Market Commentary of The Indices Market, October 2018

This Indices Market Commentary covers various topics and understanding of stock indices market activity and engaging information for an astute trader and investor, of international markets by demonstrating how interconnected the economies of nations have become.

October 31, 2018: A tumultuous trading day for American indices, however, did find a way to spend most of their session in positive territory. One particularly exciting development witnessed lately is the dropping level of Break-Evens and also the apparent rejection of Treasuries to follow along with them lower. This is alluding to economic climate continuously slowing down as the spread becomes narrower and slimmer.

Energy sector prices were hit with minus 2% on Tuesday additionally on concerns of a slow-down, but they can also be attributed to chat that Iran is front-loading exports in advance of a likelihood of more fresh sanctions. By the closing hour, virtually all core indices enjoyed bounced close to 1.65% while we monitor today (Wednesday, Oct 31) month-end closes.

Data numbers aided the bulls on Wednesday session once we watched Consumer Confidence generate the very best amount - 137.9,  in nearly two decades, while the earlier release has been reduced to 135.3. Month-end today and Non-Farm-Payroll to be released on Friday therefore still plenty to play. Attention-grabbing that the capital flow continues advancing towards America look out for year-end US Dollar funding.

October 30, 2018: A great deal of the early Asian market talk encompassed worries as we noticed a continuation of last weeks weaknesses, however coming from external as opposed to internal led. Although Chinese indices happen to be off 25% Year To Date, the vulnerabilities found in Eurozone, as well as America, continues to be influencing an already vulnerable Chinese market.

German's Sunday's election has eased most of the nervousness in Europe; however, HSBC’s Group numbers offered a helping hand (its stock has rallied more than 5%). Confidence managed to do improve in the course of Eurozone trading hours; however, the latter part of a turn around in American markets did have considerable influence with its opening this morning session. 

With Wall Street action, suppose we will have to get used to 900 points daily trading wide range swings for the rest of the year! The earlier 350 points DJI gain has been arrested on concerns of increasing US-China trade strains. At one stage in the session, DJI  was down 500 points, the swing movement of above 850 points. A few of the significant technology leaders have lost a large chunk of their summer high prices as profit takers, liquidation and fearfulness quest for the next bid price. 

The month of October is known as a pensions funds re-balancing period and therefore in combination with the timing has most likely been much more unbalanced than numerous people might have estimated. The Trade news flash gave the impression to hit the marketplace with fear; however, the signals happen to be there for quite a while now. China is undoubtedly permitting the currency slide towards the seven handle.

Much closer trade links with Japan, unwinding of automobile purchase tax and much more challenging overstated claims with regards to future US discussions suggests China is going to bargain tougher than many right now think! Equities managed to do bounce off of low session levels, and all this gave the impression to take place within the last a couple of hours of a trading session. 

We've month end on Wednesday (Oct 31) and non-farm payrolls on Friday, so perhaps Monday is merely a taster as to what we've got on hand for this week action!

October 28, 2018: The thrill resumes on Monday, huh? Markets such as this are not easy to trade, mainly when this might only be the first, second or third Leg. We've our eyes focused on the end of November as being a “bad hair day” for marketplaces. Which means this, several other ideas with regards to price action as we move through the Index charts book analysis and fine-tune our look for the time scale just ahead-See charts below.

Homebuilders and semiconductors market sectors have already been underperforming having losses near 35% Year To End. Nearly everyone is passing the blame on rising interest rates over valuations for technology equities, as well as for real estate.

The Gross Domestic Product numbers released were a lot better than estimated, however, the overhang coming from previous nights technology earnings ended up being to weigh on market sentiment. The upcoming week we still have Apple along with Facebook to report; however, it remains to be the market mood which will continue to dominate. 

The stats for the thirty day period are a wake-up call; nevertheless, in contrast to global returns, the American indices happen to be faring far better. Markets are concerned with approaching mid-terms however only enough to take them back to flattish for 2018. 

Asian markets have been becoming accustomed to huge intraday price swings, and also the direct result is the not enough conviction along with follow-through. Early gains on Friday had been lost as the not enough momentum continues to weigh upon sentiment. Key China market segments have suffered higher than most this year; however, the 8% loss of the Shanghai in last year in October alone raises the uncertainty. 

Many had expected that having already undertaken a pounding this current year, that it could have made it through just a little considerably better - that wasn't to take place. Cash is abandoning not only China but all Asia - Can you guess where?

