AEM (Fundamentals Remains Intact But The Price Action Is Signalling A Potential Correction)

AEM - Fundamentals remain intact but the price action is signalling a potential correction in the near term. The price currently sits of the uptrend line and the 50 Days MA. A break below these levels could trigger downside target to 3.45 and 3.01. 

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Nasdaq 100 - Imminent Correction With Recent Volume Surged

 

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Jackson Hole 27-28 Aug - Powell could stoked stock and gold prices

 

Jackson Hole talking point 27-28 Aug - Powell will discuss the Fed’s monetary policy framework review - a review it has been undertaking for nearly two years into how it conducts monetary policy - on the opening day of the Kansas City Fed’s annual symposium on Thursday. Many Fed Governors have made speeches hinting at softening  the inflation target.  The expectation of Powell adjusting its inflation target this Thursday could explain why the bond market lack of reaction to last week’s US inflation data which surprised on the upside. The affirmation of loose monetary policies for a longer term could stoke stock and gold prices next week. It’s will be worth watch Jackson hole next Thursday . 

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Gold Suffered Its Biggest 2 day fall in 7 years . Is the Gold rally Over?

 Spot Gold - Suffered its biggest 2 days fall in 7 years falling from 2030 to 1862. 

Is  the Bull Market for Gold over ? 

Gold weakness is caused by the 10 year US treasuries yield climbing a couple of basis points to 0.67% and a recovery of the USD. The dollar index is rebounding but only a move above  95.00  could trigger further upside. The fundamental cataylst for the gold rally remains intact with loose monetary policies expected to stay for a long time that will keep real yield subdued and negative should keep gold attractive. On the chart the Gold uptrend is intact after hitting a low of 1862 and staying above the 50 Days MA .  Gold is likely  to consolidate in a range between 1862 to 2015 for the next 1 months before attempting new high again . This is a healthy correction which will provide bullish investors another opportunity to ride the next leg up. However if Gold breaks 1862 , it could retrace to 1813 and 1741 which will be a good entry level

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Sembcorp Industries Trade Plan

During the market outlook on 1st August 2020, Robin shared about the story of Sembcorp Industries de-merger with Sembcorp Marine. Today, he shared his trade plan with clients in the chat group. More upside expected until AGM on 11 August 2020.

Access video of the Robin's latest market outlook: https://marketoutlook.robinhosmartrade.com/

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Friday could be “D day” for stocks

If we make it through Wall street could scale new all-time highs . Expect sharp drop if we don’t.

A one group of companies will likely determine the next big move in stocks...

Some of of the largest companies in the stock index are due to report their latest business results.

The big techs release their results after the stock market closes tomorrow... $660 billion social media firm Facebook (FB), $1 trillion Internet giant Alphabet (GOOGL), $1.6 trillion consumer electronics behemoth Apple (AAPL), and $1.5 trillion online retail and web services giant Amazon (AMZN).

Those seven businesses represent about $5.3 trillion in market value... They're indicators of how the U.S. economy is doing... And they're all part of the tech-dominated Nasdaq 100 Index.

Since late March, the Nasdaq 100 is in a big uptrend. Over the past few months, the index has traded in a tight, rising range called a "channel"...

You can see the Nasdaq 100's rising uptrend channel line in my chart. If it breaks below this trend line that I believe is the most important inflexion point it could be make or break for the market.

If tech leaders report weak earnings, the Nasdaq 100 could break down from its channel...

That would be a big short-term warning sign. Tech stocks have been the leaders during this recovery. So if they close below the lower boundary of their channel (for at least 2-3 consecutive days), the Nasdaq 100 could face a quick 10 to 15% decline, down to its June low around 9,940

Whether the Nasdaq 100 continues higher or drops lower, the other major indexes will likely follow.

I’m currently holding gold, silver, gold stocks, and bitcoin, which I think is in the midst of a multi year bull market.

With Apple, Facebook, Google, and Amazon reporting tomorrow afternoon, just be sure to have your ducks in a row before then.

