Blog: Market Analysis

Market analysis, insights and trading ideas on various markets and products!

Weekly Market Wrap: Global Conflict Bearish for Stocks

Market Analysis

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, technical, economics, and portfolio management:

Click here for last week’s market report (09 October 2023)
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Market Recap & Upcoming Week

Last week witnessed significant global developments. In a shocking turn of events on October 7th, Gaza’s militant group, Hamas, launched sudden attacks against Israel, resulting in casualties on both sides. This unexpected assault, coinciding with the Jewish holiday of Simchat Torah, has reignited concerns reminiscent of the unanticipated 1973 Mideast war. The backdrop to this is a tumultuous landscape in Israel, with disputes over the Al-Aqsa Mosque compound and the expansion of Jewish settlements adding to the volatility. Furthermore, this surge in external conflict comes at a time when Israel is already under internal strain due to widespread protests against Prime Minister Netanyahu’s legislative proposals.

On the economic front in the U.S., a subdued sigh of relief may be in order as data reveals a slowdown in the inflation rate. September’s rate stands at 3.7% year-on-year, and 0.4% from the previous month. The slower pace, however, does not signify an all-clear for consumers. With core inflation up by 4.1% since last September and the Federal Reserve’s anticipated decisions regarding interest rates, there’s an air of cautious anticipation. A particular point of concern is the surge in mortgage rates, hitting a 23-year high, posing potential challenges for home buyers in the near future.

Brace yourselves for a whirlwind of economic updates next week as we dive deep into one of the most action-packed earnings periods of the year. Leading the charge are global titans like Tesla, Netflix, and Johnson & Johnson, followed closely by financial giants such as Bank of America, Goldman Sachs, and Morgan Stanley. Furthermore, with AT&T and Lockheed Martin also unveiling their reports, expect a comprehensive insight into various sectors, shaping the financial narratives for the weeks to come.

In parallel with these corporate disclosures, pivotal economic indicators are set to be unveiled. Tuesday promises to be especially enlightening with the U.S. Census Bureau releasing September’s national retail sales data, offering a snapshot of the health of consumer spending in the country. The real estate enthusiasts should also keep their eyes peeled for the latest figures on September housing starts and existing home sales, not to mention the much-anticipated National Association of Home Builders’ Housing Market Index for October, shedding light on the housing market’s current pulse.

EURCHF – Very nice clean trade with 190+ pips profit, congrats to those who took this trade with us! 💰🔥💪🏻

USDSGD – Nice bull flag forming on top of resistance-turned-support, signalling more upside!

EURUSD – Following up on this, we have increased our target profit to capture more profits for this trade.

S&P 500 (US500) – Following up on this, prices are unable to break above the 20 & 50-EMA, and there is a possibility they may continue downwards.

Next major level of support is the 200-EMA, which coincides with a support level on the chart.

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Spencer Li

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.

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Weekly Market Wrap: Jobs Much Stronger than Expected!

Market Analysis

Click here for last week’s market report (02 October 2023)
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Market Recap & Upcoming Week

Last week, Wall Street exhibited a marked change in reaction to the U.S. government’s monthly jobs report, which has lately seen an unprecedented pattern of downward revisions. This has instilled caution among traders, resulting in fewer stock trades and subdued market movements on the days of these report releases.

The ongoing trend, marking the first time since 1979 that each monthly report has revised its numbers downward, has unsettled the previously held confidence in an economy supporting higher interest rates. With traders gradually distancing themselves from jobs data, they’re now focusing on data sets with fewer adjustments.

On the brighter side, the U.S. economy showcased a significant uptick in September, adding 336,000 jobs and surpassing Wall Street’s expectations. Interestingly, the unemployment rate remained stable at 3.8%, defying predictions of a dip to 3.7%.

Though this robust growth is at odds with Fed Chair Jerome Powell’s inclination for a more moderate labor market, the general market belief, given the positive stock rebound post the report, is that the Federal Reserve is likely to retain the current interest rates in the forthcoming meeting.

Earnings season is set to begin in full swing post the Indigenous Peoples’ Day holiday. A slew of notable names from the financial sector, such as JPMorgan Chase, Wells Fargo, and Citigroup, are scheduled to unveil their quarterly results.

