Blog: Market Analysis

Click here for last week’s market report (29 May 2023)
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For subscribers of our “Daily Trading Signals”, we now also include a “Weekly Market Report”, where we provide a weekly deep-dive on the market, including fundamentals, technicals, economics, and portfolio management:

Market Recap & Upcoming Week

The past week in the financial world was marked by key developments across the US and Chinese stock markets, significant corporate milestones, and noteworthy trends in the labor market. Trading was halted on Monday, May 29th, as the US observed Memorial Day, with the New York Stock Exchange, Nasdaq, and US bond market all closed.

Amid this quiet start to the week, chip manufacturer Nvidia made headlines by becoming the sixth US company to reach a $1 trillion market capitalization, largely thanks to the growing demand for its AI-optimized chips. This achievement illustrates the wider market trend of big companies growing bigger, with investors increasingly betting on dominant market leaders.

Conversely, Chinese shares entered a bear market, indicating increasing pessimism about the country’s economic recovery, despite earlier hopes fueled by government efforts to revive the property sector and the lift of strict Covid-19 restrictions.

Meanwhile, the US labor market showed signs of resilience, with job openings reaching a seasonally adjusted 10.1 million in April, despite the recent collapse of Silicon Valley Bank. The US stock market saw significant gains following a strong jobs report that exceeded Wall Street expectations, signalling robust hiring amidst slowing inflation. This, coupled with a late deal to avert a government default, sparked a major uptick in the market.

As we move into the upcoming week, investors should be prepared for a potentially calmer trading period, following last week’s surge in response to a deal to raise the debt ceiling. The week is set to commence with the worldwide developer conference hosted by Apple, where the tech giant is anticipated to reveal new releases.

Market watchers should keep a keen eye on the various economic indicators slated for release in the coming days, including updates on U.S. factory orders, non-manufacturing services, the U.S. trade deficit, and consumer credit data. These figures will provide insights into the health and trajectory of the U.S. economy amid global inflation concerns and recovery from the pandemic.

In terms of corporate earnings, the week will bring reports from an eclectic mix of companies, encompassing various sectors. Names to watch include J.M. Smucker, GameStop, Brown Forman, DocuSign, and Seneca Foods. The performance of these businesses, particularly retail sector players like GameStop, could offer a barometer for consumer sentiment and sector trends.

Daily Trading Signals (Highlights)

We cover 3 main markets with a total of 200+ counters, so we will never run out of trading opportunities:

Forex, CFDs, commodities, bonds
US stocks, ETFs, global stock indices
Cryptocurrencies, crypto indices

By covering a broad range of markets, we can focus our attention (and capital) on whichever market currently gives the best returns.

Subscribe for real-time alerts and weekly reports:
👉🏻 https://synapsetrading.com/daily-trading-signals

Commodities ETF (DBC) – TP1 has been hit, waiting for TP2 to get hit. Congrats to those who took this trade! 💰🔥💪🏻

Sea Limited (SE) – Great chance to take some profits on the short position after the stock has dropped 22%!

Can continue to hold some for TP2.

NASDAQ 100 (US100) – Prices broke higher than I expected, but now it is even more overbought and we are seeing an island shooting star, so perhaps there might be some pullback.

Spencer is an avid globetrotter who achieved financial freedom in his 20s, while trading & teaching across 70+ countries. As a former professional trader in private equity and proprietary funds, he has over 15 years of market experience, and has been featured on more than 20 occasions in the media.

Weekly Market Wrap: Debt Ceiling Fears vs. AI Hype?

Click here for last week’s market report (22 May 2023)
Click here to subscribe for the latest market report (29 May 2023)
Click here to see the archives of all our past market reports

Market Recap & Upcoming Week

Last week, Nvidia’s Q1 fiscal 2023 earnings report exceeded market predictions, resulting in a significant surge in the company’s shares. The strong performance is mainly attributed to Nvidia’s leading position in the production of artificial intelligence chips and a significant increase in demand for its data center products.

As a result, Nvidia’s net income saw an increase from the previous year. Meanwhile, Wall Street was preparing for a potential U.S. default, following Treasury Secretary Janet Yellen’s announcement about the U.S. potentially running out of cash for bill payments. This led to contingency plans to maintain the financial market operations in case of a default.

