So last weeks events were a bit thin on the ground, but the ECB policy meeting was probably the most important. The governing council or rate setting committee, that sets rates and monetary policy, announced a slight change to their forward guidance.

This included the announcement that the ECB is in no rush to raise rates. The bank also said that they would account for higher inflation tolerance in their overall policy mix. In short the ECB said “they expect to keep interest rates at their present or lower levels until inflation reaches 2% well ahead of their projection horizon AND remain durably at or above that rate for the rest of the projection period.

In a nutshell, no rate rises even if inflation remains stubbornly high for a protracted period.

The bank confirmed that the recent Delta variant spread is a “growing source of uncertainty.”

The Euro, albeit almost becalmed last week, as the week before, fell slightly – reflecting the unlikelihood of any rate raise or policy tightening I the next 18 months.

So, its Central Banks that continue to support the markets and determine the direction of everything from equities to bonds, foreign exchange, and commodities.

……….and we have another key meeting this week from the Federal Reserve.

Review

FTSE +20 +0.28% DOW +374 +1.08% S&P +85 +1.96% NASDQ +410 +2.85%

DAX +193 +0.83% NIKKEI -455 -2.62%

Once again equity markets confirmed that, dispute a resurgence in Covid cases across Europe and the US, there remains only ONE game in town. Namely equities!

And look how these markets have rallied since the lows at the start of the Pandemic last March.

The FT published a report, authored by UBS, which highlights the winners and losers. You only have to look at the super wealthy flying into space to know who the winners are.

Wealth inequality has reached record levels – where data shows US

individuals’ net assets against their liabilities rising dramatically since early last year. The net worth of the top 1% of people is now 26 times their liabilities. For the bottom 20% its just 5 times................................................ this is the widest it’s ever

been. TBH – I was surprised how high the bottom 20% are…….

Instead of flying into space the super wealthy should be taking the federal reserve out to lunch. Maybe they are already doing that as well.

EURUSD -0.34 -0.28% GBPUSD -0.13 -0.1% USDJPY +0.47 +0.42%

Gold -10 -0.55%   UK OIL +0.98 +1.34%    US OIL +0.63 +0.86%

Bitcoin +2,247 +7.16%

Data / events

Following hot on the heels of the ECB last week we have the Federal Reserve / FOMC meeting this week which is always interesting.

Whilst not an event the market will continue to watch the Covid infection rate

across Europe, US and Far East and Australia as the Delta variant takes hold. Monday

Germany                  IFO Business Climate Survey. Broad survey of manufacturers, builders, wholesalers, services, and retailers; Euro / Dax sensitive Continuing to climb

Tuesday

US                               Consumer confidence for Conference Board. USD sensitive to a more notable pull back

Wednesday

US                                           Crude inventories. Last week saw first build in stocks

in a few weeks.

US                                           Federal Reserve FOMC policy meeting. No change in rates. And less likely as the Delta variant surges in some of the Southern States, Will the FED continue the discussion regarding the eventual tapering of the Fed’s $120bn monthly asset purchase programme? i.e., when will they start to slow the purchase of bonds, which pumps billion of USDs into the financial system each month. Previous advice was that the Fed will continue with the purchases until it sees “substantial further progress” towards its inflation and employment goals. So, no tapering for a while.

USD, Equities, and commodities all sensitive to this key event.

Thursday

US                                           Advance GDP. First of three releases of the GDP for Q2. This measures the value of all goods and services produced in the period April to June. Quarter on quarter rise of a whopping 8.5% following 6.4% in Q1.

And the FED will still be keeping rates at record low levels       !!

Friday

US                                           Revision to UoM consumer sentiment reading. Still confident!!

Saturday

China                                     Manufacturing PMI – Is China’s growth spurt post pandemic recovery starting to run out of steam?? This matters for the global economy although the US has clearly picked up any slack due to slow down in the World’s second largest economy.

