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Weekly-Report-041116 THE TRADERS CLUB WEEKLY REPORT: 04/11/16 CONTENTS: Week in the markets P.4 FX Majors Traded Pairs Summary P.6 US Dollar Index Watch P.7 FX Majors Currency Strength P.8 FOREX FX Major Charts P.9 FX Emerging Markets P.10 FX Emerging Market Chart of the week P.11 FX EM Driver Charts: GSCI, USD Index, MSCI Index P.12 FX Big Impact News P.13 Index Watch: UK FTSE100 P.15 Indices Index Watch: US S&P500 P.16 Index Watch: Far East: Nikkei 225 & Hang Seng P.17 Index Watch: US Market Sentiment Dashboard P.18 CONTENTS: US and UK Equities Short Lists P.20 Equities US and UK Sector Analysis P.21 Commodities to Watch P.23 COT & Seasonality Hot List P.24 Commodities Chart of the Week P.25 China Watch P.26 Commodities Precious & Base Metals P.27 Energy P.34 Crude WTI Watch P.35 WTI Brent Spread Strategy P.36 RBoB Gasoline Watch P.37 Week in the markets: It’s US elections this Tuesday and if you believe the polls it could now go either way! The results and fall out, will obviously dominate the markets in the shorter term. Tuesday also sees China publish its trade balance data which could also add some market volatility. The week ends quietly (possibly) with the US, Canada and France all on bank holidays. Currencies: The US Dollar gave back its recent gains and headed into the US elections slightly weaker but holding a more hesitant, neutral feel. GBP ended last week with some gusto, reversing losses against most of the majors. CAD looks the weakest of the majors currently with NZD also turning in a stronger outlook. NZD announce their interest rates Wednesday and are expected to fall from 2% to 1.75%. EM Currencies will be nervous over the election period and especially look out for MXN this week if there is a Trump victory! Indices: US markets look fragile and weak ahead of the elections with the VIX fear gauge flashing warning signals of impending volatility. FTSE100 retracing from highs on further Brexit woes and US election sentiment. Far East neutral. Japan Nikkei 225 pulling pack from recent highs and Hang Seng giving back further gains but overall neutral despite a stronger but more sluggish Chinese economy. Commodities: Gold as the safe haven ‘go to’ asset, will be the commodity to watch next week as it reacts to the US election results and the effect these results will have on the US Dollar. WTI crude oil came off nearly 10% last week as fears of the OPEC production control agreement will fall over. Price support at $44 then $40. In other commodities, both Orange Juice and Coffee are breaking price records and remain fundamentally and technically strong. Forex: FX Major Traded Pairs Summary: US Dollar Index Watch: US Dollar Index Daily Chart: How to use: The US Dollar index is a basket of key currencies against the USD. The Index gives a good guide to the strength or weakness of the USD versus these other currencies. (JPY,CAD,GBP, SEK,CHF,EUR). NB. It can also be traded as a futures contract. Comment: Dollar back into the resistance zone (97/98) as predicted in last weeks report. Waiting for US election results before deciding on future direction. Currently neutral, slightly weaker feel. FX Majors Currency Strength: How to use: Data is based off weekly and daily currency strength quantitative analysis to present a ‘feel’ for the longer term sentiment, strength Weak Neutral Strong and weakness levels in the major currencies. GBP, CAD, CHF, JPY, NZD, EUR, USD, AUD, Currency Strength Analysis: USD still gaining more strength. JPY losing a lot of its strength gains and looking weaker. AUD giving back strength. GBP down but not out – flat. EUR, CHF picking up some strength from neutral. FX Majors Charts: Charts of interest this week – the longer term view: NZDUSD : NZDUSD: Since Jan’16 has been in an up trend versus the US Dollar. Currently pushing its way through the cloud with a positive momentum could see prices move back towards Sept’16 highs of 0.7483. Sitting at the moment on a short term Fibonacci line at 0.7296, this area could be key for a break further upwards. A reversal from here, would see support at 0.7178 , 0.7113 then 0.699. Currently trading at: 0.7324. Watch out for NZD interest rate announcement Wednesday. Expected to cut from 2% to 1.75%. FX Emerging Markets: Comment: Commodity prices and weaker domestic equity markets and the USD giving back some strength and with the US elections hanging over the EM markets, all in all it created a more neutral feel to these currencies. The one to watch this week will be MXN on the outcome of the US elections. How to use: The left side of the table gives a fundamental economic view of where the Emerging Market currencies stand measured in an ‘Overall