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Gold, Precious Metals , Crypto’s and Dow’s Price Action

Gold, Precious Metals , Crypto’s and Dow’s  Price Action

Gold nearing all  time high , precious metal  and crypto’s breakout.  Spot Gold is approaching its all time high at 1920 (last done 1900) , silver  broke above the US$19.54-21.09 resistance with  Platinum and palladium joining the party . Crypto currencies in Ethereum and Bitcoin are breaking out too. On the equity front, The Dow last traded at 26469 could be weak in the short term , heading for its support at 26277 and 25748. Nasdaq last traded at 10483 could be poised to test its 10120 support .  Silver’s break above the US$19.54-21.09 resistance zone on Wednesday triggers the bullish implication of its 2015-2020 basing pattern. This breakout is equivalent to gold’s January 2019 breakout and supports an ultimate upside target for silver of US$31.80-32.00. In the short term, silver is in “overbought” territory so there are risks of a short-term pullback/correction. However, with both the daily and weekly momentum indicators confirming the breakout, short-term pullbacks should be seen as buying opportunities in anticipation of a move up to the US$31.65-32.10 area. The old resistance zone at US$19.54-21.09 is now seen as support. Looking at the silver/gold ratio this week’s surge in silver has the ratio breaking out of the 2012-2020 downtrend channel suggesting further outperformance in silver over gold For Crypto, Ethereum’s breakout last Wednesday from the June-July trading range targets US$217-248.00. This breakout in turn has confirmed a larger move from the 2019- 2020 consolidation pattern which supports a minimum upside target of US$365- US$400. While Bitcoin is lagging Ethereum the chart setup is similar. The breakout from the May-July consolidation pattern implies an initial upside target of US$12,200-12,500. 

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UOB - Testing Support

UOB - Testing the uptrend channel support line again. A break below this line could take it down to the next support at 20.05 and 19.50. Last done 20.62.

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Risks on the Horizon

The “second wave” concerns have obviously accelerated over the past week to the to the irritation of the Donald. The President celebrated the good job number describing it as “spectacular news for American workers and American families”, promising to “vanquish” the coronavirus.

White House continues to draw comfort from the growing divergence between cases and deaths in America. While new cases hit new high, average daily new deaths have declined by 65% from the peak reached in April. 

The morning it was reported that the virus situation in US has turned for the worse Florida and Texas hit a record number of daily coronavirus cases on Saturday, respectively reporting 11,445 and 8,258 new cases in the last 24 hours, according to figures released by the states’ health departments. 

There are plenty of risks next week as cases rise, states are now taking measures to try and control the spread of the virus. Investors may may be wise hedging against the prospect of more restrictions being imposed to slow the spread of the virus that could hamper the economic recovery.

Volatility to Spike?

Separately, there was a substantial increase in VIX options trading as well. Open interest for Aug. 19 70 calls by roughly 9,138 contracts on July 1, while open interest for Sept. 16 calls at 80 and 85 rose by 10,512 and 15,294, respectively.

There are plenty of reasons for a trader or institution to place these bearish bets or protective positions, especially given the significant advance in the S&P 500 off the March lows and that it currently trades at around 20 times 2021 earnings estimates.

Though deaths from the virus in Florida have remained on a downward trajectory, Surgeon General Dr. Jerome Adams has warned that fatalities lag new cases and a clearer picture might not emerge for two weeks or more. 

What would be very concerning is if deaths now start to rise meaningfully after a lag. So far affected states has resisted locking down the economy again but if the death rate rises , the pressure to lock down will mount  and the stock market which is currently building in a V - shape recovery scenario may be disappointed.

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Shanghai Stock Index - breakout out of 3 years downtrend.

China stock market awakening? Price action shows initial sign of a trend breaking out of its nearly 3 years downtrend and a nascent peak is emerging. It looks promising with an impressive volume. It is a possible sign that the institutions which have been underweight China stock market may be starting to make a comeback. Watch for signs of confirmation in the coming days.