 A slightly longer trade recap than expected from Adrian, but in this video he looks at the Scanner tool and all the trades triggering 3 bars ago… the idea being that this Accelerator strategy has a typical hold time of 1 to 3 days. Adrian reviews these latest trades, warts and all for a full trading recap.

Support, resistance, chart patterns… these are extremely complex techniques to identify trades, and extremely subjective too. And that’s the problem. Today’s Trade of the Day is all about Walmart’s latest buying opportunity on the Momentum Stocks system. A great trade, and most importantly, with clear indicators and algorithms, it is extremely simple for our system users to spot too.

I hope you had a great weekend.

let’s check in with what’s been going on in the markets… and what’s in store for this week.

Markets react to Fed ‘guidance’ change

Following the slide in US equities on Friday, global markets were lower overnight…

The risk-off move was quite marked last week, although we have seen a noticeable rebound off the lows in the overnight futures markets.

But it’s clear that traders remain nervous.

Financial markets continue to reverberate to the news from the Federal Reserve’s policy meeting last week… and the prospect of rising interest rates down the line.

In case you weren’t aware…

The Fed communicates its intentions to the financial markets using terms referred to as guidance.

This states what the Fed’s thinking is on the path of interest rates and other more recent monetary tools such as quantitative easing (QE).

QE is the purchase of bonds – both sovereign (i.e. government) and corporate (bonds issued by companies to borrow money).

By buying these bonds, the Fed provides liquidity to the financial markets.

Up until last week the Fed made it very clear that rates would be kept at record lows for a long time – until at least 2024.

The markets got comfortable with this – which is why they have been rising relentlessly since March 2020.

Even as inflation spiked higher in recent data, the Fed allayed markets’ fear by restating their view that the spike in inflation was transitory.

So, what happened last week that changed all this?

Simply the FOMC (Federal Open Market Committee that sets interest rates), decided to change its guidance.

It said it now expected to raise rates twice in 2023, which effectively brings the first rate rise forward by one year.

No wonder the market reacted…

The reason for this change is that the Fed expects growth and inflation to be higher than previously forecast this year.

2023 is still a long way off, of course.

But what it tells you is that the Fed is having to change its guidance as the post pandemic economy heats up.

That means it could change again if this economic hot streak gets even hotter or persists longer than expected.

Of course, the other element is how transitory this inflation spike is?

Will it persist longer than August?

Time will tell.

Let’s review the markets and see just how the markets reacted to this shift in policy guidance from the Fed.

As you’ll see, the move last week affected all asset classes as this risk-off move took hold

Review of last week’s key action

FTSE -117 -1.63% DOW -1189 -3.45% NASDQ -39 -0.28% DAX -245 -1.56% NIKKEI unch

Clearly equities were knocked badly by the Fed’s change in guidance.

The falls were notable, not for the magnitude (because equities have had a lot worse times in the last 15 months, what with Covid panic and so on) but because this was the worst week in 4 months.

That probably says more about how resilient equities have been since then.

What is interesting is how unaffected the tech shares were.

Remember it was the reflation trade that has been driving markets higher in the past few months.

So, any unwinding of this approach would likely NOT hit the tech shares, as they had not benefitted from it in the first place.

UK shares were hit hard due to the resource sector coming under pressure.

Miners were particularly hard hit whilst oils escaped from the worst of it.

EURUSD -2.46 -2.03% GBPUSD -3.14 -2.22% USDJPY +0.55 +0.5%

Not surprisingly the USD got a very big lift from the Fed’s updated guidance.

Rising US interest rates will provide USD holders with a better return.

It’s only marginal but that’s the way the forex markets have been working where rates have been crushed to zero across the developed world.

The Dollar Index had its best week since April last year, as the EURO and GBP fell sharply.

Ironically, economists expect the MPC to raise rates by this time next year here in the UK, but that had little impact in this general USD rally.

Gold -114 -6% UK OIL +0.67 +0.9% US OIL +0.63 +0.9%

Bitcoin -1,980 -5.37%

Reports over the past 10 days said that gold would benefit from the increasing threat of inflation.

