ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
Stock Market Commentary: The runway for (short-term) bearishness has greatly shortened. The classic safety trades sprung to life to add exclamation points to the broadening sell-off. After over 6 weeks of near relentless losses, the Japanese yen (FXY) caught a strong bid. Inflation fears returned to the background as traders eased into Treasury bonds (per … Read more
In a blunt and direct discussion, Bank of Canada (BoC) Governor Tiff Macklem made a compelling case for fighting inflation by declaring that “the economy has entered this period of excess demand with considerable momentum and high inflation, and we are committed to getting inflation back to target.” To do so, the BoC hiked its … Read more
Stock Market Commentary: Throw out all the gradual scenarios for a potential climax. The stock market carved out a quick crest that puts the current rally at risk. Out-performance from small-cap stocks and late saves for the S&P 500 and the NASDAQ barely averted a technical setup for a bearish reversal. The stock market goes … Read more
Stock Market Commentary: Forget recession fears. Forget an aggressively hawkish Fed. Forget the stock chart holdouts. Bullish belief delivered another powerful confirmation of what has become an exceptionally strong bounce from March’s nervous test of the last oversold point. The rally launched from the March lows and barely rested or paused. The rally has been … Read more
Stock Market Commentary: The stock market continued its quest to convince us that the world is getting or soon will get a lot better. Perhaps the market is somehow feeding off the definitive hawkishness from the Federal Reserve. Whatever the explanation, market breadth expanded to levels last seen 4 months ago. The rally demonstrates broadly … Read more
The news headlines rang out today that Russia’s leader Vladimir Putin gave the orders to send “peacekeeping” troops into two breakaway regions of Ukraine. Stock market futures reacted instantly. Yahoo had a particularly dramatic headline declaring that futures “tanked.” Reflexively, I checked CNBC to review the preliminary damage: S&P futures down 1.8% and the NASDAQ … Read more
Back in October and November, Bitcoin (BTC/USD) created renewed excitement when the cryptocurrency challenged its all-time high and then set three new all-time highs. Unfortunately, the breakout turned into a fakeout. Bitcoin peaked with the NASDAQ (QQQ) in November as financial markets moved away from aggressively priced risk assets. However, a more sustainable bottom may … Read more
Stock Market Commentary The stock market indices enjoyed an impressive year. However, weak and declining market breadth produced numerous exceptions to the strong performance of indices and ETFs. A number of important and well-known individual stocks corrected, collapsed, and crashed in 2021. For some, the tailwinds of the pandemic ran out. For others, investors tired … Read more
Identify Parabolic Trading I often warn about the dangers of chasing parabolic trading action in stocks and currencies. Since parabolic trading tends to end with steep price reversals, traders need to know how to identify trouble. A parabolic price run-up is an extreme uptrend. It is usually brief and features frequent, often consecutive, trading days … Read more
A month ago I asked “how long can a parabolic Turkish lira last?” The answer turned out to be a month. However, the path to the end included two false conclusions and a massive blow-off top. The trading in the Turkish lira (USD/TRY) provided a new lesson in parabolic price action. Parabolic trading is inherently … Read more