In addition to the financial giants, market participants should also keep an eye on earnings from major corporations like PepsiCo, Delta Air Lines, and Walgreens Boots Alliance. But it’s not just about earnings. Inflation watchers should mark their calendars for Wednesday and Thursday when updates on producer and consumer prices will be released, offering insights into the current economic landscape.

The week promises more than just earnings and inflation data. On Wednesday, the Federal Reserve is set to disclose meeting minutes from its recent FOMC gathering, potentially shedding light on their monetary policy outlook.

Meanwhile, for those inclined towards retail, Amazon’s “Prime Big Deal Days” is an event to watch. Kicking off on Tuesday, this two-day shopping spree offers Prime members exclusive deals on a wide array of brands and products, making it a potential boost for mid-month retail sales.

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Spencer Li

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Advance/Decline Ratio (ADR) Indicator

Market Analysis

The advance/decline ratio (ADR) is a widely used market-breadth indicator in technical analysis.

It compares the number of stocks that closed higher (advancers) against the number of stocks that closed lower (decliners) from the previous trading day.

The ratio is calculated by dividing the number of advancing stocks by the number of declining stocks.

How the Advance/Decline Ratio (ADR) Works

Investors often use the advance/decline ratio to gauge market trends and detect potential reversals.

By comparing the ratio to the performance of a stock index, such as the NYSE or Nasdaq, traders can assess whether a broad spectrum of stocks is participating in a market rally or sell-off, or if the movement is concentrated in a minority of stocks.

A low ADR can suggest an oversold market, while a high ADR can indicate that the market is overbought.

These conditions may signal an impending reversal. For technical traders, identifying these directional changes is crucial for successful trading strategies.

Although the ADR provides helpful insights, it is rarely used as a standalone tool.

When paired with other metrics, such as moving averages, it becomes a powerful component of a broader market analysis strategy.

The ADR can be calculated over various time frames, such as daily, weekly, or monthly periods, to track short-term and long-term trends.

Types of Advance/Decline Ratios (ADR)

Standalone Ratio: On its own, the ADR reveals whether the market may be overbought or oversold. A high ADR suggests that more stocks are advancing, possibly indicating overbought conditions, while a low ADR signals that more stocks are declining, possibly pointing to an oversold market.
Trend Analysis: Observing the ADR over time helps traders identify whether the market is trending bullish or bearish. A steadily increasing ADR suggests a bullish trend, while a declining ratio may signal a bearish trend.

Concluding Thoughts

The advance/decline ratio is an essential tool for traders and analysts looking to understand the underlying strength of a market.

By combining it with other technical indicators, traders can gain valuable insights into market conditions and identify potential shifts in trends.

Although useful, the ADR should not be used in isolation but as part of a comprehensive analysis to improve trading decisions.

The Synapse Network

The Synapse Network is our dedicated global support team, including event managers, research teams, trainers, contributors, as well as the graduates and alumni from all our previous training program intakes.

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Weekly Market Wrap: Yields and USD Continue to Rise!

Market Analysis

Click here for last week’s market report (25 September 2023)
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Market Recap & Upcoming Week

Last week, the tech and financial sectors saw significant developments. Amazon announced an ambitious investment of up to $4 billion in Anthropic, positioning itself as a competitor to OpenAI, the developer of ChatGPT. This move is part of Amazon’s strategy to remain competitive against tech giants like Microsoft and Google’s Alphabet. Meanwhile, OpenAI itself seeks a massive valuation jump to $90 billion in its latest share sale, up from a previous $29 billion earlier this year.

China’s moves to reconsider price controls in its housing market and achieve self-reliance in the semiconductor industry underscored its shifting economic strategies, after concerns mounted over the fallout from Evergrande’s financial troubles, with the property giant’s shares plunging 25% due to delays in debt restructuring.

In the energy sector, oil prices soared to a one-year high as crude stockpiles dwindled, while mortgage rates in the U.S. spiked to a nearly 23-year high, presenting further challenges for the housing market. The specter of a U.S. government shutdown loomed as House Republicans canceled their recess, signaling a tense standoff in the days to come.

This week poses significant potential disruptions on both the political and economic fronts. Tensions in Congress are reaching a boiling point as a government shutdown looms. The deadlock stems from a lack of agreement on last-minute spending bills needed to sustain government operations past September 30th. The ramifications of such a shutdown are vast, affecting millions, from essential government personnel to beneficiaries of federal aid programs. Moreover, the economic impact is non-trivial.