So, why did gold fall 6% last week? That’s its largest weekly fall since March last year.

Well, as I have said on many occasions the only factor that will cause gold to rally is a continued fall in the USD. Well, that had been happening, gradually.

But not anymore as we have just been discussing.

Clearly inflation is NOT currently the driver in Gold – it’s the US Dollar… and has been all year.

Remember, a strong US Dollar is not good for USD priced commodities, in general.

However, oil did not suffer from the strong USD as demand remains strong and growing in the post pandemic economic recovery.

Some analysts are forecasting a spike in prices to $100 per barrel. Time to sell, I hear you say!

Bitcoin struggles as China bears down on Bitcoin mining and bans use of crypto as a medium of exchange.

Data / events for the week ahead

A busy week with manufacturing and services data plus the MPC policy meeting

Monday

EU ECB’s Lagarde testify at a virtual hearing before the European Parliament Economic and Monetary Affairs Committee. EUR and EU equities sensitive.

Tuesday

US Chairman of Federal Reserve testifies on the Fed’s emergency lending programs and current policies before the House Select Subcommittee on the Coronavirus Crisis

Wednesday

EU, UK and US Flash readings on manufacturing and services sectors across most of the developed world. Still running hot? Markets will be keen to know.

US Oil inventories. Tight market still.

Thursday

UK MPC – key meeting as inflation picks up and MPC ponders changing guidance, similar to US. Watch Sterling and UK equities.

US Final of three GDP readings. A hot Q1 followed up by an even hotter Q2 - probably??

Friday

US Revised UoM consumer sentiment. Still solid but a more concerted fall in equities could dent sentiment in the months to come.

OK, so let’s see how the week unfolds.

I’ll be back in touch with more news and views on trading the markets…

A quick video to demonstrate that buying Cryptos isn’t the only game in town. Plenty of profit can be made from shorting too, as Adrian explains in this video, reviewing 15 major cryptos and the opportunities over the last few days.

Monday 7^th June 2021 – All eyes on Inflation

Stock markets are on the defensive side overnight following a near record close on US equities

On Friday, the Dow came within 1% of its 35,091 all-time high set on 10^th May.

And the broader S&P500 came just 5 points (0.1%) shy of its record.

For now, investors are bullish about the outlook for the world’s largest economy... and about how the US central bank (the Fed) will support markets. Will that change? We’ll have to wait and see what unfolds this week…

It’s likely that this week’s US inflation report will be keenly anticipated.

That might put a dampener on the markets until it is released this Thursday.

Over in the commodity markets, the oil price was weaker overnight.

After a strong week last week for US crude (+5.4%), it pulled back around one dollar (1.5%) on Sunday night.

Oil traders are waiting for talks this week between Iran and world powers about a nuclear deal that could release further crude oil supply to the markets in concluded positively.

Which way these talks go could bring some extra volatility into the oil space – great news for those of us who like to trade it.

Review of last week’s key action

FTSE +46 +0.67% DOW +227 +0.67% +26 +0.61% NASDQ +65 +0.48% DAX +173 +1.12% NIKKEI -776 -2.61%

US equities jumped Friday following a weaker than expected Non-Farm Payroll report.

 Despite reporting 559K new jobs, the report was still a miss on the consensus among leading analysts of 645K jobs.

The conclusion, albeit likely temporary, was that this report made it less likely that the Fed (the US Central Bank) would be motivated to change guidance or reduce the $120 Bln monthly quantitative easing (QE) currently in place.

In other words, interest rates aren’t likely to rise anytime soon, and the Fed will keep supporting the markets.

That was enough to keep investors happy and buying stocks.

Stocks up, dollar down

There had been a view recently that the US economy was in danger of overheating (which might lead to the Fed tightening monetary policy).

But this notion has been quashed by the past two months’ weaker-than-forecast employment data.

This did not get anywhere near the One Million new jobs that some economists were expecting in April.

Other markets were also similarly affected. 

Bonds enjoyed the same sentiment, with yield on the 10-year Treasury falling 7 basis points as prices rallied.

