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 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 . 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 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, 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, , 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. Gold: In this bucket due to the US election. Could move either way on the Zinc: Confidently broken overhead results and with some volatility behind resistance at 2400 but not too much it! up space before coming into further resistance. COT And Seasonality Hot list:

How to use:

The COT Index Assessment is based on a weekly index calculation and net positions of the ‘large speculators’ category of the CFTC report. Seasonality: historical price data has been analysed over a 20 year period to draw conclusion as to the seasonal direction of price. Technicals: An assessment is made on the current longer term price trend and the current price momentum leading to (and including COT data and seasonality) an overall assessment for the possible price direction of the asset. Commodities chart of the week (Non Metals/ Energy): Coffee: Coffee (KC): Up nearly 50% from Jan’16. (Highest for nearly 3 years) Currently heading towards longer term resistance at 168.57. Any reversal of sentiment could see Coffee retrace to the 155 area. Arabica prices have been supported by Robust prices due to poor supplies and droughts in Brazil with demand switching to Arabica. Production of Robusta is expected to remain low into 2017. The charts do look over bought though so watch out for some profit taking in the shorter term. China Watch: Dashboard: Manufacturing PMI rose again to 51.2, better than expected and better than the previous 50.4. Stock markets were again slightly positive and hitting 2016 high levels again. Tuesday sees Chinese trade balance figures reported. Last trade balance figures were 278bn. Overall a more positive but sluggish feel to the Chinese economy.

Key: Dashboard: China is a key driver of both Precious and Base Metals sectors. For example nearly 50% of global demand in Copper heads towards this country and it’s one of the biggest users of gold. Understanding what China is doing is key to understanding the ‘flow’ of the market sentiment and what could move price. The dashboard should let you ascertain the current economic situation in China. NB: Updated charts this week are coloured red. Precious and Base Metals: Base & Precious Metals Market Overview:

Base: Base metals were more positive the week just gone during Metals week. A possible shift in sentiment? Zinc and Aluminium looking the strongest currently in the complex. Next week with US elections may see traders see how it results play out before taking any action, which could make the first part of the week particularly quiet.

In Precious PGM’s are more of a mixed bag. They have been showing shoots of a recovery but again, with the US elections around the corner look to have gone into consolidation mode. Gold will be the one to watch during and after the US elections.

Sentiment:

Base overall feel =

Precious overall feel = Key Numbers:

Key: S1 = next short technical level etc, L1 = next long technical level etc. built around the current price. R/R = Risk Reward either going long or short based on current price and stops / target at L1 and S1 Longer term trend = determined from weekly charts Chart User Guide for the Metals section:

Weekly Heikin Ashi chart with Ichimoku, moving averages (50,100,200) to determine 3 Line 4 hour break chart used for finding trend direction. Fibonacci's and Ichimoku used shorter term changes with and against the for longer term risk and trade management. longer term trends.

Stochastics used to determine over bought/ sold areas and possible longer term price reversals.

Aroon used to determine trend direction and changes in trend direction. 70/30 areas used to determine this as overbought / oversold areas. Set to 10 weeks.

Directional Movement Daily Kagi chart using ATR, Indicator (DMI) set to 14 Change from Red to black periods determines trend + moving Directional Movement averages + DMI. Indicator (DMI) set to 14 Fibonacci's used as targets. periods Copper: LME 3m price: A 3%+ gain last week saw the red metal poke its head above the consolidation pattern for the first time in a long while. Momentum looks more bullish and an improving China are all adding to a more positive outlook. Gold: It will all be about the US elections for Gold this week. Watch it closely and expect some volatility in the shorter term! Platinum: Put in a bit of a recovery over the last 5 days. Holding around $990 and will need to break and establish itself at these numbers if it is going to get more bullish. Currently feels the weakest of the 3 PGM’s analysed here. Energy: Crude WTI Watch: WTI Crude Oil: Off nearly 10% on the week after hitting overhead price resistance at $51/$52. Reasons for the decline lay in the fear that the OPEC production control agreement will end up a failure.

Rig counts: US: 557 (+4 change), -218 change from last yr. International:934 (-3 change) -206 change from last yr. 9 week change:

Key numbers: Crude WTI Brent Spread: The Crude WTI Brent spread trade is the differential between the two crudes. The strategy looks for changes in the spread either for breakouts or reversals. Current level: -1.83(Last week -1.82)(Dec spread CME) RBoB Gasoline Watch: RBoB Gasoline: off 5% from last week but still looks to be rangebound as it approaches support at 1.3739.

Key numbers: Author: Stephen Hoad, The STOP HUNTER

Stephen Hoad has worked in the City of London for nearly twenty years. He has worked for some of the top Investment Banks and Trading Houses, in a career that has taken him from global risk management (front office, market, quantitative), to successful commodities options trader, to own account proprietary trader.

His professional experience in the world of trading and risk management is vast and he has extensive knowledge of financial markets, especially in the fields of Commodities, FX and Equities. He has a strong quantitative background and is a qualified Technical Analyst – he is on the elite panel of lectures teaching the STA Diploma in Technical Analysis. He also holds If you’d like to get in touch or require any an MSc in Financial Markets & Derivatives and a BA (Hons) in Business & further information please contact us at: Economics. His career has taken him worldwide and he has lectured in London, the Far East and the USA. w: www.thestophunter.co.uk t: 01227 811731 He is a leading expert in technical analysis, systematic/automated trading, e: [email protected] derivatives products, financial and quantitative theory, risk management and regulatory practices. He also has experience of dealing and trading with China. For real-time market news, charts & much more follow us on Twitter: He founded THE STOP HUNTER in February 2015, which provides @thestophunt3r quality education, training, mentoring and resources to private investors throughout Kent, London and the South East, who want to learn how to successfully trade the financial markets. He also trades from his offices in Canterbury, Kent. Stephen also undertakes consultancy work in the City and is also a part-time University lecturer. Disclaimer:

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