Goldman Sachs analysts estimate that for each week the shutdown persists, the U.S. GDP growth could be slashed by 0.2 percentage points, though a swift recovery might be on the cards post an agreement. The larger concern arises from the potential shutdown of key economic agencies like the BEA, BLS, and U.S. Census Bureau. This lack of crucial data could impair the Federal Reserve’s monetary policy decisions, especially as they prepare for the Federal Open Market Committee (FOMC) meeting scheduled at the end of October.

On the economic data front, expect a series of reports that will provide insights into the health and trajectory of the U.S. labor market. Starting Tuesday, we’ll receive the August JOLTS report, which will be followed on Wednesday by ADP’s National Employment Report detailing private sector payroll trends for September.

The week will culminate with the much-anticipated nonfarm payrolls report on Friday. All these updates come at a time when the Federal Reserve’s recent rate hikes have started impacting the job market, albeit it still exhibits resilience with hiring rates near historic highs. It’s a pivotal week, and stakeholders from all sectors will be watching closely.

GBPUSD – Following up on this trade, we are up +428 pips profit, and prices are almost hitting the TP as well!

Congrats to those who took this trade! 💰🔥💪🏻

EURUSD – Following up on this, we are up +234 pips profit, and prices are very close to hitting our TP!

Congrats to those who took this trade! 💰🔥💪🏻

Crude Oil (WTIUSD) – Prices have gone up almost 50% in the last few months, will this cause inflation to spike again?

AUDUSD – Prices finally starting to move! 🔥

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Spencer Li

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Weekly Market Wrap: High Interest Rates are Here to Stay?

Market Analysis

Click here for last week’s market report (18 September 2023)
Click here to subscribe for the latest market report (25 September 2023)
Click here to see the archives of all our past market reports

Market Recap & Upcoming Week

In the realm of technology stocks, a potential dampening in their bright outlook is on the horizon. Central to the 2023 market rally, these stocks now grapple with the prospect of prolonged higher interest rates from the Federal Reserve. Historically, the tech sector thrived not only on industry innovation but also on ultra-low interest rates.

But with the Fed’s response to inflation, this once rosy perspective has shifted. This shift was palpable when the tech sector of the S&P 500 dropped by 29% by the end of 2022. Despite signs of recovery earlier this year, thanks to AI innovations and rate cut speculations, sustained inflation and a strong economy have led to renewed skepticism.

Meanwhile, oil prices inch closer to $100 a barrel, intensifying global inflation concerns. While countries like Saudi Arabia and Russia benefit from this surge, the ramifications for the world economy, particularly inflation and its potential effect on interest rates, are profound.

The Federal Reserve’s strategy took center stage as it continued its stance on steady interest rates, hinting at potential hikes by the year’s end. This decision coincides with their revised economic growth projection, foreseeing a 2.1% GDP rise. As the central bank reduces its bond assets, all eyes are on the future decisions of the rate-setting Federal Open Market Committee (FOMC).

Despite challenges such as escalating energy prices, the U.S. consumer spending trends suggest economic optimism. Adding to the intrigue, the Federal Reserve expressed an ambitious vision for a historically “soft landing.” With plans for an extended rate-cutting cycle, they aim for controlled inflation without severe economic repercussions.

Yet, this optimistic outlook comes with its set of challenges, as history tells us that rate escalations tend to be gradual but decreases are often abrupt. The Fed’s hope now hinges on a balance between growth and inflation management.

As we move into the upcoming week, market watchers should remain vigilant about the potential shifts in the investment landscape.

Key focus areas include the impending reports on U.S. home prices and data for new and pending home sales in August. These metrics might provide insight into the health and direction of the U.S. housing market. Alongside, Federal Reserve Chair Jerome Powell’s town hall with educators on Thursday promises to offer significant cues about the central bank’s stance on prevailing economic conditions.

Moreover, the Personal Consumption Expenditures (PCE) Price Index, which is the Fed’s favored measure of inflation, is slated for release on Friday, potentially influencing investment strategies. Amid these macro indicators, a series of earnings reports are due next week from corporate giants, including Costco, Micron Technology, Accenture, Nike, CarMax, and Carnival Cruise Line. These results could offer a snapshot of the business landscape, further guiding investment decisions.

GBPNZD – Pullback to support level, waiting for price alerts to trigger when the uptrend resumes