**H1 means first half of the year (1 January to 30 June) H2 means second half of the year (1 July to 31 December).
As an independent trader, I make full use of fundamental analysis and technical analysis. Also, the market sentiment factor, which mainly key factor that make the market move. So I really like to read financial news and do some macro-economy analysis aside from looking only chart, not that they really so useful for my short term trading but in long term of horizon, there are surely things that I can make use of those information to create edges in my trading.
So normally I like to do top-down analysis every quarter or bi-monthly. So let’s go straight to the points. As an equities, forex, indices and commodities traders I will be cover few topics with some of the relevant analysis.
When I talk about indices, there are three indices that normally top my watch-list. As i trade mainly on Singapore and US market.
Those three indices that top my watch-list, US S&p 500 index, STI (Straits Times Index) and also our very emotional friend, Shanghai index.
**Candlesticks represent S&P 500, orange line represent shanghai index
The key players that can affect all other indices are S&P 500 and Shanghai Indices, if they are going down, there are barely any indices can withstand the downward pressure. (same case if they rally strongly)
Currently china market is quite stable, not much volatility after plunging like diarrhea since last year July. But this year July is coming soon. will the history repeat again? Let the time tell the story.
S&P 500 after a consistent uptrend follow by a short squeeze and create a high then it reverse with weakening when near FOMC announcement and brexit referendum. Currently under a slight correction where the bear want to test 2048, then 2020 and break 2000 key support. The incident of killing of Labour MP Jo Cox halt the progress of the bears and invite the bull speculator that think bre-stay (british stay in eurozone)mostly will happen, also some bears are taking early profit.
**bull = long position trader/investor
**bear = short position trader/investor
I will say, next few weeks will be great to watch as there are market movements when near Brexit referendum which is happening on 23th June. After that follow by FOMC meeting on 26th July and 27th July.
So let’s talk about currencies. When we talk about currencies, we will always relate with the countries. So let’s connect them together.
To be honest, although USD/SGD my homeground currencies, but not much of movement in the past few week. it just ranging between 1.35 to 1.358 area, there are moments that are trying to go toward to 1.34 but the attempt has failed which I manage to grab little of the position when near 1.345 area. With zero appreciation and government intervention last April, the bears are conscious in advancing. Let’s see how it goes for another week. Long run wise sing dollar is subjected to further weakening as the government has taken firm stand with their zero appreciation movement. So now what is variable is depend on the US currencies (and other currencies that you trade against sing).
AUD/SGD might be pair that good to watch as Aussie start to gain their strength.
Yen so far rally strongly and keep creating new high. Despite they are in negative interest rate zone and fundamentally so weak. All the bull that trade against yen always wonder when will BOJ intervention coming? Some say 100…some say 101….some say 102…(USD against Yen) well, no one know except this guy,
His name is Haruhiko Kuroda. Current BOJ governor.
Haruhiko Kuroda (黒田 東彦Kuroda Haruhiko, born 25 October 1944), is the 31st and current Governor of the Bank of Japan (BOJ). He was formerly the President of the Asian Development Bank from 1 February 2005 to 18 March 2013.
BOJ once give a stand that they feel 108 (against usd) is a healthy level, but well..see where there are now..heading to 104 and testing 103. Obviously it is falling knife but as a counter trend player, i favorite this kind of movement . Don’t ask me why, let the time tell you why when you look at the chart again in the future.
Japan, undergo low-inflation pressure, keep trying to increase their money stimulus. It has been half a year, how is their economy doing?
Japan, is in a big trouble. (my 2 cents)
United States of America
They are the main leader in currencies pair. I believe all forex traders trade at least once USD currencies not matter against which currencies. They are also know as world reserve currency.
and when we talk about US, we should know this person now, she is like wife to all traders where we have to sometime check what she say and listen to her,
Her name is Janet Yellen.
Janet Louise Yellen (born August 13, 1946) is an American economist. She is the Chair of the Board of Governors of the Federal Reserve System, previously serving as Vice Chair from 2010 to 2014. Previously, she was President and Chief Executive Officer of the Federal Reserve Bank of San Francisco; Chair of the White House Council of Economic Advisers under President Bill Clinton; and business professor at the University of California, Berkeley, Haas School of Business.
Everyone look at her and want to know when federal reserve is going to raise the next interest rate since Dec 2015 where the rate is now at 0.5%.
The recent FOMC announcement and decision to maintain interest rate come with no surprise to all traders and investors. Now the market players are looking into July with she quite neutral stand with two interest rates are subjected to raise this year where make July or Sep consist the probability to raise interest rate. Their current goal is to raise the rate to 0.9% by end of this year.
Now we are looking into Brexit referendum factor whether it will be affecting her and her committees decision in raising the interest rate.
