Tech Wreck Rebounds, Gold and Silver Get Slammed Lower

This week started on a bearish note, as all markets sold off hard right after lunch hour EST.

Tuesday was a continuation to the downside, pushing to new weekly lows, but volumes were drying up.

Wednesday the equity market bottomed out.

Thursday and Friday we saw a recovery, but it did not take us to positive territory as the index closed in the red.

 

SP500 5 Day Chart

SP500 5 Day Chart

Weekly Stock Market & Sector Overview

Top Chart – Sectors Overview

  • Retail is up 1.11%
  • Technology was down 0.09%
  • Financials are down 0.28%
  • Energy is down 0.70%
  • Utilities are also down 0.78%

 

Bottom Chart – Markets Overview

  • US Dollar is up 1.09%
  • SP500 is up 0.27%
  • Oil is down 1.71%
  • Gold is down 2.60%
  • Silver is down 3.70%

 

Stock Market Update and Sectors

Stock Market Update and Sectors

 

 

Tech-Wreck Manages to Rebound and Close Green

In the last two weeks, the FAANG stocks have traded 8% lower from the November 28th, 2017 high.

On Monday FAANG stocks dropped over 2.9%, prompting even more institutional investors to “lighten” their positions.

However after bottoming out on Tuesday, these high flyer stock names rebounded sharply higher to finish the week up 0.3%.

Nasdaq did not feel the love, as the technology index closed lower for the 2nd consecutive week. (First time since August).

Of all the stocks, Netflix was by far the weakest (red on top right chart below).

 

FAANG Index

FAANG Index

 

Jobs Report is Positive, But Looking Under the Hood Reveals…

The majority of new jobs that were shown to be created took place in lower income sectors of the economy.

If you just look at the headline number, you will see that:

  • 228,000 jobs were added in November (vs 198k expected and 244k prior)
  • Average hourly earnings dropped to 0.2% vs 0.3% expected and -0.1% prior
  • Unemployment rate stayed at an incredibly low reading of 4.1%

 

However, as professional traders we need to look deeper into the numbers and can’t make conclusions based on “headline” numbers.

So let’s break down the jobs report.

Leisure and hospitality had the majority of new job gains.

In fact, waiters and bartenders hit a new all time high of 11.783 million in November.  This is an increase of 18,900 jobs in just one month.

Granted this could be seasonal staffing by restaurant owners in preparation for the Holiday.

Here is a break down of the jobs added in November:

November 2017 Jobs Report Non-Farm Payrolls

November 2017 Jobs Report Non-Farm Payrolls

 

Bitcoin Volatility Explodes ahead of Futures Launch Sunday

It’s official, Bitcoin futures are coming to the futures market on Sunday December 10th at 6PM EST.

The contracts will be listed first on the CBOE, followed by the CME later this week.

Price was very anxious and traded all over the place on the last day of the week before the big open.

GDAX shows bitcoin trading to as high as $19,967 before dropping to $13,788 – a whopping 30% decline.

Now the interesting part, Bitcoin’s volatile last few days would have triggered the “circuit-breaker” on 7 of the past 10 days.

Circuit breakers will be used on the futures in the following way:

  1. When Bitcoin moves 7% in either direction, trading halts for 2 minutes
  2. When Bitcoin moves 13% in either direction, trading halts for 2 minutes once more
  3. When Bitcoin moves 20% in either direction, prices will be trading limit and cannot move more than this in any given day

So in theory, if you are long Bitcoin futures and the spot price goes up 30%, you will be capped at the 20% for the day.

Now if you are short, and Bitcoin moves up 30% you will be stuck with the short not able to get out until the following session, which could be enough to wipe out your entire account even more.

I would strongly encourage new traders not to get drawn into the hype, and to spend more time observing and less time actually holding a trade.

On Sunday, I will also be a new trader to this market and even with over 14 years experience I will be watching from the sidelines.

Here is a chart of Bitcoin’s volatility  on the BitStamp exchange:

Bitcoin Volatility

Bitcoin Volatility

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weekly Economic Calendar – Busy Week Ahead – Fed Rate Hike to Dominate the Wire

We have an extremely busy week ahead of us, with the Federal Reserve meeting taking center stage.

Tuesday we will hear from Mario Draghi, president and the European Central Bank (ECB) (tradeable assets: Euro, gold)

Wednesday we see a flurry of data out of the US, beginning with the latest inflation data at 8:30AM.  Two hours later we look at weekly oil inventory numbers.  At 2PM it is all about the Federal Reserve, as Janet Yellen hosts her last quarterly meeting as Fed Chair.

The Fed is largely expected to hike interest rates, but the market is more interested about the future path of rate increases.  What will the dot plot look like?  How has the balance sheet normalization process advanced?  What worries does low inflation present and how will the Fed act on this?  There are many questions that need to be answered.

Watch the news wire closely!

Thursday is UK’s monetary policy update and big day, expect to see significant volatility in the Euro and currency markets that cross with the British Pound also. (Preferred pairs: EUR/USD, GBP/USD)

Friday has no major economic announcements.

Weekly Economic Calendar

 

That’s it for this week.

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Good luck and good trading.

 


The information contained in this post is solely for educational purposes, and does not constitute investment advice. The risk of trading in securities markets can be substantial. You should carefully consider if engaging in such activity is suitable to your own financial situation. TRADEPRO Academy is not responsible for any liabilities arising as a result of your market involvement or individual trade activities.