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Dow Jones Short Term Price Action

Dow Jones - Risk remains on the downside. The index tested 26304 multiple times but failed to break above. The short term upside is capped by 26304 resistance and the downtrend line. Turn bullish only when price is able to hold above 26304 level. The index should retest the 25000 level again. A break below 25000 could bring the index to 24655 and 24243.

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STI and Singapore General Elections

Singaporeans will go to the polls on 10 July 2020. For those hoping to see an election rally, historically, elections have not been a major market driver.

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Dow Jones Futures - First Break Down in 1.5 Months

Dow Jones Futures breaks down from the uptrend channel for the first time in 1.5 months. Standby for more weakness ahead.

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Nasdaq 100 - Euphoric Level

Nasdaq 100 - Euphoric level, but historically trading at a 15% premium to its 200 days moving average marks a tactical peak and a correction towards the 200 day moving average.

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DBS - Hit First Resistance

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Predictions for S&P and Nasdaq

Last night, the market started by extending the rally from the past 2 days before turning down to erase the day's gains. Our system managed to predict the day high for S&P and Nasdaq right before the reversal! Experience systematic intra-day trading with our signals here:

www.tradingkungfu.com/keylevels

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Bitcoin - Multi-year bull has just begun

This chart shows Bitcoin multi-year mega bull has just begun. The 3 near term targets 10495, 12007, 13837 should be taken out this year and its all time high at 20000 will be within reach next year 2021. The secret to this prediction is in the Price Action... the Volume.

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Intra-Day Trading with Pin Point Precision

Dow Jones gave traders a roller coaster ride yesterday, With dismal employment data and US China trade tension casting doubts on the recovery, at one point it had fallen 1500 points from previous day's peak. We predicted the day low 22800 before the market opened, and we saw the index free falling right from the opening bell and rebounded sharply at our predicted level to stage a 1400 points come back!

To experience systematic trading with pin point precision, check out our RHO Index Key Levels signal www.tradingkungfu.com/keylevels.

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BT: Traders cry foul over losses from SocGen actions on SIA shorts

I shared my views on this issue in an interview with The Business Times. Article was published in The Business Times papers today, and on its website yesterday.

Source: First published in The Business Times on Friday 8 May 2020:
https://www.businesstimes.com.sg/companies-markets/traders-cry-foul-from-loss-on-sia-leveraged-shorts-over-ex-right-pricing

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SIA Rights - How traders loss all their money in SIA Daily Leverage Certificate through a bizarre price movement

SIA went ex-rights yesterday and there was some unusual and bizarre movement  in its share price wiping out  the total value of SIA  Daily  Leverage Certificate (DLC) 5 X Short which  has been suspended as the underlying price has appreciated more than 20% from their theoretical ex-rights price (TERP) of S$3.71 which means that losses are now in excess 100% for this leverage product. The value of TERP was derived by Soc Gen, the market maker for DLC using a methodology which includes the rights share component based on the issuance of approx. 1.78bn shares and the Mandatory Convertible Bond (MCB).

The retail investors who bought the SIA 5XShort DLC were the amongst the worst casualties, they lost all their investments.  They are crying foul because they had bought the SIA 5XShort DLC based on the TERP that was derived by SIA which amounted to $4.16 as at Thursday closing price of $5.91.

Investors who bought the 5Xshort DLC had bet that SIA could continue to be weak given the poor fundamentals as a result of COVID 19. SIA share traded in a weird fashion  yesterday from a low of 4.15 to a high of 5.05 before closing at 4.40 and strangely it had closed at 4.62 at 5 pm at the closing bell only to be was bashed down to 4.40 at the after hour matching of trade by a big block order.  These weird price action leaves traders scratching their head.