Health’ rating. This analysis is then married up to the technicals: price and momentum to draw a conclusion as to the overall direction of the individual currency in the medium to longer term. All Emerging Market currencies are versus the USD. The Technical Indicators and Overall assessment are from the point of view of the USD vs the EM currency, eg if BRL showed Bearish in its overall assessment, this means that the BRL is strong against the USD, but bearish for the chart. The final column combines both the fundamentals and technicals to try to give an overall weighted chart perspective. FX Emerging Markets Chart of the week: MXN Comment: MXN (Mexican Peso) a Trump victory next week could send the Peso up to new highs very quickly! Either way, Clinton or Trump expect some volatility in the MXN. Currently in the cloud, down support is at 18.7, 18.32 then 17.95. 19.93 are the highs and at time of writing trading at 19.20. FX EM Driver Charts: GSCI, USD & MSCI Index: How to use: These are 3 key drivers of the Emerging Market currencies that can be easily monitored. The GSCI Index is a basket of commodities (heavily energy weighted) – commodities are a key component of a lot of these countries economic development. The MSCI Index is a basket of emerging market equity indices. This can paint an overall picture of health in the EM stock markets. The US Dollar Index: almost all the debt of the EM countries are denominated in USD. So the US economy, changes in interest rates etc can play a pivotal role on the movement on any of the underling EM currencies. FX Big Impact News: How to use: About Economic News: Each week major economic news comes out from around the globe that can have a serious impact on the currency markets. The most important news (in our opinion) is listed here………….. Indices: Index Watch: UK FTSE 100: UK FTSE 100: Been bitten by the US election bug and further Brexit woes. Retracing from highs and in the shorter term looks weak. Down support at 6500 then 6300. Weekly Heikin Ashi chart: 4hr 3 Line Break chart: Daily Kagi chart: Index Watch: US S&P500 S&P500: VIX increasing, US Elections Tuesday, weak sentiment and technicals; it could be a rollercoaster ride next week for the S&P500! Down side support: 2050 then 2000. Daily Heikin Ashi chart: 4hr 3 Line Break chart: Daily Kagi chart: Index Watch: Far East – Nikkei 225 & Hang Seng Nikkei 225 turned back south into no-mans land. Currently Hang Seng Despite stronger Chinese markets the HSI was trading 16905. off slightly over the last week. Currently 642 Index Watch: US Market Sentiment Dashboard: General Sentiment: Weak Bearish How to use: Data is based off weekly and daily currency strength quantitative analysis to present a ‘feel’ for the longer term sentiment, strength and weakness levels in the major currencies. VIX (CBOE Volatility Index): The fear gauge. Volatility picking up to Jun’15 levels, adding a bearish feel to the S&P500. (>30 = investor fear/uncertainty & <20 = less stressful markets) Equities: US & UK Equities Short Lists: How to use: The shortlist is based on a top down approach on the ‘fundamentals’. The list tries to find the strongest and weakest sectors currently and then the strongest and weakest stocks within those sectors. After that, technical analysis should be used to ‘time’ any trade entry when the / your correct signals arise and a consideration made on the general strength of the Stock Indices in which they trade. US & UK Sector Analysis: Financials sector (US): Healthcare(US): (Daily chart): holding (Daily chart): up despite a weaker weakening further market generally… and the weakest of US stock sectors currently… UK Banks Sector UK Pharmaceuticals looking stronger & Biotech sector not but giving back looking healthy in recent gains: the short term: Strong industries: Household Goods, Automobile & Auto Parts, Homebuilding & Construction, Containers & Packaging, Transport Infrastructure. Weak industries: Bio Technology, Renewables, Coal, Holding Companies, Metals & Mining Commodities: Commodities To Watch: The below trend direction analysis is based on an assessment of the daily technicals. Use more detailed technical analysis e.g. indicators, support and resistance, sentiment: COT, Open Interest etc. for possible trade entry, exits and stops. Bullish Opportunities: Not behaving as it should: Bearish Opportunities: FCOJ: Hurricane season, = bullish WTI Crude Oil: fundamentally poor, seasonals, technically still looking technically hitting the buffers at recent strong. Broken record highs. highs & OPEC playing games making this trade like a rollercoaster ride. Coffee: technically looks strong and talk of smaller crop for 2017.
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