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Tesla vs Pharma: Selling Safety to Take on RiskRisk on or risk off? Those kind of sentiment changes are one of the most important things for traders in the stock market. Today gave an example of how quickly the herd can sometimes pivot. Tesla, a classic “risk on” name recently struggled near 52-week lows, while “safe-haven” Eli Lilly pushed to new record highs. But Thursday’s rally on softer inflation data seems to have changed all of that and drawn investors back to riskier growth stocks. This process of selling safety and moving back to risk seems especially visible on the intraday chart below, which compares price action minute by minute. Notice how LLY slid early (despite a lack of news) as TSLA muscled higher. Next came an inversely correlated rebound in favor of LLY, followed by more downside in the drug stock and more upside in the electric-car maker. Most traders know this process of risk on and risk off. But seldom does it appear so clearly. It’s a good lesson on the importance of sentiment in the market. TradeStation has, for decades, advanced the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more. Important Information TradeStation Securities, Inc., TradeStation Crypto, Inc., and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., all operating, and providing products and services, under the TradeStation brand and trademark. You Can Trade, Inc. is also a wholly owned subsidiary of TradeStation Group, Inc., operating under its own brand and trademarks. TradeStation Crypto, Inc. offers to self-directed investors and traders cryptocurrency brokerage services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. When applying for, or purchasing, accounts, subscriptions, products, and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means. This content is for informational and educational purposes only. This is not a recommendation regarding any investment or investment strategy. Any opinions expressed herein are those of the author and do not represent the views or opinions of TradeStation or any of its affiliates. Investing involves risks. Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options, futures, or digital assets); therefore, you should not invest or risk money that you cannot afford to lose. Before trading any asset class, first read the relevant risk disclosure statements on the Important Documents page, found here: www.tradestation.com .
NASDAQ:TSLAEducation
by TradeStation
The Rise of the Dollar Ends with a CrisisHistorical rallies regarding the US dollar show an unpreceded rise for high-risk assets, including stocks, which in the past had led to some sort of financial/economic crisis. For sure, always is very difficult to make an accurate forecast in price and in time, but we must not forget the explosion of the tech bubble in the 2000s, the ‘’Great Recession’’ in 2008, as well as the sovereign debt in 2012 since the one factor that has a high correlation to those declines, was the strengthening of U.S Dollar at least by 19% each time. Just to remind you that the benchmark S&P500 has already fallen by 23% this year. An estimation from Morgan Stanley is that the profit margin of US companies will be dropped 0.5% for every 1% of the rising Dollar. And if we consider that during the fourth quarter due to the rise of the Dollar earnings will fall by about 10%, we can imagine the disaster that will follow in stocks, excluding other issues of energy costs. Moreover, the occurrence of major central banks’ policy tightening now in an aggressive manner is amazing. Therefore, this new bubble has to break out suddenly. The possibilities are raising for more rate hikes, according to the recent stubbornly high inflation, which in turn will strengthen the Dollar even more. And this is good for the US because strengthening the dollar means cheaper imports and a record purchasing power for Americans. But for non-American citizens is bad and especially for the other Central Banks that have deposits in US dollars. It will be more expensive to repay their loans – companies and emerging market governments – since, from the debt data perspective, $83 billion dollars are going to be matured by the next year covering 32 countries. According to the World Bank, there are warnings of heading a global recession and many developing economies will face huge damages respecting the cutting in spending on education and health care to cover their debt payments. What’s even more concerning for now is that volatility and VIX is still relatively low despite lower stocks. So is extreme fear yet to come? Check our VIX chart in one of our past ideas.
ICEUS:DX1!
by ew-forecast
4
DXY D1 - Bullish Break ExpectedDXY D1 With the above being said... 'key global topics' and other comments, we have to understand the market correlation and timeframes... We can take yesterdays D1 close with a pinch of salt, due to inconsistent volume, but lets see where we close after today (hoping support holds). US based FX and commodities look like they want to be correcting somewhat. Which might see DXY dip below support. US stock space is slower paced and a little delayed. So correlation isn't going to be 100% inverted.
