Is trading this market engineered the calm ahead of the storm or perhaps has the Federal Reserve mastermind to destroy volatility indefinitely?
Current market volatility is in fact nowhere on the horizon as the closing of 2017 begins. The Chicago Board Options Exchange Volatility Index (VIX), just completed its calmest fourth quarter on record, averaging just under 11 in the last three months.
The measurement has gone down for past three straight quarters, its lengthiest streak of decreases ever since the year 2011. The Volatility Index employs options prices across the S&P500 Index to create a way of measuring anticipated equity swings during the following month. It leans towards slide whenever equities are climbing, and rise when equities are falling.
However, the absence of volatility has not tapered off volatility trading per se. A high number of traders and investors do not see the relativity calmness ending. Volatility has gone down so low this current year that the Chicago Board Options Exchange has had to add entirely new, much smaller strike prices: the kind level by which contracts can be executed. Traders and investors are now able to bet that the Volatility Index could possibly fall as far as 9.
In spite of this, big-shots with their expensive software programs and charts are annoyed that current market has not crashed at this point like it was meant to do way before this time, probably the most disliked bull market of all time. Most of us are cognizant that bull markets are expected to finish having fireworks, the abnormal volatility which in fact has not happened yet. Could perhaps this time around be very different?
Most likely not because this bull market has perhaps the weakest fundamentals numbers ever considering the debt at each and every level, equity buybacks, light expansion, geopolitical worries so what exactly may be the catalyst? I'm wondering with the nation turning into progressively more split up and divided if specific abnormal political happening could precipitate a market crash?
And BTW, will we at this point recognize the Volatility Index "VIX" together with the Consumer Price Index (CPI) along with a lot of other alphabets stats as propaganda?
Trading was affected somewhat by the Federal Reserve minutes this week; the authorities laid out plans for a December 2017 interest rate hike on top of that an additional three interest rate hikes the coming year. This has been not a big surprise; the Federal Reserve funds estimation of 77% for a 25bp interest rate hike before minutes released was known. The Federal Open Market Committee officials specified they had big worries over the low inflationary conditions and exactly how long it'll stay on. This concern brought on weaken Dollar. However, for the time being, the bull market party will continue.
The US stock market shifted moderately higher this week, reaching new record highs once again, receiving a boost from the 13-year high in consumer sentiment and strong retail sales.
The Dow Jones Industrial Average improved 32 points or 0.1% to 22,872; the NASDAQ Composite gathered 14 points or 0.2% to 6,606, and the S&P500 Index added in 2 points or 0.1% to 2,553. With average volume, 769 million shares traded on the New York Stock Exchange, and 1.7 billion shares were swapped on the NASDAQ exchange.
Eurozone stock markets had been confused this week following the Catalonian president’s much-awaited address, as Puigdemont asked for peaceful answers as well as talk with the central Spanish government, furthermore requested a mandate to profess an independent state of Catalonia.
For the week Eurozone stocks ended mixed, as a sharp jump in Chinese exports supported the key materials segment. While on Friday the German DAX30 Index inched up by 0.1%, the U.K.'s FTSE100 and French CAC40 Index dipped by 0.3% and 0.2%, respectively.
The comment from my travel: I've been amazed at the infrastructure changes in Eastern Europe. Especially Poland, they have fairly recently blossomed to be a front-runner in the European region for Information Technology (IT) at the very cost-effective services, and also to be known as skilled workers. As an example, Credit Suisse from Switzerland fairly recently relocated a selection of their back offices to Poland, and then I came across numerous major corporations doing the same thing. Should there be any sort of indications of growth in Eurozone - Poland by far and most likely other Baltic region countries including Latvia and Estonia look like they're an area precisely where future growth can present themselves.
The stock market in Asian region ended higher to finish out the week, together with latest positive worldwide economic optimism continuing to boosting sentiment, while Japanese stocks increased they rally to ranges most certainly not witnessed in over twenty years.
The Japan Nikkei225 Index leaped by 1%. The stock market in Aussie land and India advanced higher as well, with the latter increasing on the heels of late Friday's encouraging inflation and industrial production numbers. The China's Shanghai Composite Index climbed by 0.2% on the day.
Many of the leading trading markets around the world have created all-time highs or even significant highs levels. However, Shanghai Composite Index isn't automatically following that routine; there will be a point in time when the Index will be more valuable than the Dow Jones average.
We are witnessing companies such as Huawei grabbing market share away from the likes of Apple company and in many cases offering as sophisticated technological innovation to the marketplace but quicker as well as a lesser price with a similar quality.
As China's government opens its marketplace further, we will have many other companies accomplishing the same thing and chipping western market share, nonetheless right now technical innovation is undoubtedly driven by the America and to some degree Europe.
US Bond Markets were closed as Monday marked Columbus Day. This is a rare occurrence since only one of 2 days within the twelve months in which the American markets are open, and the Bond markets are closed. Another is veteran’s day.
Meanwhile, US Bonds had taken notice of the Consumer Price Index numbers, with the curve flattening all the more. Consequently, the US bonds, US Treasuries expanded the upside push experienced during the last several trading sessions. The yield on the ten-year note, in which proceeds opposite of its price level, has dropped by 4.3 basis points to 2.280%. The European bonds, German yields fell on Friday throughout the curve but continue to be up to Ten years offering with negative returns.