The worldwide demand for Greenbacks is precisely what might be the dominant drive into the end of the year. With money coming back home, it has to be deployed in-house, which might well give an explanation of latest Collateralized Loan Obligation (CLO) explosion launching the need for junk debt, and in many cases, the flattening yields curve gets to speak about. Month-end in the upcoming week so keeps a particularly close eye relating to the levels - Stay disciplined never the less.

October 26, 2018: Fresh cash, stable volume, and a lot more solid earnings and so they turned and went after the offers. On Wednesday you could get bids and on Thursday its offers that they seek out! A few major leaders reported following the close; however, this overall performance should go further for boosting Asian market even though only the stock markets involved. 

Helpful to see the corporate outcomes are putting together on the first and second quarter trend. Just after hours many discouraging key releases already have flipped the technology sector futures. Alphabet and Amazon delivered a few of day session gains, but bear in mind still sitting pretty on Year To Day returns.

Sentiment for Friday is going to be echoing of those results: however also looking at Eurozone and more importantly Italian credit rating as well as Brexit headlines over the weekend. The important question may well be should primary focus be moving away from technology sectors for a month or so - be mindful of following weeks on month-end closes!

October 25, 2018: On Wednesday equities fell substantially lower as losses sped up into the closing hour, all earlier gains have been quickly rejected as every single core Index began to decline. The selling increased as the market moved on with the NASDAQ leading the downfall, ultimately ending just about negative 4.5%. 

Furthermore sees the DJI off more than 600 points, therefore, erasing virtually all gains for 2018. This decline has taken over 7% off the DJI for this month to date; however, we do have a vested interest in where the market will close the upcoming week: this is an end of the month never the less.

Many point out that the confidence has been lost mid-morning once the Housing figures were unveiled; however the short-term momentum continues to be unfavorable all month long, so we are inclined to disregard these comments. 

Worthy of remembering that during earnings reporting season firms are restrained from purchasing their stock and so it will be intriguing to find out how November starts up with the Economic Confidence Model (ECM) date due.

October 23, 2018: Frankly, there isn't a hell of a great deal to post in regards the market this week. Many of us know the marketplace is heading down - and we are aware that Federal Reserve has set up for a low to take place at about the time of the mid-term election.

But anyway, futures trading whipsawed on Monday session just as much before cash started as the cash performed once it was open. The S&P500 and DJI  both equally spent a great deal of their day trading in the negative; however that wasn't the case for the all mighty NASDAQ. We have now already seen the majority of the earnings coming from North American companies along with the numbers, on the whole, had been encouraging of current market levels. 

Nonetheless, it's not a value which is getting categorized as much as a requirement for the non-public sector along with the currency itself. It's as much the way it is - even worse transpiring everywhere else as good things are occurring in the good of US of A. 

The powerhouse of Asian countries is continuously slowing with China, Japan,  India, and Australia, all struggling with their problems. In Eurozone Brexit will be here up until following Spring, Italy recognizes its mind as well as budget; however we still wrestle the split between southern and northern Eurozone. 

The push for US of A funding at the end of the year may very well be intense. Emerging Markets (EM) have been in turmoil, yet no-one seriously wants to admit it.

October 20, 2018: Early on Wall Street results had been lost in a small, volatile early morning trading session. What's intriguing and stands out that the DJI  appears to be presuming the guided index role on Friday session, takes its change from the NASDAQ market.

This might very well be foreign cash beginning to seek stock even though a stimulating bid for P&G stock shows the reason, also though short-term continue to looking volatile; however, the movement continues to into the Greenback.  

US Treasuries tend to be resuming their yield rise all be it a parallel switch throughout the curve. The marketplace still doesn't believe that the Federal Reserve is going to rise to the dot plot in 2019, though as we see prices slide on demand and is always seeking paper.

Coming from a broader point of view, we can easily say that an additional rebound faded in equities, along with small capitalization stocks under performing once again; therefore, the risk-off trend got yet another confirmation.

The upcoming week is going to be crucial for worldwide risk assets. Because, considering the long-term breakdowns in the primary Eurozone benchmarks, the latest bear market low levels in Chinese stock market, as well as the weak market internals on the Street, this could be the last chance to steer clear of a protracted bearish period or quite possibly a worldwide bear market.

October 19, 2018: The futures market was edging lower well before the cash market opened and the selling just merely increased as soon as the cash market did open. Therefore, once again, that it was technology stocks which led the markers lower with early on losses of about 2.5% as profit-taking continues to be a crucial factor for the month.

US Treasury yields were lower given that the flight is now back again into fixed-income granted the latest volatility. We notice that the curve also has steepened somewhat as investors demonstrate a craving for short-term paper above the long end. 