TVC:DXYLong
by Trade_Simple_FX
Bear Ribbon and Pennant!(Updated Chart)I apologize for my last chart as I did it from a cell phone. Here we can see a clear sign of a Bear Ribbon/Pennant forming to indicate a continued trend. Usually pointing to halfway through a drop. With the FED finally lowering its balance sheet, China's Economy is now mainstream news, Global Bond Yield surging, S&Ps report on the economy, and it's still getting worse. We are in a recession! Risk Off. Recommend a study on Commodities. (Sorry about the Scaling on the chart.)
BITSTAMP:BTCUSDShort
by NotoriousJimbo
Bitcoin Descending Channel$BTC has followed the broader bear market rallies without departure from the continued descending channel with the weekly 20 EMA closing in on the 200 EMA and the 50 tightening against the 100 EMA. Since late October 2021 and the ATH set in November, a clear bearish trend has set up as inflation has ripped, the Federal Reserve has increased rates to what they laughingly call "neutral" while FTX has focused on bailing out over-leveraged hedge funds and VC's. Within the past week, we've seen the Treasury Dept sanction Tornado Cash mixer due to concerns of money laundering... regardless of the case's merits, headwinds remain strong while the bear market rally has been resilient. Price action is coming to a decision point with the end of August approaching and the weekly candles coming back to the upper channel limit. Given the broader market headwinds and no clear pivot from the Fed, the likelihood of continued sideways chop is about as probable as the bear market rally fading away with more severe retracement. A bullish scenario would be a move towards testing $29.3k (heavy pink line) but is much less probable until we see the Fed pivot. Sideways chop would be continued PA between approx $19k and $24k while further retracement levels are defined. Most bearish scenario would be the heavy white line around intersecting with the $6.3k upper channel by January 2023. Risk off remains most likely considering Nasdaq following the dot.com bubble and close attention must be paid to the 1970's rolling peaks of inflation throughout the decade. We're not at a point to be bullish although volatility for swing trading long/short positions and scalping remain viable for skilled traders with a high degree of risk acceptance.
INDEX:BTCUSDShort
by R0MM3LL
Upside for Gold as rate expectation cooled by recession riskSummary The surge in energy and agricultural commodities in the past 6 months had materialized into serious inflation even down to the consumer end across the globe. To cope with inflation, the Fed has begun to raise rate at an accelerating pace. The rise in the interest rate of the USD causes dysfunction of traditional risk haven such as Japanese Yen FX:USDJPY and Gold COMEX:GC1! . However, with more evidence that the US is very close to a recession, the Fed might need to tune down to a more cautious approach to balance between taming inflation and speeding up recession due to higher borrowing cost (and debt repayment) for business. The stabilization in rate hike might soften the already strong dollar, hence providing room for traditional risk haven assets to rebound and restore some of their risk haven property . With still ongoing global political uncertainty (see appendix for more detail), there might be further upside potential beyond rebound. One should pay extra attention to the collective transition of power globally which is happening at a similar time coincidentally. Technical and trade planning Just like most commodities, the dominant force driving gold downward is the strength of the USD. The US Dollar Index TVC:DXY had reached a new high at 107.786, before retracing back to 106.895 to close lower last Friday, creating a reverse hammer candle. While the uptrend of the dollar index is still effective, however the bearish pattern hinted the peak might have reached (or at least the upside momentum is reducing) . Similar pattern in reverse was seen in many commodities including gold, which means opportunity for rebound trade. Note that gold currently is trading below most moving averages which means the downtrend is still in power. 20 days moving average trading below the 50 days, and both pointing downward double confirm the bearish view. In rebound trade it is very important to keep your cut loss and profit taking tight. One should also adopt strategies that allow more tolerance for error (e.g. longing call option with >30-60 days to expiration). Here are some technical levels trader of gold should be aware of: Downside support (to cut loss if dropped through) 1676.7: 2021-Aug hammer candle bottom 1721.8: 2021-Sep downside retest bottom Upside resistance (to take profit if fail to go further) 1785: May-16 bottom (broke on Jul-5) 1833: 250 days moving average 1878.6: Jul-3 rebound peak Appendix: Political events to keep an eye on Asia The former prime minister of Japan, Shinzo Abe was