diseases per day. In this regard, 166 cases are not even a drop in the ocean. But the main thing is not this, but the fact that the sample itself is not indicative - the majority of those in it are children or young people who, with any of the previous strains, had a milder form of the disease. That is, as we can see, it is even more early to please. This means that it is more than wrong to perceive yesterday's movement (the growth in demand for risky assets and the exit of their safe-haven assets) at face value. More objective reasons for the joy of those who like risky assets were the decision of the Central Bank of Australia to leave the rate unchanged at an ultra-low level and at the same time not to start tapering yet. Or the data on China's trade balance, which showed higher growth in exports and imports than forecasted. Or the decision of the Central Bank of China to lower the bank reserve ratio in order to increase liquidity in the country's financial system. But just a few people paid attention to this. In general, we prefer to keep an eye on some atypical predictor indicators. For example, every time El Salvador decides to bribe Bitcoin, the cryptocurrency market loses 10% -20% of capitalization. El Salvador bought 150 Bitcoins last week - open the crypto chart after that. And for the US stock market, we use the dynamics of Katie Woods funds. If the Arches fell, we should expect a decline in the US stock market as a whole. In general, Katie Woods is an extremely vivid illustration of the fact that you can earn a lot in the financial market. But to continue earning at such a pace, or at least to keep the earned, is a task of a higher level of complexity and the overwhelming majority cannot cope with it. For a number of positions of Katie Woods funds, the return in 2021 (relative to the maximum marks) is minus 70-80%. That is, not only the entire profit of the last year has been eaten up, but also half of the base investment has been lost. So, in the long term, a specific statement of a specific trader is really not worth much.
NASDAQ:NDXShort
by Trade24Fx
2
Week in a Glance: Omicron, Powell, NFP and OPECAll last week, the markets have been buzzing with one thought - her name is omicron. Will it be more contagious? Will a more severe course of the disease bring? Will the vaccine and immune defense cope with it? The future of financial markets largely depends on the answers to these questions. Judging by the dynamics of prices for risky assets (sales): stock markets, cryptocurrency markets, commodity markets - the markets did not like the current version of the answers. Indeed, the omicron is rapidly scattering around the world (more than 40 countries have already recorded its presence on their territory). It is more contagious (in South Africa, the weekly growth rate of cases due to the new strain exceeded 400%). According to preliminary data, omicron has an increased ability to undergo immune defenses compared to previous versions of the virus. In general, so far everything is extremely bad. The only thing missing to a complete picture is the more severe form of the course and the higher mortality rate. But we will get this data only by the end of the coming week or even next. Fed chairman Jerome Powell added fuel to the fire, speaking in Congress, he made a number of quite sensational statements regarding the future of monetary policy in the United States. In particular, we are talking about his announcement of a revision of the rate of reduction of the quantitative easing program towards acceleration in December, as well as about his recognition of the fact that inflation in the United States is not a temporary phenomenon. That is, it is obvious that the rate hike will take place much earlier than the markets expected. Another unpleasant surprise for buyers on the US stock market was presented by the data on the US labor market: the figures for NPP came out 2 times worse than forecasted. The oil market was pretty depressing last week. The reasons are obvious - with the prospects for demand, everything is not very good in light of the new wave of the pandemic in Europe and the prospects for a worsening situation in the world due to the omicron. With the proposal, on the contrary, in the short term, everything looks optimistic: on the one hand, the countries are preparing to sell off strategic reserves, and on the other, OPEC + did not take any countermeasures last week and, on the contrary, increased pressure on oil quotes, deciding to increase production by 400K from January. b / d. In general, the fundamental background for oil is extremely toxic, even despite its strong decline over the last month.