This could be additionally driven by overseas demand for the US Dollars and therefore the funds being parked instead of invested in, for the moment anyway! Many people are speculating that it's everything about the Fed Minutes as well as their persisted appetite to boost interest rates which challenges virtually all foreign currencies favoring the US Dollar. 

Looking like we'll be expected to wait around for next weeks earnings once we see numbers from Microsoft, Amazon, and Alphabet in order to turn sentiment around.

October 18, 2018: American stock market traded quite heavy in the beginning, as it appeared like ETF’s were generating the selling, however only although Dealers looked forward to the Fed paper. We did find a way to turn the trading markets off of their very own early morning lows when we got into contact with the Fed Minutes release and with minimal brand new details was successful in only hammering Treasuries as equities virtually unchanged. 

With all the increase in long-term bonds, the banking equities uncovered buyers, even while they under perform the utility sector. At the closing, the bond market kept on drifting, as the US Dollar broke more robust. Having fun with off the well-known slick Willy (Bill Clinton) 1992 presidential campaign message was to aim at, “It’ is the economy, stupid." Today's slogan is more like, “It is  interest rates, stupid.” 

Buying on the dip mindset (definitely worked for those that bought on Monday) just will not die as not one of the drop in the aggressive bulls during the past couple of weeks decided to go to the Bear side. However, they all moved to market correction instead.

October 17, 2018: Earnings are turning out to be the helping-hand for American stock markets just at the moment whenever hard data numbers were required. The market rally on Tuesday was vast with all of the indices providing at least 2.15% while the NASDAQ once again leading the way with plus 2.9%. The two big banks Morgan Stanley (MS) and Goldman that announced at the open really helped sentiment, by being up plus 5.5% and 2.5% respectively.

Looks great, but you ought to keep in mind that in spite of yesterday's gains, MS continues to be 12% down on the entire year. Wednesday we have Federal Reserve Minutes presented and worth keeping in mind that even on Tuesday we continue to be staying below the Dot Plot. Markets are in no way pricing in all of the rate hikes for 2019 yet; therefore we may well see an additional movement upon a Wednesday's release.

Quite interesting that due to the rally is seen in stocks the bond market traded much higher (price / lower yield) challenging that connection yet again! Perhaps the market is beginning to accept that equities rally with rising rates is for real! 

October 13, 2018: The Dow Jones futures were showing a 300 plus point higher market opening; however, that wasn't quite what we saw. Virtually all early on gains have been retraced leading to negative closes across the market. We saw the DJI  drop earlier gains and also print negative just before closing up positive 1.15%. But, for the week the big Index has shed 4%, so there is an excellent chance we're not out of the woods as yet, and much more volatility should be expected for the next week. 

A wild journey on Friday for many core indices. The S&P500 (SPOOZ) struck an earlier high at 2776, to give it all up plus decline to 2730 by midday, and after that recuperate and close at 2767 in final minutes of the trading session, winding up 39 points positive or 1.4% for a day. 

Even though the rebound on Friday has been excellent, the SPOOZ has been from a technical perspective very oversold; therefore Friday’s rally wasn't any surprise to TradingSig followers. The core index is down 4.39% for the full week, indicating that we're not out of the woods and this suggests more volatility ought to be anticipated next week.

Once again, the top performer has been the NASDAQ index by having a solid plus 2.3% bounce. The VIX fear index has received a lot of coverage this week coming from sub 8% to more than 25! Nonetheless, important to note that the forward curve stayed relatively steady and merely inverted upon the 25 print. The large financial institution leaders reported much better than anticipated statistics; however we have got a lot more due from the others this coming week.

October 12, 2018: Wall Street began with lower than expected Inflation data of 0.1% after seeing a positive 0.2% in the month of August. At first, we got a positive initial couple of hours trading, and then the Exchange-traded funds were observed with more selling and options participants started delta hedging in cash once again. The VIX Index has soared to 25 an increase of 6% on Thursday, coming from the opening of sub 15.

Today we've got the big banking institutions (Wells Fargo, Citibank, JP Morgan Chase) set out to report and considering the S&P500 financials were down 3% on both Wednesday and Thursday sessions, any misses will most likely be enormously penalized! 

There was a talk on Thursday evening that Trump and Xi Jinping will be tentatively organizing a meeting very soon - this would definitely be a significant decisive factor for the markets to react! The two DJI and also S&P500 ended close to 2% lower, although the NASDAQ was able to lose only 1%.

October 11, 2018: Yesterday stock market captured most significant losses in Eight months as increasing interest rates made traders and investors run away from risky stocks. The Dow Jones Industrial, S&P500, and Nasdaq Indices plunged in between Three and Four percent. Technology stocks were among the many most severely impacted. (See all Technical Analysis and Outlook daily charts analysis below.)