Furthermore, Treasury yields and mortgage rates reached new multi-year highs, indicating the bond market’s expectation for further rate hikes. The rise in the six-month yield suggests traders are pricing in another rate hike in the coming months. Unlike the previous rate-hike cycle in 2018-2019, which aimed to normalize monetary policy amid relatively lower inflation, the recent rate hikes respond to higher inflation rates. The six-month yield’s highest point in 22 years implies a shift in the market’s perception of the Federal Reserve’s policy direction.

As we head into a holiday-shortened trading week, investors should closely monitor the strength and weaknesses of the various currencies and the stock market. With a strong rebound in the USD, continuous weakness in the Aussie and New Zealand dollars, and strong pound, these shifts in the forex market can significantly influence financial strategies. In addition, the general weakness observed in the stock market last week may continue to affect portfolios.

Moreover, the potential resolution of the debt ceiling in the US could trigger significant market moves. Especially if it isn’t resolved, the surprise could lead to large market movements, so staying alert to this development is crucial.

In addition, investors should keep an eye on key economic indicators and corporate earnings. With the release of reports like the Case-Shiller National Home Price Index, FHFA House Price Index (HPI), the Job Openings and Labor Turnover Survey (JOLTS), and the Labor Department’s nonfarm payrolls report, understanding the current state of the housing and labor markets in the US is essential. Furthermore, updates on inflation and unemployment rates in the eurozone will give valuable insights into its economic health.

Lastly, earnings reports from Salesforce, HP, Broadcom, Dollar General, Lululemon Athletica, Macy’s, and Dell Technologies will provide key insights into the performance of these companies and, by extension, the sectors they operate in.

Daily Trading Signals (Highlights)

We cover 3 main markets with a total of 200+ counters, so we will never run out of trading opportunities:

Forex, CFDs, commodities, bonds
US stocks, ETFs, global stock indices
Cryptocurrencies, crypto indices

By covering a broad range of markets, we can focus our attention (and capital) on whichever market currently gives the best returns.

Subscribe for real-time alerts and weekly reports:
👉🏻 https://synapsetrading.com/daily-trading-signals

NZDUSD – Our patience has finally paid off, and prices are now falling rapidly. Congrats to those who held the short patiently! 💰🔥💪🏻

AUDUSD – Price continue to head down, going to test the previous swing low soon.

USDJPY – After breaking above the neckline of the double bottom, the RR ratio is good for a long trade.

NZDJPY – A range-trading opportunity, can wait for prices to pull back higher for a better entry.

China tech stocks (3067) – Looks like the rally has stalled, we will need to see if the final support level of around $7.25 holds.

Weekly Market Wrap: More Rate Hikes Coming Up Soon?

Click here for last week’s market report (15 May 2023)
Click here to subscribe for the latest market report (22 May 2023)
Click here to see the archives of all our past market reports

Market Recap & Upcoming Week

Last week was characterized by numerous significant events, both domestically and globally. Morgan Stanley announced its plans to downsize its Asia-Pacific investment banking workforce by roughly 7%, a decision driven by changing market conditions and a broader cost-cutting initiative. The decision underscored the widespread dip in global deal-making activity, with corporate buyout activity hitting a ten-year low in Q1 2023.

Despite a modest increase in consumer spending, large companies like Home Depot reported sales declines, further shaking market confidence. The looming debt ceiling deadline and the possibility of the US defaulting on its bills continued to trigger market unease.

On the other hand, positive signals also marked the week. The announcement by House Speaker Kevin McCarthy about a possible debt-ceiling deal vote led to a surge in stocks, and the resilience of the labor market was highlighted as weekly initial jobless claims fell and major tech companies saw stock highs.

In Japan, foreign investors found the country’s market appealing, leading the Nikkei 225 stock average to a 33-year high. Despite Japan’s economic challenges, its political stability, government policies, and market reforms have attracted investors.

However, the week concluded on a somewhat tense note with stalled debt ceiling talks and the Federal Reserve Chair suggesting a potential pause in interest rate hikes. Despite the uncertainties, the major indexes still managed to end the week positively.

The coming week holds numerous intriguing developments for market watchers. We are anticipating a flurry of earnings reports from major players across various sectors, which will likely shed light on the broader economic landscape.