Not surprisingly, the US dollar (USD) fell back on the news.

That is because keeping current record low interest rates will not encourage investors into the USD.

Back in the stock markets, it’s not just US equities that have been on a run.

The Stoxx 600, the pan European Index, hit another record close Friday, as sentiment continues to go from strength to strength in the Eurozone 

The German DAX also posted another record close.

EURUSD -0.25 -0.2% GBPUSD -0.3 -0.22% USDJPY -90.34 -90.3%

In the currency (forex) markets, the US Dollar recovered a little lost ground last week but remains close to its weakest level this year, albeit in a particularly tight range.

Sterling also trades within a tight range with both the USD and the Euro.

Growth estimates for the UK this year are one of the highest in the G7 and investors remain confident in UK plc.

Gold -13 -0.7% UK OIL +2.66 ++3.85% US OIL +2.70 +4.05% Bitcoin +1,178 +3.3%

In the commodity markets, oil hit a multi-year high last week as it tracks the fortunes of the stock market.

US oil touched $70 a barrel for the first time since October 2018.

Gold has been showing signs of running out of steam. Last week’s move was also helped along by a slight recovery in the US dollar.

With a weaker than expected employment report, will inflation be less of a worry?

Sadly not. Markets remain nervous about inflation, and quite rightly so.

We have had benign inflation for two decades or more so there is a generation of adults that have never known the destructive effects of persistently high inflation.

Not that this is what is expected but the media are highlighting daily the jump in prices.

Last Thursday the FT put out a piece on Global Food prices, which have jumped alarmingly over the past month.

In fact, food prices in May jumped 40%, which is the biggest jump since 2011.

The reasons are many but can be summed up by a post pandemic surge in demand.

This is especially the case in China which, according to the FT, has been buying up grains and soyabeans in huge quantities.

Data / events for the week ahead

A quiet week, as tends to be the case the week following US employment data.

The highlights this week are US inflation and ECB monthly policy meeting.

Monday

No significant data

Tuesday

Ditto

Wednesday

Canada interest rate decision. No change in rates expected from the Royal Bank of Canada (RBC) as Canada lags the US recovery.

Commodity surge will underpin the Canadian dollar although, like others, Canada crosses remain becalmed for now.

US Crude oil inventories. All eyes on Iran nuclear talks…

Thursday

Eurozone ECB monthly policy meeting. The Eurozone economy continues to improve as lockdown measures are eased across the bloc.

Unlikely there will be any change from the ECB. Inflation has jumped to 2% from 1.6% the previous month but, like other Central banks, the ECB expects this to be a temporary phenomenon and expects prices to ease back in July / August.

US CPI – inflation data. Another jump could unsettle markets. Expecting core prices to slip back to +0.4% monthly rise. This would still propel the year-on-year rate to 4.7% compared to 4.2% in April.

It’s the headlines that matter and markets will be sensitive to anything that overshoots this mark.

Friday

US University of Michigan consumer sentiment. Sentiment fell last month but is expected to rebound as inflation nerves settle down a little.

Good luck in the markets.

12-04-2021

Markets weaker overnight in Far East despite jump in Alibaba which rallied 5% following the $2.8Bln fine from Chinese regulators re anti competitive practices. Clearly the consensus for a greater fine and this now puts the inquiry to bed.

US markets may be given a further boost today following the airing of an interview with Jay Powell, the chairman of the Federal Reserve. Powell described the US economy as being at an inflection point, with growth and new jobs about to accelerate. However he warned that new hot spots of covid infection could impede the recovery which underlined the importance of the vaccine roll out.

The hope is that the vaccination program will break the link between infections and hospitalisations whilst slowing the spread of the disease as evidence emerges that what is happening here in the UK.

Review

• FTSE +178 +2.65%
• DOW +647 +1.95%
• S&P +109 +2.71% N
• ASDQ +420 +3.11%
• DAX +127 +0.84%
• NIKKEI -86 -0.3%

Equity markets had another positive week, hitting record highs in US indices and the pan European Stoxx index.