Apparently, the primary reason for this sell-off was the rising interest rates globally. Following a decade of global vital central banks artificially retaining interest levels very low (also negative as well), interest rates are starting to climb. Usually, whenever we see a massive sell-off within the stock marketplaces, investment capital moves into the bond market, increasing bond prices and forcing yields lower. That didn't take place yesterday! 

And what about Gold, and other various ‘safe haven’ play? Very much the same boat, Gold continues to be wholly despised by large investors and big players, and can't seem to get any respect, even with a broad equity markets sell-off. 

You'll find lots of cherished opinions nowadays, however, we'll continue to permit the marketplaces to show us which of those market sectors is going to rise, and which will go down.

October 10, 2018: Eurozone was trading on discussions of bettering BREXIT unsupported claims; however, the picture is developing in a lot of expectations that could produce a significant move in case it is unsuccessful! Gilts (British government bonds) could not get a bid anywhere given that they grapple through latest losses. Fixed-Income looks vulnerable and open here, any aiding growth number unleash in America will worsen this downfall to the next stage effecting equities.

The breakdown of the DAX current Mean Support 11957 in progress may now seem to cause an immediate plunge towards Key Support 11788, and Yearly Low 11726 before eventually rebounding to retest Mean Resistance 12170 on short to a medium-term uptrend, while outer Index Dip is looming way down at 11213.

October 9, 2018: American markets had only stock market segments available for trading on Monday as US Treasuries were closed for the national holiday. However, they did have an ETF's to follow along, although, and that has been suffering, and thus we saw a very inconsistent trading days pertaining to main indices.

Seeing the DJI off 200 points coming off from its high, we ultimately found a favorable market close. Attention-grabbing was that utilities had found excellent support level at that time, while we see quite a few profits taking in technology as well as real estate relatives. Observe Step 3 in progress. 

Asian markets will undoubtedly be a guide for today's (Tuesday)  European trading session, however having seen having a positive retrieval in the later part of the trading session, virtually all eyes will get back to the peripheral factors.

The Nasdaq has been in the center of attention on Wall Street yet again, as the tech benchmark continues to lead the selloff in US stocks. The Nasdaq hit a two-month low today, dipping below last week’s low.

While the fear-index is still below the 20 level, which is considered the line-in-the-sand by the majority of analysts, the behavior of the VIX changed, and although today’s US bank holiday likely contributed to the wild swings, this is something to keep an eye on in the coming weeks. 

The US Dollar gathered ground in comparison to the Euro Dollar, the British Pound, and the most EM (emerging market) currencies, and even though the Yen, the Aussie Dollar, and the Kiwi Dollar were able to remain in the positive, the uptrend in the DXY (Dollar-Index) is apparent. Intermediate price levels to watch are Mean Resistance $95.99 and Mean Support 94.90.

October 6, 2018: Right after plummeting in early morning trading session on Friday, stocks regained a bit of ground in the afternoon session but nonetheless finished the day for the most part lower. With all the decline on the day, the primary indices added to significant losses placed in the last trading session.

The primary indices ended the Friday's session solidly in the negative zone, however, well off their low levels of the trading session. The S&P500 dropped 16 points or 0.6% to 2,886, the NASDAQ plunged  91 points or 1.2% to 7,788, and the DJI slid 180 points or 0.7% to 26447 (See the Daily Chart Analysis below).

For the first week of Q4, the S&P500 declined by 1%, NASDAQ dove by 3.2%  to its lowest finishing print in more than 30 days, and also the DJI surrounded small -  less than a tenth of the percent.

The NFP report numbers were weaker than estimated; however, the revision number was substantial! The print arrived in at plus 134,000, versus expectations of 185,000, yet the rate high a 1969 low level of 3.7%, although wages increased to decent 2.8%. A lot has been given of the 50 years low in the unemployment data, and somewhat rightly, however, I would point out that a version of  87,000 is a large number.

Nonetheless, the marketplace seems to be focusing on the US Treasury marketplace and the somewhat unstoppable increase in yields. Even though cash stocks opened the session positive, it wasn't long before focus has been drawn in the direction of a bond market. The afternoon's ISM report sped up the bond weakness along with 10-Year's placing four basis point to close at 3.23% on the day.

October 5, 2018: American futures had been heavy just before the cash market opened; hence a 200 point drop wasn't any surprise. The NASDAQ Index drove the majority of Thursday lowers and even finished down minus 1.8%. The Russell 2000 decreased by 1.5% as brokers jostled by way of volume. Virtually all indices climbed off of their respective day's lows, then again even the key DJI as well as S&P500 indices closed down negative 0.8%.