assassinated last Friday. Abe was seen as the de facto power of Japan. He initiated and was involved in lots of Japan economic policy and China-Japan relation issues. Close ties with global leaders, he was one of the early promoters of threat emerging from growing China, which later led to global boycott of China. He also showed his support to Taiwan as he saw the country as the first line of defense of Japan from China. One of his unaccomplished goals was to revise the country’s pacifist constitution to formalize the Japanese self-defense force as army, and broaden its military agenda outside of homeland defense, to be involved in regional security issues, such as Taiwan. The death of Shinzo Abe might help the constitutional revision to gain more supportive votes, which will worsen China-Japan existing tension. The 20th National Congress of the Chinese Communist Party will take place in November this year. One of the major topics is whether the current Chinese leader Xi Jinping will be re-elected for the next 5-years term. With lots of policy missteps that have caused material harm to the Chinese economy and financial stability, there are growing voices within the party that they might want a leader who can focus on reviving the Chinese economy instead of political ideals. At the same time, Xi is neutralizing the opposition force by revealing their evidence of misconduct and corruption (same strategy 10 years ago). The upcoming continuation or transition of power in China is going to be a very tricky one. Europe No end in sight for Russian invasion toward Ukraine, albeit increasing military support by the western powers. Inflation continues to make record highs in Europe with latest June CPI figures standing at 8.6%, energy talk with Russia is going to be very difficult especially for natural gas which is virtually impossible to get supply from other continents. The prime minister of the UK, Boris Johnson had resigned last week amid back-to-back scandals , with the Chris Pincher case became the last straw that broke the camel's back. The United States Recession risk, high gasoline price, baby formula shortage, the series of unfortunate events had taken a toll on the president Joe Biden approval rate, which dropped to just 30% in the new national poll. The negative sentiment toward democrats is likely to make the republicans take control of both the senate and the house. The democrats probably can take advantage of the recent Supreme Court’s decision of overturning Roe v. Wade, however the edge might not be enough to change much according to the latest forecast.
COMEX:GC1!Long
by geoffreyip523
RISK ON vs RISK OFF ✅✅✅Hello traders! ✅ Today we will talk about RISK ON vs RISK OFF Market Sentiment as I use this confluence to enter trades. Risk ON vs Risk OFF market sentiment reflects all the market activity, its not a market sentiment for crypto or forex or stock market its for all the financial markets, when i use this confluence i try to understand what are institutional/retail investors are doing are they buying risk on assets or they are buying risk on assets. Usually investors buy risk on assets when they are looking for risk meaning they want higher yield on their investment they want to MULTIPLY money(key word) this is happening during times of financial prosperity, no wars, no lockdowns, no problems around the world everyone are doing great and making money On other side RISK OFF is when investors tend to buy financil assets that PROTECT (key word) their capital they dont want a high yield they want just to save their money and protect during time of financial stress, wars, lockdowns when everything is not clear and safe. ✅ RISK ON Assets Stock Market Crypto USOil AUD NZD CAD EUR GBP ✅ RISK OFF Assets Government Bonds JPY CHF USD GOLD SILVER
Education
by Snick3rSD
Gold Meets Resistance in the Mid $1800'sGold has found support exactly at $1836, one of our levels. We noted in previous reports that gold should find support at $1836 or $1826. From here we saw a pivot back to relative highs in the mid $1800's. Recall that we have a dense cluster of levels in the mid $1800's at $1857, $1857 and $1865. These align with relative lows from early May, and are currently acting as a barrier to higher prices. The Kovach OBV is tapering up slightly, but we will need more momentum to hit $1876, our next target. If we reject current levels, $1836 and $1826 should provide support.
COMEX:GC1!Short
by quantguy
Bonds Test Higher LevelsBonds have edged up higher, with ZN hitting our target of 121'00. This is a strong psychological and technical level. We are seeing a bit of a divergence between the price action and the Kovach OBV so unless more momentum comes thorugh, anticipate a dip or some ranging between 120'14 and 121'00. If we dip further, 119'23 should provide support. If we are able to break out further, then we have a fairly wide vacuum zone to the next level and target at 121'28.
CBOT:ZN1!Long
by quantguy