NASDAQ:NDXShort
by Trade24Fx
1
BTC Market Review 04.12.2021The first cryptocurrency again spent most of Friday in a narrow range of 56150-57600. After the publication of mixed data on the US labor market, the cue ball made an attempt to grow, but immediately encountered a wave of sales, and the bears quickly returned the price to its previous levels. Then the fall continued and demand was absorbed near the key mark of 53500, and then 52700. In the morning, the cue ball fell below 50,000 and a panic spill began. The minimum is set at 42,000. Almost all altos have lost about a quarter of their value in one day. The next support is in the 40,000-40900 range. Now quotes are around 47600. Market capitalization: $ 2092 billion Dominance Index: 41.5% Fear / Greed Index: 24 American stock indices closed in the red on Friday. The Dow Jones fell 0.17%, the S&P 500 fell 0.84%, the NASDAQ Composite fell 1.92%. The price of WTI oil is now $ 66.16. Gold quotes have grown slightly and now give $ 1,783 per troy ounce. The dollar index is equal to 96.15. The number of new jobs in the US industrial sector in November increased by only 210k, instead of the expected 550k. This is a very significant discrepancy. The hourly wage indicator also fell short of the forecast. However, the unemployment rate turned out to be better than forecasted - 4.2% instead of 4.5%. Immediately after the release of this data, the dollar index fell sharply, and the cue ball jumped to 57600, but then everything turned in the opposite direction. Market participants believed that this data is not so bad as to influence the plans of the head of the Federal Reserve to reduce stimulus at a faster pace than previously thought. Despite the fact that prior to the appearance of the first substantiated forecasts on the degree of influence of the new strain of the coronavirus Omicron on the global economy in general and the pace of stimulation curtailment in the United States in particular, all technically significant support levels up to 40,900 have been broken. My tanks are full of BTC because I redeem such straits as El Salvador does, which today bought another 150 BTC at a rate of $ 48670. (Not a financial advice) Forecast for today: Judging by the development of the situation at the moment, the minimum has already been set and we will not go lower in the near future. Panic is a poorly predictable thing, since it is based not on logic, but on emotions. It is impossible to exclude further attempts to approach the key support zone of 40,000-40900 at the moment. The lows were quickly bought off as prices became very attractive. It is likely that the entire panic impulse will be bought out and the price will return above 50,000 in the near future. ----------------------------------------------------------------------------------------------------------------------------------------------- RISK WARNING Trading involves substantial risk and is not for every investor. Risk capital is money that can be lost without jeopardizing ones’ financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.
BITSTAMP:BTCUSDLong
by MoneyButton
Omicron in the US, Data from ADP and Insider SalesThe markets were scared again. In general, over the past 4 trading sessions, it was scary 3 days out of 4. That in itself hints at a change in the vector of market sentiments. Yesterday, the news was chosen as a pretext that a vaccinated US resident, after traveling to South Africa, brought home some fresh omicron with him. Thus, the United States joined the list of 23 countries where a new strain of the virus was discovered. We emphasize once again that sales are not only about the omicron - they are about the general readiness of the markets for a fall or at least a correction. And you can always find a reason. Speaking of reasons, Powell again spoke in Congress yesterday and once again noted that the Fed's attitude towards inflation has changed. The country's central bank has definitely moved from the stage of denial to the stage of acceptance. Direct speech of the head of the FRS on this matter sounds like this: "The Central Bank should be ready to respond to the possibility that inflation will not decrease in the second half of next year." A change in the vector of monetary policy, in our opinion, is a more obvious threat to the US stock market than the potential damage from the omicron, which may not happen. On the question of changing the vector. After yesterday's data from ADP, it is even strange to talk about problems in the US labor market. The indicator added over 500K again in November. And in general, in 2021 there was not a single month when the indicator did not grow. At the same time, the average monthly growth exceeds 500K. When did this happen? That is, the Fed will no longer be able to cover up with a double mandate. Returning to the expediency of selling on the US stock market. The general principle is simple: follow the money. But not behind those behind which stand the amateur traders from Robingood and other gatherings of amateurs, but behind those who represent the real picture. We already wrote that Buffett sits on a huge bag of cash and waits like a spider. Here's another fact: CEOs and corporate insiders (Musk, Bezus, Zuckerberg, Brin, Page and others) sold a record $ 69 billion in shares in 2021. According to InsiderScore / Verity, as of Monday, insider sales are up 30% from 2020 to $ 69 billion and 79% from the 10-year average. The reason on the surface is the total overvaluation of stocks.
NASDAQ:NDXShort
by Trade24Fx
Inflation Breaks Records In Europe, & Powell Admits The ObviousFrom the point of view of macroeconomic statistics, the main news of yesterday was inflation data from the Eurozone, which showed a record rise in prices in the region. 4.9% year on year, this has never happened in the entire history of the euro. This is almost 2.5 times more than the ECB's target, significantly higher than the previous value and experts' expectations. But recently Christine Lagarde was very clear in her position, so the data did not make the euro much easier. So, the global and stable nature of inflationary processes with each new publication of data becomes more and more obvious. As a result, yesterday even Powell, who had previously repeated like a mantra that inflation was a temporary phenomenon, announced at a Senate hearing that it was high time to abandon the term “transitory”, since this is not a completely correct description of inflation. In addition, Powell said that perhaps in December the pace of reduction of the FRS quantitative easing program could be accelerated. This means that the rate hike may start earlier. Equity markets, which had counted on less aggressive rhetoric in the light of the omicron, were under strong downward pressure. But this is nothing compared to the pressure the Turkish lira is under. Erdogan continues to systematically and systematically put pressure on the national currency. Turkish President Erdogan, live on the state broadcaster TRT on Tuesday night, November 30, pledged to provide "noticeably" lower interest rates ahead of the general election, which is currently slated for 2023. In general, there is no hope. Downward pressure was also observed on the oil market. There were enough reasons: omicron and fears about demand amid statements by the head of Moderna that vaccines may be less effective against the new strain; Biden's confirmation of the advisability of listing the strategic reserve; rather optimistic start of negotiations with Iran. As a result, November for the oil market turned out to be the worst in terms of the scale of the fall since March 2020, when the asset lost about 55%.