Investors remain positive about the medium term outlook, looking past the end of the pandemic.

Friday was tougher for US markets as bond yields started to rise again

following the announcement of the regular upcoming auction of bonds.

Another concern for US markets is complacency and the overall level of optimism – any shift here could cause a set back in equities. Maybe Biden’s tax plans might be one of the possible causes.

UK markets had a strong week as the FTSE100 hit its highs for the year. Cyclical stocks and the fall in Sterling helped push the index higher.

Followers of UK plc will know the FTSE250, a better barometer of the health of the UK economy, has been nudging all time highs for the past week – rallying 3.5% last week - breaking the all time high from late December 2019.

EURUSD +1.37 +1.16% GBPUSD -1.16 -0.84% USDJPY -1.03 -0.93%

The US Dollar had showed signs of a turn down just before Easter. This move accelerated last week as traders reacted to the soothing words of the Federal Reserve following release of minutes from previous meeting.

Yields on US treasuries had backed down also in response but the mood altered Friday with a rise in yields again….Hence the bounce on Friday in the USD.

Gold +9 +0.52% UK OIL -1.61 -2.5% US OIL -1.89 -3.08%

Gold has had a good run, helped in part by the fall in the US Dollar over the past week or so. But like the US Dollar, Gold is showing signs of a pullback. Although it is worth noting that Gold did manage a higher high last week so the technical don’t look too bad.

It all depends on the US Dollar in the medium term.

Oil is becalmed for now following the reassessment of demand in the medium-term which caused the sell-off Mid-March.

Data / events

A busier week for data and events in this full week following the Easter break.

US banks will be in the spotlight with reports from JPMorgan Chase, Bank of America, Citigroup; Wells Fargo; Goldman Sachs.

Banks have been feasting on ideal conditions for investment banking deals. Expectations will be high so the outcome depends on how well these banks can match / beat forecasts.

For the UK, more normal life resumes today with further easing of the lockdown measures as non-essential shops and other businesses open.

Oh and pubs can serve drinks outside. To highlight the desperation that clearly many of us have been feeling, a pub in Sheffield opened its garden last night and was packed (with no spare tables). Midnight in Sheffield at below zero degrees temperature – what’s there not to like?

Boris Johnson reminds us all to be responsible – I wonder how many will listen to that advice?

Monday

US                               Jay Powell speaking about the economy on 60 Minutes program. Can effect markets – with sensitivity towards bond yields and tax rise implications.

US                               Not something we would ever highlight but results of 10- year bond auction announced. Further stress on yields?

Tuesday

US                               CPI - Consumer Price Index. Still remaining in check. Any uptick will likely be seized up by bond traders and then equity traders!

Another bounce as US consumers enjoy the $1,400 windfall via the fiscal aid package provided by the Biden administration.

Wednesday

NZ                               RBNZ monthly policy meeting. No change from the NZ central. Bank likely follow on from last month’s comments that global and domestic economic conditions were not changing enough to warrant a change in monetary policy.

Eurozone                  ECB President Lagarde due to speak at Reuters hosted event. Not sure of topic but Lagarde tends to tread a careful line with comments relating to economic policy.

US                               Not be outdone, Powell is speaking again. This time at the Economic Club of Washington. Again any comments on monetary policy will tend to be seized upon.

Thursday

US                               Retail sales. 4.7% expected – a huge jump as US consumers enjoy the $1,400 windfall via the fiscal aid package provided by the Biden administration.

US                               Philly Fed Manufacturing Index. A pull back from March’s

strong reading.

Friday

US                               Prelim UoM Consumer Sentiment reading. Climbing back to pre-pandemic days.

People are often asking me to call a live trade in our free introductory events, and whilst that isn’t the purpose of these screenshare sessions, it is something that I like to do from time to time.

This week, I was teaching the merits of the 4-hour timeframe, which I consider extremely underrated by many home traders.

During the workshop, I also explained some of the details for my 4-hour chart strategy called S4. It is looking at turning points that are confirmed by strong trends.