While we keep on trading in everything that promises to be a crazy October indeed, here's an unexpected glance at the US Dollar, commodities, as well as yellow metal.
The US Dollar has reclaimed its uptrend. The Dollar has rebounded sharply from a significant oversold environment, leaping higher than 2.5% over the last 30 days. This comes on the heels of the severely oversold state throughout several time frames. In other cases it confirmed a robust 1-month return after having a 5% triple-time-frame drop, it led to a lot more, and it was not a good sign in which push had changed.
Currency trading market settled down following the earlier frantic trading sessions. However, the rally continued in Aussie land, with the Aussie Dollar and the Kiwi Dollar adding to their latest advances. The Japanese Yen furthermore carried on to move higher, and then the British Pound outperformed both their rivals - US Dollar and the Euro Dollar in the choppy trading session.
Crude oil, notably the Brent contract, rebounded following the earlier drop, as the Iraqi-Kurdish standoff around Kirkuk created energy traders and investors uneasy. West Texas Intermediate crude oil jumped by $0.85 to $51.45 per barrel, and wholesale petro was $0.04 higher at $1.62 per US gallon.
Yellow metal reaches a remarkable technical moment since the short-term declining trend has become busted. However, the significant $1308 resistance continues to be in front of the Yellow metal. The long-term outlook is impressive, regardless of the undoubtedly risk-on sentiment. However additional market consolidation may be possible before the subsequent higher move.
The Gold has advanced towards the weekend crossing the $1300 level once again, with all the long-term upward trend continuing to be dominant, regardless of the general bullish trend pattern in risk assets.
Warning: Do not keep Gold in the Swiss Banks or any commercial bank in any country. Precious metals are wealth preservation assets. For that reason, they should not be held inside a ruined as well as a vastly leveraged financial system. Actual physical gold and silver have to be located in the most secure private vaults outside of the commercial banking system and having personal accessibility to the precious metals by the beneficial holder.
Switzerland in all likelihood possesses the greatest political system on this planet, and also the overall economy is exceptionally well managed. It is sad that this Swiss National Bank (SNB), as well as its banking system, have departed from the earlier style of Swiss Banking which has been depending on service, conservatism, as well as personal liability.
Instead, we've got a system having bank management leveraging the money hundreds of times when derivatives will be added. Then, and losses are socialized, and profits are privatized. i.e., picked up by depositors or government.
The earlier Swiss banking model type has been exceptional however has been wrecked by the United States government chasing after a high number of Swiss asset managers and bankers. Oddly enough, nobody has gone after the management of all of the leading United States banks, which in turn cost the entire world hundreds of billions of Dollars in 2007-2009 financial crisis.
This week we witnessed BTC (Bitcoin) close and also crack across the Five thousand dollar level the very first time. Bitcoin recovered quickly coming from a more recent decline to 2800 price level observed in mid-September, the problem is that what is the long-term perspective by using these cryptocurrencies in the future. The critical questions we have to ask ourselves: Will the Governments allow this type of currency without the presence of control of government entities or central banks to flourish? Presently, the market capitalization of Bitcoin is only shy of One hundred billion dollars (a market capitalization higher than Goldman Sachs), and also the entire crypto market is about 200 billion dollars.
Lagarde head of International Monetary Fund's (IMF) came out and also said it's time to get really serious about the cryptocurrencies, possibly hinting the Special Drawing Right's (SDR) that will be remodeled into becoming a cryptocurrency in the foreseeable future. Nevertheless, the framework of Bitcoin will make it hard to see Governments embracing Bitcoin in its present form, within the Banking segment to be able to move money from point A to point B one would have to produce a listing of paperwork, for example, Know Your Customer (KYC).
In respect of where the funds originated from and also who you are giving to. So why would Bitcoin be any different? As soon as there are any excuses for Governing bodies to go after, like the Terrorism, Tax evasion, or more dreamed up illegitimate commerce. In my opinion, Bitcoin is going to be shut down (or looked at as against the law) and even substituted with a Government controlled cryptocurrency: Which will undoubtedly relinquish its present interest.
Nevertheless, an exceptionally rewarding trading market day for all those involved, appreciate the experience since there is going to be a great deal of volatility to come as newer restrictions, as well as regulations, will be approved.
In the meantime, Bitcoin continued its mind-blowing breakout push on Friday, setting up the mood for the entire cryptocurrency sector. Nevertheless, Litecoin, Monero, and Ethereumalso came into the rally along with close to double-digit results.
US Housing data might appeal to traders and investors next week, together with earnings season will likely start the ball rolling. With traders and investors more likely to keep watch over numbers on housing starts, home-builder confidence, and existing home sales.
Reports numbers on industrial production, regional manufacturing activity, and import as well as export price are likewise slated to be released.
The Federal Reserve gang is likewise due to launch its Beige Book, the compilation of historical proof on economic situations within a dozen of the Federal Reserve districts.
On international front reports due out next week which are worthy of point out includes the following: In Europe trade balance, Consumer Price Index, and construction output, along with German investor confidence, and new car registrations. In the United Kingdom, we have employment change and retail sales, and inflation figures.
In Asia-Pacific, China's leading figures are, Producer Price Index, Consumer Price Index and Q3 Gross Domestic Product, industrial production, and retail sales. In Japan, trade balance, and industrial production. Aussies will have a report on employment data.
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