The retail sector remains in sharp focus with prominent firms such as Lowe’s, AutoZone, Dick’s Sporting Goods, BJ Wholesale Club, Urban Outfitters, Costco, Dollar Tree, Best Buy, and The Gap all slated to report. Moreover, from the technology and banking sectors, investors will keenly look at the performance disclosures from Zoom Video Communications, Nvidia, and TD Bank respectively.

Mid-week, attention will undoubtedly shift to the Federal Reserve’s release of the minutes from its latest FOMC meeting. Policymakers had decided to raise interest rates by 25 basis points at this meeting, and the minutes will provide more context about their decision-making process.

On Friday, we will see the Bureau of Economic Analysis (BEA) issuing its Personal Consumption Expenditures (PCE) Price Index for April, which is the Fed’s preferred measure of inflation. This, along with the University of Michigan’s report on consumer sentiment, will provide vital cues about the state of the economy.

Further, new data on the housing market, including figures on new and pending home sales for April, will offer insights into the health of this critical sector.

Daily Trading Signals (Highlights)

We cover 3 main markets with a total of 200+ counters, so we will never run out of trading opportunities:

Forex, CFDs, commodities, bonds
US stocks, ETFs, global stock indices
Cryptocurrencies, crypto indices

By covering a broad range of markets, we can focus our attention (and capital) on whichever market currently gives the best returns.

Subscribe for real-time alerts and weekly reports:
👉🏻 https://synapsetrading.com/daily-trading-signals

Global REITs ETF (REET) – Forming a potential H&S reversal, with a bear flag breakdown at the right shoulder.

NASDAQ 100 (US100) – In my videos, I mentioned that this chart will likely advance another 5% to test the prior swing high, and here we are now.

I would not advise buying at these levels, as there is a high chance of a correction, so you can consider closing the short-term long positions.

The strongest bull case would be if prices hover sideways while staying near/above the breakout point, and build strength for another move up.

Sea Limited (SE) – Double top pattern formed at strong resistance, plus strong gap down.

USDSGD – The last few days we saw great strength in the US dollar, and we are halfway to the top of the range now.

Bitcoin (BTCUSD) and Ethereum (ETHUSD) both pulling back to the support trendline, low risk area to go low.

Weekly Market Wrap: Strong Q1 Earnings, But Persistent Inflation

Click here for last week’s market report (8 May 2023)
Click here to subscribe for the latest market report (15 May 2023)
Click here to see the archives of all our past market reports

Market Recap & Upcoming Week

Last week, the Big Tech stocks, represented by the TAMAMA acronym, continued their strong performance with impressive year-to-date returns, underpinned by resilient results and a strategy of continual expansion and diversification.

On the other hand, there was a surprising underperformance of China’s stock market despite the nation’s strong economic rebound. The MSCI China index lagged behind the S&P 500, with an average profit growth of only 1% for listed Chinese companies. Concerns arose over the sustainability of the current consumption bounce and a weak job market for younger workers in the country.

Meanwhile, global inflation concerns persisted, with slow signs of cooling. The Federal Reserve held back on raising interest rates, due to banking system stresses and uncertainties around the debt ceiling. However, the markets noted some positive signs, including a slowdown in supercore inflation and a reversal in durable goods prices, primarily driven by a spike in used vehicle prices.

The challenge remains to navigate a path back to a situation where the Effective Federal Funds Rate exceeds inflation, with Wall Street calling for rate cuts to counteract the perceived dissonance between short-term rates and lower long-term Treasury yields.

As we move into the next week, the spotlight will fall on the last significant wave of this earnings season. Reports from retail giants like Walmart, Target, Home Depot, and Alibaba will provide insights into the consumer sector, potentially setting the tone for market sentiment.

The U.S. Census Bureau’s report on April retail sales, due on Tuesday, will offer critical information on the health of consumer spending, which has been a significant driver of economic recovery. Simultaneously, the housing market will be under scrutiny as data on building permits, housing starts, existing home sales, and the NAHB’s Housing Market Index for May is released.

On a global scale, economic indicators from Japan and the eurozone will attract attention with new GDP readings expected.

An inflation reading from Canada could give insights into the country’s economic health amid global inflation concerns.