Investors are complaining that there is no transparency and no level playing field when there are an official SIA derived TERP at 4.16 and a TERP derived by Soc Gen at 3.71 which is not publish and retail investors have no privy to the information. Investors content that big gap in the TERP potentially opens the door to market manipulation because if someone had information that the TERP is at 3.71 and the markets perceives it at  4.16, it is obvious that the airbags for the DLC will easily burst resulting in the DLC being delisted. Fuelling more discontent , if Soc Gen had used the same official TERP at 4.16 investors will have sufficient time to exit their position and perhaps the airbags wouldn’t have burst.

One investor actually wrote to SIA Investor Relation and got this reply:

“With regards to your query, it would not be relevant to calculate the TERP based on MCBs prior to maturity given the nature and trading characteristics of both types of securities (e.g. no market quote/price for MCB prior to issuance compared to ordinary shares traded on an exchange)”

Soc Gen adjusted TERP 3.71 is significantly different from the announced TERP by SIA at 4.16 . Being a material difference, this should be communicated clearly to traders of DLCs on a timely basis before the ex-rights date. The significant difference in the adjusted price create a huge price disadvantage for those who are holding on the SIA DLC shorts while huge advantage to SIA DLC long.

What’s going here… its bizarre . At S$4.77 SIA  is even higher than the TERP price of S$4.16 base on a pre-ex-rights price of S$5.91. The S$4.77 price would indicate a pre-ex-rights price of S$7.44! WoW. Overnight, SIA’s price/share has increased from S$5.91 to S$7.44 which is an appreciation of 26%!

Many traders are asking me whether there was any conspiracy behind this weird price movement to flush out all the traders holding the shorts from the people who had privy information of the adjusted TERP at 3.71.  Frankly after having being involved in promoting DLC with Soc Gen and SGX since its inception,  I don’t think there is any malaise but someone must be held accountable for this confusion which has resulted in huge losses and loss of confident for derivative product listed on SGX.

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Starhub Q1 Results Is Due On 6 May - How will it fare? How Does It Look On The Chart?

Starhub Q1 earnings will be due on 6 May (Wed), how’s it going to fare in view of the Covid 19 lockdown?

1.    With travel restrictions around the world all but halted Roaming cut from roaming revenues will be severely hit. as border restrictions around the world have all but halted travel. Analyst estimate roaming revenues to be about 10% of StarHub’s service revenues.

2.    Pre-paid is another area that will likely see some pressure, with foreign workers and tourists big contributors to this segment. Both segments are under strain from the travel restrictions into Singapore.

3.    With the population staying indoors an the closure of non-essential businesses the  during the CB,  handset sales will come under pressure.

4.    A common assumption is that with many staying at home, there will be more consumption of data and watching PayTV.  With almost 100 % of the household connected to broadband, most will use Wi Fi.

How’s my outlook for Wednesday result? This blog believe it will disappoint. On the charts it is also overbought tested one month high at 1.49 on 30 Apr, a retracement to 1.37 in the stock term is possible in the near term .  It broke above the 200 Days MA which technically is strong but the price action over the last 6 months shows the price is unable to hold able the 200 MA and is vulnerable to a correction.

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Gold Trade Plan

Stock and commodity indices are rebounding since hitting the March low but guess which is the real market leader in relative performance ! It’s GOLD. For those who have been following me, I have been most bullish on Gold since Nov 2019 and I have been guiding my trading community on Gold’s Price Action. I posted a trade plan of gold 2 weeks and it has worked perfectly. Watch this updated Gold tradeplan and it’s relative performance amongst all the major stock indices in the world like China a50, Hang Seng, Dow, Nasdaq and STI. The cards are laid , if you need to invest gold should be the choice.

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Simple Support and Resistances strategy that works in any time frame!

Yesterday Dow Jones went thru a roller coaster swing going up by nearly 1000 points and gave away all the gains by market close, but last yesterday's price action established key support and resistance on the 1 min chart that i used could still use during the Asia trading hours to make some profit .

Key support and resistance levels were 22,826 and 22630. Sometimes trading can be simple only if we know how to look out for keys.