I am very positive with US dollar strength and their economy data is going toward healthy, despite recent NFP result is quite disappointing (contrary to the US stock market) but like every good investment come with uncertainty risk.
Which for US is this guy, Donald Trump.
I don’t want to go deep into it. You can do your own research on his policy. If he is becoming next US president, well, like market, we can’t exclude any possibilities right (like who will think that lehman brothers will go bankruptcy). First thing I will do with my US equities portfolio, I will exit all my position. That’s it for me.
And let’s talk about her, Hillary Clinton.
Well, I am not judging who is better to become US president. But she is quite consistent and her policy is predictable. And market, like consistency and predictability.
So let cut the politic short and go to next country. British and Eurozone.
British and Eurozone
Brexit referendum will be on 23th June. Which is coming Thursday.
Will it be Brexit or Brestay. Let the time tell but I am more toward Brexit.
I would like to explain my stand but it is going to be another 1000 words article so let’s just skip this and talk about currencies pair.
Currently EUR/USD is one of my favorite trading pair which give me close to 10R for this past week with rapid intra day swing trading.
When talk about Europe Central Bank, we will have to talk about this guy.
Mario Draghi OMRI (Italian pronunciation: [ˈmaːrjo ˈdraːɡi]; born 3 September 1947) is an Italian economist, manager and banker who succeeded Jean-Claude Trichet as the President of the European Central Bank on 1 November 2011.
He and his committees are the one who decide Euro Area Interest Rate. Who also decide to adjust the interest rate to flat 0%.
What is the impact if Brexit to Europe, if British decide to exit. Who are going to be the next country to exit too? Let’s time tell us.
But I will say that for every crisis, there are opportunity.
While talk about Bre-xit referendum let’s recall back what happen on Swiss Franc crisis and lead to Alpari Forex broker collapse.
On 18 December 2014, the Swiss central bank introduced a negative interest rate on bank deposits to support its CHF ceiling. However, with the euro declining in value over the following weeks, in a move dubbed Francogeddon for its effect on markets, the Swiss National Bank abandoned the ceiling on 15 January 2015, and the franc promptly increased in value compared with the euro by 30%, although this only lasted a few minutes before part of the increase was reversed.The move was not announced in advance and resulted in “turmoil” in stock and currency markets.By the close of trading that day, the franc was up 23% against the euro and 21% against the US dollar. The full daily range of franc was equal to $31,000 per single futures contract (to the positive if long, to the negative if short), and is more than the market moved collectively in the previous thousand days. The key interest rate was also lowered from −0.25% to −0.75%, meaning investors would be paying an increased fee to keep their funds in a Swiss account. This devaluation of the euro against the franc is expected to hurt Switzerland’s large export industry. The Swatch Group, for example, saw its shares drop 15% (in Swiss franc terms) with the announcements so that the share price may have increased on that day in terms of other major currencies.
–Wikipedia, Click here to Read more
It is an unfortunate incident happen that time that lead all account burn out, not just burn out but those who are in highly leverage long position has to fork out extra cash to cover the losses. Which also due to this incident, all the brokers now has this statement,
Trading FX and/or CFDs on margin is high risk and not suitable for everyone. Losses can exceed investment.
For this coming week, let’s trade with care shall we.
Let’s look on crude oil, my favorite trade. I took a lot of short position above 48 and realise when it goes near to 46 and below 46, overall a good trade. Currently there are retracements especially after dollar weakening with killing of Labour MP Jo Cox news release. But crude oil fundamental data is not as positive as before we might see a new round of short coming in to push the price hopefully to the demand zone and see whether the support will eventually come. And a long bull run should be beginning soon.
It has been a strong rally that almost all investors and traders are buying it to hedge their portfolio. Even George Soros too. Above 1300 seem like a strong resistance where it is hard to let gold stay for a week. Again, killing of Labour MP Jo Cox news make a lot of bull taking early profit and see what the market will be heading soon.
So that’s pretty much with my macro analysis for 2016 H2, hope you enjoy reading it and before I stop writing. Let’s talk about risk.
Some people thinking investment and trading is a money making business. Or a forecast…or analysis and the list goes on.
But I got a good point from a trader and my favorite fundamental analyst. She quote this and I can’t agree more.
We as a trader or investor, is actually in a business of risk.
There are 5 types of risks that we will need to face:
- Market Risk
- Event Risk
- Leverage Risk
- Technology Risk
- Counter-Party Risk
So, let us manage our risk properly and happy trading and investing pals! Have a great week ahead.
P/S: In case you wonder this article is written by someone who is an analyst in some financial instituition or have finance/economic background, I am so sorry to disappoint you, I am just an engineering guy who graduated with Electrical and Electronic Engineering Degree from NTU, then in IT industry for 2 years before I became an independent trader.
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