I ran the Trendsignal scanning tool which identified Gold as an upcoming opportunity that would be triggering in the next few minutes.

The trade was confirmed at 2pm on Tuesday, and has since gone on to fall over 200 points. Please see the chart below:

This is a great example of a Short trade, inline with the dominant trends of the market.

Looking at the Annotations on the chart, we can see the “Sell trade” was inline with a down trend on the Daily (DT) and Weekly (WT) timeframes, a descending chart pattern (CP) and the intermediate trend (orange line).

It was showing all the hallmarks of a strong continuance of an established downtrend. And here we are now, some 200 points lower.

This is a great trade, but it wasn’t the only popular market to trigger an opportunity that day.

This chart on EUR/USD shows another short opportunity, triggering at 6pm. Again, this reversal and turn lower is supported by a down trend on the Weekly timeframe and the intermediate trend too. In addition, the RED arrow gives a clear marker for some of our favourite 4-hour chart opportunities, which works as a great confidence builder for new traders.

Yes, this hasn’t moved to the same extent as Gold, but with a tighter stop, the potential gain is arguably even more attractive.

What is S4

The S4 strategy is a part of the Trendsignal plus training programme, and compliments the once-a-day strategies that are also available on the course. It can be applied to FX, Indices and Commodities to help identify Long and Short opportunities, with a typical trade duration of 4 hours to 3 days – ideal for a second income and those with limited time to analyse charts.

The Trendsignal Plus Course is available now for purchase and includes strategies, scanning tools, comprehensive training and live coaching. Call +44 (0)1234 757553 if you are interested in enrolling.

Happy trading

Adrian Buthee
Head of Trading

I had to give an update on EURUSD for the D1 Accelerator strategy which continues to pick up fantasitic gains for traders. Yesterday we hit target for the 10th winning trade in a row since October. Nice bite size winners, all hitting target within 3 days. And that’s the point of the strategy. And at approx. 40 pips win per trade, that’s 400 pips on just this one market.

Very strong morning on the Dax, all starting from a pre-market buy at 7:04 – too early for trading really, but it sets the scene for an extremely strong session, after the market opens. Another buy at 7.44 before we hit our Trade of the Day at 9:00am. A text book continuation trade, hitting the trailing stop for a 3:1 profit of approx. 50 points. With a 1% risk, that’s a potential 3% profit in 40 minutes.

The Stock indices continue to move to positive territory as we see the Dax move to record highs this week. All in all, a very strong risk-on week for the stock market and US Dollar weakness, and Trendsignal traders saw that from the opportunities created. Adrian explains this latest bacth of Stock index trades in today’s video; looking at buy trades on the FTSE100, GER30, US30 and SPK500 indices, all rallying considerably over the following 2-3 days after the Sniper signal was generated. A total movement of over 1600 points from a very clear rules based strategy.

As the US Dollar continue to slide, the D1 Accelerator strategy continue to pick up great winning trades. In this video, Adrian Buthee review’s the last 4 buy trades and how the strategy looks for quick scalps off the Daily chart, for trades lasting 1 to 3 days. 4 winning trades over the past few weeks, picking up at least 160 point profit from a simple to use, rules based strategy

Another great Buy trade on the AUD/JPD for the D1 (Daily Chart) Accelerator strategy. We have had 3 buys in the last 3 weeks, all quickly hitting target and in this video Adrian reviews the opportunities and the merits of each one, including looking at trends, momentum, turning points and chart patterns.

Today’s highlights included Friday’s and today’s pick up in Tech stocks as the equity markets rebound from the 4^th negative week in a row. Covid infections are on the increase and the US continues in their stalemate over the next Federal stimulus package to be agreed between the Democrats and Republicans. This week offers the first of 3 live TV debates between Trump and Biden, with Biden remaining ahead in the polls. News on Trump paying little-to-no tax over the past 17 years is also likely to feature strongly. How will a Biden win affect the markets? We go through all these points in today’s Podcast.