Wednesdays ADP report frightened markets, and now we hold out to see precisely what Fridays Non-Farm-Payroll will deliver. The marketplace has been shaken as a result of a rapid rise in Treasury yields which continues to handle the question of why is this harmful to the stock market! The global capital flow proceeds to be heading towards America for the time being now, and rising interest rates is only going to speed up that demand. This is definitely going to be a thrilling battle to observe and will probably end up being very volatile also!

Both the French CAC 40 and UK’s FTSE 100 finished close to negative 1.3% while the German DAX posted a loss just minus 0.35%. The DAX Index managed to post a positive for several hours in mid-day trading session, however, could not hang on and declined at the closing hour.

The HK's Hang Seng shed 1.8% on the session, although even worse was the Bombay Index SENSEX which was down massive 2.24%. Even worse for India is the fact that INR remains to be in trouble, with record lows at 74.15 witnessed once again on Thursday. Japan's Nikkei Index held in somewhat better, slipping just minus 0.56% as the Yen currency traded down to the middle of 114’s handle.

October 4, 2018: The big surprise for American markets emerged on Wednesday following the ADP employment number report released in the morning. We were treated to the very best number in several months and a lot better than the plus 168,000 found in the month of August. Services captured their quickest ever rate, and the bond market took its time and energy to respond. However, late in the trading session Ten year and Bonds smashed critical levels, so we observed prices hit throughout the remaining session.

The long Bonds are experiencing yields it is not observed in more than four years, while two’s hit ten-year high levels. , and that has been what started the stocks rally. Most main indices had retreated from their high on the day as interest rates rallied, however right now it is the conundrum of - would they go along with rates or perhaps currency, as this will unquestionably pick up the Dollar from this point on.

A somewhat subdued trading day for the German market on a national holiday, however, the emphasis remains to be about the Italian budget offer with BREXIT in no way far from anyone’s thoughts.

October 3, 2018: The large-cap DJI struck yet one more all-time high on Tuesday to further improve a solid opening for the fourth quarter. Nevertheless, it wasn't all optimism as many small-cap indices suffer, even though the broader S&P500 hovers close to an unchanged territory. The seriously lagging small-cap market segment is yet again looking scary for stock bulls, as the Russell 2000 index is lagging in performance the much broader equity market.

October 2, 2018: Intriguing that the high levels in American indices were hit during the early trading session, which in turn tended to drift the market balance of the day. Technology is continually a serious concern and thus much so that we all saw the NASDAQ Index closed on a small positive side. 

The Canadian trade package has been supporting a large capitalization stocks, however, is not the particular news technology sector was demanding.

That hopefully will most likely come as soon as the USA/China trade package is reached, however, we'll obviously have to wait patiently for that one out and about. The capital stream continues to be into the Greenback and mainly out of many Asian EM's (Emerging Market) currencies. 

This Being the first trading week of October, most are already referring to Friday's employment job report. It's the beginning of the fourth quarter, so it's unlikely we'll need to hold off until Friday before we begin to see signs of all new fresh capital flow.

The NASDAQ completed its inner Index Rally 7665, and it is posed to test the Mean Support 7532, while additional Mean Support 7414, 7352 along with Key Support 7194 is resting below. On the upside continues retest of the Key Resistance 7660 is keen. 

October 1, 2018: German stock market rebounded today in the middle of reducing trade worries after the United States and Canada reach an agreement on a perspective NAFTA (North American Free Trade Agreement) deal. The benchmark DAX Index opened higher after falling 1.5% on Friday's session.

In economic news releases, Germany's retail sales improved much quickly in the month of August pushed by increased food as well as non-food product turn over, numbers coming from Destatis pointed out. Retail sales expanded by real 1.6% YoY in August, much faster than the 0.9% growth witnessed last month. The total annual rate arrived in line with projected targets.

Euro common market manufacturing undertaking expanded at the slowest pace in twelve months in last month, finalized data coming from IHS Markit pointed out. The factory PMI decreased to 53.2, the smallest since September of 2016, arriving from 54.6 in August. The earliest estimation has been at 53.3.

With impressive open rally, the disruption on Mean Resistance of 12431 established on 21st of September and retested on 27th of September will undoubtedly bring intermediate long-term bullish implications, having upside target to completed inner Index Rally 12467, with further assault on Key Resistance of 12562. 

On the flip side, the breakdown of the current Mean Support 12249 in progress may now seem to cause an immediate plunge towards to Mean Support 12098, before eventually resting at vital Key Support 11788 on medium to long-term downtrend.

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