NASDAQ:NDXShort
by Trade24Fx
Markets Rejoice Early, and Experts Talk about OmicronYesterday the markets realized that on Friday they somehow overdid it and counter movements were observed on most of the assets. However, in most cases it was not possible to return to the original ones. The reason, on the one hand, is the hope that everything is not so bad with this Omicron and can still carry. On the other hand, the risks are still great to walk for everything. In this light, there is nothing strange in the fact that there was only talk on the market about a new strain. The WHO has warned that the risks associated with the omicron are very high and the consequences are serious. Many countries have imposed travel restrictions from several African countries. And Japan, out of harm's way, decided to ban everyone in general, prohibiting entry to foreign citizens. Faucci told Biden that it would take about two weeks to assess the potential of the new strain. So stock up on popcorn. However, vaccine manufacturers Moderna and Pfizer have assured that it will take them about a hundred days to develop a new vaccine, if needed. Goldman hastened to sketch out scenarios for the development of events from the most terrible, when the omicron turns out to be a delta squared and the world economy again goes into lockdown to the most optimistic, in which the omicron will cause an easier course of the disease, which will even play into the hands of the healthcare system. In any case, there is not enough data yet. The easiest way to gauge the magnitude of the problem is to observe South Africa where the virus came from. If the quality characteristics there change for the worse (more severe cases per 1000, more deaths, etc.), then you need to prepare for a bad scenario. In the face of such uncertainty, OPEC + decided to postpone the meeting of the technical committee. Let's remind, monthly OPEC + is going to decide what to do next with its coordinated actions on the oil market. It is likely that against the backdrop of pandemic panic and US interventions, OPEC + will not increase production, and maybe even cut it. In general, the second half of the week will be very interesting in this regard on the oil market. Today, the main event of the day is inflation data from the Eurozone. It is worth preparing for another record, as yesterday's data from Germany showed new local highs and an increase in overall pressure.
TVC:UKOIL
by Trade24Fx
1
Week in a Glance: Omicron & Panic, Interventions in Oil & FedThe main event of the week, of course, was the wave of panic that covered the markets on Friday. That is, everyone became nervous on Thursday, when the announcement of the WHO meeting appeared due to a new strain of the virus, which was even given its own name Omicron. Well, on Friday, after the new strain was recognized as even more infectious and potentially breaking through the immune defense, a full-fledged panic arose. The VIX fear index soared by 50% +, stock indices lost 2-3% each, oil collapsed altogether, losing almost 12% in a day. It should be noted that this was a classic rally from risky assets (stock markets, cryptocurrencies, commodity markets) to risk-free ones (the Japanese yen and Swiss franc were strengthening, treasuries yields were decreasing). It is still difficult to say whether this will be the beginning of the bursting of bubbles. Panic can be stopped relatively easily, for example by declaring that current vaccines are coping with a new strain. Despite last week's Thanksgiving and all the overshadowing news about the new strain, there was still some pretty big news. For example, the minutes of the last FOMC meeting showed that the US Central Bank is actually ready to act and in the event of further inflation growth will react with both a more aggressive reduction of the quantitative easing program and an increase in rates. Powell's reappointment as head of the Federal Reserve also added fuel to this fire. The oil market was also hot, not only because of the fall on Friday, but also in general news. The drop on Friday was a demand concern overlaid with a supply concern. The fact is that Biden announced the listing of the US strategic reserve. Within the framework of which the States will release about 50 million barrels of oil on the market. At the same time, the United States called on other countries (China, India, Japan, South Korea) to follow their example. All in all, the perfect storm for oil. This week, all the attention of the markets will be focused on the new strain. Headers will almost certainly be like Omicron found in the US, UK, etc. Part of the attention on Friday will try to divert the data on the US labor market. Last week jobless claims showed the lowest value in the last 50 years, which shocked the markets and it will be extremely interesting to look at the NFP numbers in this regard. In general, it will definitely not be boring. So, let's buckle up.
TVC:UKOILShort
by Trade24Fx
1