Comparing Different Asset ClassesThe above chart illustrates the performance of different asset classes in % change from Mar'20 low .
The list of included assets is as follows:
Copper
Gold
ES
Brent
DXY
For the futures markets, the Jun'21 contracts are used; for DXY, the ICEUS index is used.
As seen in the chart, the best performing commodity is copper, the rise in copper prices is led by firm demand, especially from China. The oil market comes in second here, with an increase of almost 60%, oil price is now entering overbought territory, though there is still some room for further upside. The S&P500 comes in third here with an increase of almost 55% from the Mar'20 low. Many traders are still looking to get more upside exposure here; nonetheless, the risk of sudden price plunge is elevated at these levels. With regard to gold — the safe-haven asset which usually outperforms all other asset classes during financial turmoils — its performance hasn't been anything close to spectacular. The reason for lack of performance by gold is BTC and silver, both of which showed outstanding resilience to overall market conditions. Our loser of the year is DXY, which has lost almost 10% of its value since the Mar'20 low.
Talking of BTC, I did not include BTCUSD in the chart as the chart gets destroyed by it, I am attaching it here separately for ease of reference and to show how BTC is turning the financial world upside down.
Performancechart
A siren call if ever I heard one. This market may end up lower.The most important thing I am noticing that I do not hear anyone talking about is that Utilities have been cycled into discretely over the past month .
1-Month Performance
Utilities +5.61%
Consumer Cyclical +2.18%
Financial -1.35%
Energy -6.9%
1-Week Performance
Utilities -2.28%
Consumer Cyclical -2.71%
Heathcare -3.1%
Basic Materials -6.24%
It was wise to go risk off in preparation of the election. If there is a contested election the market could sell off in the uncertainty.
The market was slowly rising higher on stimulus hopes, and with stimulus not having a chance of being negotiated until the results of the election - a contested election could drag chance of fiscal policy further out with the market selling off till it finds a resolution.
Just as stimulus was a catalysts for a melt up no fiscal stimulus is a catalysts for a melt down.
Keep in mind this selling volume is closing at lows of the day now, with higher than usual volume. This has all the typical signs of a bear market forming- why would volume be rising if everyone was just feeling peachy about how great there investments are doing? People adjust portfolios usually when they NEED to, not when they want to and that drums up the volume even louder.
The final point I want to make is the spike in volatility. When the VIX springs out like this you can not deny that people are willing to pay high premiums because they want bearish leverage in the options market.
You do not see the VIX spring up to levels like this because #bullgang went gangbusters buying debit call spreads.
My strategy is to open a Put Vertical on /ESZ0 Futures - expiring Nov 6th (9d)
Buy to Open 3240 Put
Sell to Open 3185 Put
Capital Requirement: $950
Max Loss: $950
Max Gain: $1,800
Probability of Profit 42%
Theta is low because it is in a spread
BRLARS @ +49,07 % one of best performer (2016) of 1842 pairs !Take care
& analyzed it again
- it`s always your decision ...
(for a bigger picture zoom the chart)
This is only a trading capability - no recommendation !!!
Next week i`ll confirm or change my opinion about this SetUp :)
Buying/Selling or even only watching is always your own responsibility ...
1482 Cross-Rates (2016 Statistics) @ drive.google.com
39 Currencies (2016 Statistics) @ drive.google.com
Best regards
Aaron
EURBGN @ 0,00 % lowest performer (2016) of 1842 pairs !Take care
& analyzed it again
- it`s always your decision ...
(for a bigger picture zoom the chart)
This is only a trading capability - no recommendation !!!
Next week i`ll confirm or change my opinion about this SetUp :)
Buying/Selling or even only watching is always your own responsibility ...
1482 Cross-Rates (2016 Statistics) @ drive.google.com
39 Currencies (2016 Statistics) @ drive.google.com
Best regards
Aaron
Dollar rally: A tutorial on relative strength analysisHi traders. I'd like to share a few tips, that many traders ignore (I'd dare to say most).
If we compare the different dollar pair's performance over different time periods, we can glean important information, as to what cross pairs to trade, and reap some nice uncorrelated to oil, DXY and stocks returns. This is one of the advantages of including Forex in your trading portfolio and strategies.
In this chart, we take a look at a 5 week line chart of all dollar pairs. We can see that some started the week up, and went down, and only one closed up for the week (GBP). Out of all the pairs that fell, the ones that fell the most are the most interesting ones to short. We can look to short them against the dollar, to ride the main fundamental trend, kicked off by the Fed today - or we can look to trade cross pairs, taking advantage of the Pound's fundamental edge over the rest, as evidenced by the relative strength chart.
The idea is simple, go to the GBP cross pair charts, and find the most optimal technical setups to build your long GBP portfolio.
I'll leave that part to you, feel free to post your setups in the comments section, and I hope you find this technique useful.
There's more to this process, but I'll leave the extra bits of information to my trading students. This is already a great start to improve your Forex analysis and trading results, and stop wasting time looking at endless amounts of charts every day.
Cheers,
Ivan Labrie.
Ps: Check out this link, you can see Forex daily/weekly/monthly performance ranking of all currencies.
www.finviz.com