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Has the market bottomed?

Last week, I had seen consecutive three day surge of all US major indices averaging nearly 22% gains which marks the best performance in a decade last week. As such, it is very normal for most of our viewers to think that the markets have bottomed and time to get into buy position for heavily discounted blue chip stocks.

The recovery I observed for the past week could be a technical one ("dead cat bounce") rather than the market hitting the bottom. We could be moving towards a new trading environment where price becomes volatile (whipsaws), with weaker markets hitting new lows while stronger markets start to find a more significant bottom.

Thus, with the best part of the initial market rebound behind us, I expect markets to work towards their way back to their March lows (as shown in Chart A).

Looking back at the carnage in 2008 (Figure 1), a typical rebound in a bear market ranges from 12% - 24.2% before testing for new lows.



Also, viewers need to understand that the direct effect of the virus is just the start. With lockdowns being imposed on the world ’s demand drivers, world trade growth is about to crash. The speed of decline will be matched only by the freeze in trade finance that occurred in the Global Financial Crisis.

Check out this week's episode of RHO Market Chat:

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More Upside Next Week After Wall Street Staged Its Biggest Rebound Since 2008?

More Upside Next Week After Wall Street Staged Its Biggest Rebound Since 2008?
Previous Price Action Don't Look Too Promising !

Since 2 to 11 Mar Dow Jones Index have failed after every rebound without a follow through buying and in fact prices got lower subsequently .

Donald may have chosen to declare national emergency to combat the Covid 19  just 30 minutes before the market close to catch the short sellers . He also caught the market by surprise by directing the US Energy Dept to purchase crude oil for the strategic petroleum reserves . The announcement triggered a wave to program short covering that lasted until  the closing bell. Chances are short covering rebound do not last very long.  

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Dow Jones - After The Big Fall . Is This Rebound a "Dead Cat" Bounce?

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RHO Market Chat - Episode 1

Last week, we saw the major US indices top out from their all time highs, dropping over 10% in a single week, and recording one of the worst weeks in history.

Are we entering a bear market, or is this just a healthy correction for the massive bull run?

Find out this and more from Top Tier Trader, Remisier and Principal Investment Specialist Mr Robin Ho in this week's RHO Market Chat!

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Gold Prices and Dollar Index Shows The Underlying Strength of Gold is strong

Gold Prices and the Dollar Index - As a rule of the thumb , when the value of dollar increases relative to other currencies,  the price of Gold tends to fall in dollar terms. Its because gold becomes more expensive in other currencies.  Today spot gold cross the 1600 level in the midst of a bullish dollar trend, it shows the underlying strength of Gold is very strong and this multi year gold bull cycle that started in Mar 2019 will continue.

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Wall Street Melt Up Looks Like the Run Up Before The Dot Com Bust

U.S. stocks ‘Melt Up’ Looks Like The Final Leg Of Run Up That Happened Before The Dot-Com Crash

It seems like no matter the negative headlines including the disruptive and destructive  corona virus epidemic  stocks continue pushing higher.

Inspite of the Wuhan virus outbreak that threatens to  disrupt global supply chain and businesses in an unprecedented scale  , the benchmark the Wall Street  Index has not only regained its losses from its previous highs two weeks ago but have scaled new highs

The markets are ignoring the negative news but choose to place their faith in central bankers and its easy-money policies – like interest rate cuts and liquidity injections from the most powerful central banks in the world – only throwing  rocket fuel on the Melt Up in U.S. stocks.

The writing is on the wall, we might be reaching the late innings of this historic bull market, but the gains are accelerating. This is really looking like what happened in the late 1990s during the run-up to the dot-com peak.

Of course, a brutal bust followed the dot-com bubble... And the Fed is up to some of the same tricks again today. But most important, smart investors who followed the market higher – and got out at a good time – made a killing.

That's exactly what can happen again this time...

For the smart investors , make the  money and  retire,  it could be the final shot, the Melt Up is about to hit a dramatic turn.

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