A key event to watch will be the Group of Seven (G7) summit, commencing on Friday in Hiroshima, Japan. As the world leaders gather to discuss and form policy on pressing global issues, their decisions may have significant implications for global markets and international relations. Therefore, investors and observers should keep a keen eye on the outcomes of this summit.

Daily Trading Signals (Highlights)

We cover 3 main markets with a total of 200+ counters, so we will never run out of trading opportunities:

Forex, CFDs, commodities, bonds
US stocks, ETFs, global stock indices
Cryptocurrencies, crypto indices

By covering a broad range of markets, we can focus our attention (and capital) on whichever market currently gives the best returns.

Subscribe for real-time alerts and weekly reports:
👉🏻 https://synapsetrading.com/daily-trading-signals

CHFJPY – Another potential range trade

EURGBP – Breaking down from the descending triangle.

GBPNZD – Range trading for this pair, wait for a pullback for a better entry price.

Gold (XAUUSD) – On the long-term weekly chart of Gold, if prices manage to break out of the range, there is a lot of upside.

Weekly Market Wrap: Profit Taking on Crude Oil Shorts!

Click here for last week’s market report (1 May 2023)
Click here to subscribe for the latest market report (8 May 2023)
Click here to see the archives of all our past market reports

Market Recap & Upcoming Week

Last week, stock markets ended on a high note due to a strong jobs report and impressive first-quarter results from Apple. The S&P 500, Dow Jones, and Nasdaq Composite all rose significantly, with 253,000 jobs added in April and unemployment dropping to 3.4%.

Although the labor market recovery is ongoing, with downward revisions to previous months and mixed results, investors seemed optimistic that a recession is not imminent.

The Federal Reserve’s weekly balance sheet showed the biggest plunge in 14 years, reflecting the impact of the banking crisis and quantitative tightening. In Europe, the ECB raised policy rates by 25 basis points in response to the worst inflation in four decades, with plans to accelerate its Quantitative Tightening program.

Despite assurances of a stable banking system, regional bank stocks declined as investors expressed concern about the impact of regional banking problems on the broader economy.

Oil prices tumbled due to concerns that higher interest rates might slow the economy and curb energy demand, while corporate profit margins dropped less than expected despite inflation and aggressive interest-rate hikes.

The Federal Reserve raised policy rates amid these economic uncertainties, and the Eurozone grappled with record-high inflation in the services sector, prompting the ECB to maintain rate hikes as it approached its policy meeting.

This week, investors should look out for earnings reports from several major companies, including PayPal, Airbnb, The Walt Disney Company, Electronic Arts, Toyota, and Honda.

These reports could provide insights into the performance of various sectors and the impact of current economic conditions.

Additionally, important economic data will be released with the Consumer Price Index (CPI) and Producer Price Index (PPI) for April, which may reveal more about the ongoing inflationary trends.

Another key event to watch is the Bank of England’s (BoE) policymaker meeting on interest rates scheduled for Thursday. This meeting could offer clues regarding the central bank’s monetary policy stance amid rising inflation concerns.

Lastly, the U.K.’s gross domestic product (GDP) reading on Friday will provide further information on the country’s economic performance, potentially influencing markets and investor sentiment.

Daily Trading Signals (Highlights)

We cover 3 main markets with a total of 200+ counters, so we will never run out of trading opportunities:

Forex, CFDs, commodities, bonds
US stocks, ETFs, global stock indices
Cryptocurrencies, crypto indices

By covering a broad range of markets, we can focus our attention (and capital) on whichever market currently gives the best returns.

Subscribe for real-time alerts and weekly reports:
👉🏻 https://synapsetrading.com/daily-trading-signals

USDCHF – First TP hit for 230+ pips profit! 💰🔥💪🏻

Trend is still very bearish, so it is a good idea to hold onto half the short positions to see if it can go lower.

Crude Oil (WTICOUSD) – Finally hit our TP giving a +16.5% profit in less than 2 weeks! Congrats to those who took this trade! 💰🔥💪🏻

CADJPY – Following up, the breakout turned out to be a false breakout, as prices quickly fell back into the range.

If this long bearish bar closes near the lows, we can consider re-entering the short trade.

Gold (XAUUSD) – If you have any long positions, this might be a good time to take some profits, since it is very near the the major resistance level.

NZDCHF – Going for another leg of profits, after pulling back to test the breakout and 20-EMA.