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: Despite recent bouts of trading in or like a bear market, market breadth has somehow managed to avoid closing in oversold conditions. In fact, the last “official” oversold period was 518 trading days ago. Yet, since the NASDAQ topped out in November, market breadth has dropped into and out of oversold on … Read more
In an earlier post on Sunday, I provided reasons to believe that the market was finally drawing a line in the sand for a sustainable bottom. With anticipation, I pronounced I would go on a shopping spreed down to S&P 500 (SPY) 2600. At the time of writing, it looks like I may have to … Read more
The race to zero interest rate policies (ZIRPs) is reaching a climax. Australia: Reserve Bank of Australia On March 3, 2020, The Reserve Bank of Australia dropped its key interest rate 25 basis points (bps) from 0.75% to 0.5%, an all-time low for Australia. In doing so the RBA proclaimed the following in its statement: … Read more
When U.S. Treasury Secretary Steve Mnuchin helped send the dollar careening with commentary welcoming a weak dollar, the British pound (FXB) surged enough against the then hapless U.S. dollar to make me speculate on GBP/USD reaching a blow-off top. GBP/USD did indeed pull back from that point, albeit in very choppy fashion, for almost a … Read more
The following chart reminds me that except for one post-Brexit emergency rate cut and its rapid reversal once the cut turned out to be unnecessary, the Bank of England (BoE) has done nothing with interest rates in the 9 years since the financial crisis. Source: Bank of England During an interview with the BBC on … Read more
Speculators are net bullish on the British pound (FXB) for the first time in almost two years. Source: Oanda’s CFTC’s Commitments of Traders While the net long position is barely above zero, the flip of the script is still significant given how little time speculators have spent bullish on the pound since at least 2008. … Read more
“There’s already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced. It could happen sooner than markets currently expect… …The need for internal balance – to use up wasteful spare capacity while achieving the inflation target – will likely require gradual and limited interest rate increases … Read more
Now I understand better why and how the British pound (FXB) soared so much in the wake of the latest announcement on monetary policy from the Bank of England (BoE). Source: FreeStockCharts.com Going into last week’s monetary events, speculators increased their net short contract position to levels not seen since at least 2008. Source: Oanda’s … Read more
(This is an excerpt from an article I originally published on Seeking Alpha on November 14, 2016. Click here to read the entire piece.) {snip} These quotes came from Mark Carney, governor of the Bank of England (BoE), in response to questions during the Q&A period of the November Inflation Report. I believe Carney reminded … Read more
(This is an excerpt from an article I originally published on Seeking Alpha on September 7, 2016. Click here to read the entire piece.) The theme was consistent for the Markit economic indicators for August: the UK economy rebounded sharply and strongly from the initial post-Brexit blues. Almost across the board, measures of economic activity … Read more