Business cycle update - More weakness in EM equitiesBusiness cycle also implies more downside for EEM and likely for DAX and SPX.
Businesscycle
Business cycle points to outperformance of XLP Relative performance of defensive sectors XLP, XLU and IYR vs SPY.
XLV performance did not follow a cyclical pattern
Best fit suggests outperformance of XLP vs SPY in coming months
Business Cycle vs G3 Govt Bond YieldsBusiness cycle points to lower long term government bond yields. US 10 year yields seem to be the most at risk.
LONG LT BONDS & Bond proxies
Business cycle points to weakness in EM equitiesSlowing business cycle also points to further weakness in EM equities until end of 2019 or steel prices turn higher.
SPX may be more resilient but upside should be limited.
IF EM equities will be under pressure, it is likely that DXY will be strong in the coming months.
SHORT EEM bounces. Be cautious on SPX
FINANCIAL MARKETS AND BUSINESS CYCLEIt is important to understand that primary trends of stocks, bonds, and commodities are determined by the attitude of investors during unfolding of events in the business cycle. An understanding of the interrelationship of credit, equity, and commodity markets provides a useful framework for identifying major reversals in each.
MARKET MOVEMENTS AND BUSINESS CYCLE
The bond market is the first financial market to begin a bull phase. This usually occurs after the growth rate in the economy has slowed down considerably from its peak rate, and quite often is delayed until...CONTINUE READING: tradersworld.co.in
NKE: Earnings Out of Season, Topping with Strong SupportNike, the icon of footwear, reports today out of season which is not a good sign for earnings. The stock is not being traded heavily pre market, however, so the retail crowd appears to not know about this earnings report yet. The stock has already hit an extreme deviated peak in its business cycle after a fast-paced speculative run out of its prior bottom formed in 2016-2017. This stock is more fortunate than others. It has strong support close to its current price. The Cycle indicator has headed down to the center line and the stock should trough sooner than later. This is a weekly chart so you can see the support level easily. This stock is not a good candidate for a sell short due to this support.
EURUSD Pair Has Negative Bias to the Downside...Be CautiousBy looking at the 4-hour chart and the daily chart, the EUR/USD currency pair has taken a turn to the upside. The pair had rebounded from 1.1211 a hair below our hypothesized bullish entry point of 1.1215. The pair had a 2.5% probability of falling lower than our hypothesized support area. However, we deduced that for something like that to happen, there would have had to be some kind of dovish catalytic speech/sentiment uttered by the European central bank president Draghi or similar dovish news.
Therefore, we suspected that sooner or later the pair would attempt to claw back to its hypothesized moving average of 1.1506, but before that happened, the EUR/USD pair would’ve had to elevate toward our 1.1215 mark, which it did. Now, we are convinced that it will continue in the short term toward our next hypothesized target of 1.1361 before it finally gets back to its moving average sweet spot of 1.1506.
There is a strong possibility that the pair could surpass its hypothesized moving average of 1.1506 and continue toward our next target of 1.1652 and possibly 1.1798, but this is as far as the pair will go up the charts because fundamentally, the Euro zone economy is weak, and the Eurozone’s economic cycle is nearing its peak. In fact, the EU economy is already acting as if it has commenced its recession cycle.
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Signs of Caution from Consumer ETFsConsumer Staples (usually a defensive investment) are taking precedence over Consumer Discretionary (usually aggressive posture, when all is well) in October. We are pressing lower and showing the largest drop in a while. This is potentially a leading indicator of some kind of slowdown coming.
tesla on the brinkFounded by Elon Musk, the company, has some rather concerning fundamentals. Don’t get me wrong, electric vehicles are the future; we need renewable sources of energy before the world reaches peak oil. Big Energy companies are slowly moving away from oil as a source of energy we are witnessing electric cars solar panels pop up everywhere the future is here and it is happening. The energy sector is changing but we shouldn’t get carried away. If you would indulge me for a few pages I will give you some numbers and you can decide for yourself whether one should be cautious or not. The charts I will put up in this report were obtained from the company’s earnings reports.
Short term weakness in the TECH sector?Facebook has been in the limelight for tanking cause of the news , but this chart shows that the tech sector has been tanking for a while now, will it continue I don't know but my outlook is bearish until price breaks through 68.37 in XLK
