Financial market are always a happening place & this week was no exception. But nothing makes me happier than to take an overview of the situation & wind down for the week. So before I move on to enjoy my weekend here is a brief recap first. U.S. stocks continued to advance despite wake of Geo political risks, trade war worries & emerging markets fallout, Greenback was in a corrective mode with equities rebounding strongly & Cryptocurrencies continues to struggle with their current resistance levels. Let’s dig in a little further now.
The Crazy Cryptoverse
Wider acceptance for the digital coins continues to grow but so does the need by the financial authorities to address the grey areas surrounding them. Issues like scams, classification of assetts, regulation & most important of all their integration into the wider financial system worldwide without disrupting the whole grid. All of this is going to take time & it would probably be a slow and painful process. In the meanwhile we will continue to monitor the Cryptoverse as it evolves. The most interesting news from the Cryptoverse last week that I came across was about a project called BlockBroker, a 5-star rated anti-ICO scam platform that turned out to be a scam itself! How ironic can things get… so it becomes even more important to be vigilant & do your diligence before you blow up you money by running after something which sounds too good to be true. Things will get settled down eventually & you will be able to figure out good from bad and still have time to invest & be a part of this blockchain revolution. Until than no need to panic and be a part of the FOMO group.
Let’s look at the hourly price chart for the Crypto kingpin – Bitcoin. The price action is so choppy that there is no point in looking at the daily chart since you can’t figure out anything on it apart from the immense squeeze with a declining volume hinting at a probable bounce from the long-term downtrend. Coming back to the hourly, the resistance zone in the $7800-$7950 continues to cap off any gains in the coin. This needs to be cleared to have a meaningful bull trend to take shape. However the bullish trend line from the lows reached at the end of the last month is still holding true giving us hope for a rebound to ensue. Keeping my fingers crossed here! The total market cap of the crypto coins stands at $342.51 billion with BTC market dominance @ 38.2% at the time of writing this (Real time stats). Looking at the CCI30 Crypto index – value sits at 7684.65 at the time of writing with MTD & YTD both improving from last week.
Here are some of the major headlines from the Cryptoverse last week:
- Leading US Crypto Exchange Coinbase to expand to Japanese Market
- Bitfinex Exchange Suffers Outages amid Cyber Attack
- Circle to Seek Federal Banking Licensing with U.S. OCC
- Cryptocurrencies To Be Regulated As Commodities In Indonesia
- Thailand Trials Central Bank Digital Currency for Interbank settlement
- Ripple Executive Launches Smart Contract Platform to Rival Ethereum
- EOS & TRON moving to their own Mainnet Blockchain Platforms in June
And to end it all here is an interesting graphic to representing the waning interest in Bitcoin as illustrated by the drop in Google searches. Wonder what your response it?
Emerging market currencies have taken a severe hit from the soaring Greenback recently with Brazilian Real, Agrentina Peso, Turkish Lira & South African Rand coming under severe selling pressure against the mighty dollar causing major worries for these emerging economies, but let’s leave this discussion for another time. Against other Majors USD was in a corrective mode as evident from the Dollar Index chart below. Next week is a busy week for the Economic calendar with 3 Major central banks (FOMC, ECB, BoJ) announcing their rate decisions. FOMC is expected to hike, BoJ to stay on hold while ECB begins to wind down the Quantitative easing. Employment numbers from the Land down Under are also due. Suffice to say the current hawkish trajectory of FOMC is not only going to fuel further USD gains against Majors, it is going to make things even more difficult for the emerging economies.
The dollar index as expected finally turned down for the much-anticipated correction heading to the support zone of 92.50-93.20 where it is expected to hold & bounce. As I said last weekend the RSI broke down after carving a negative divergence confirming a temporary top in place. Most of the USD majors remained range bound this week with the Kiwi dollar the strongest in commodity currencies while the Euro showed some resilience with the rebound closing just below the 1.1800 level to end the week. Here is a nice chart of the correlation between different forex pairs & how they can traded in relation to each other.
The U.S stocks seem to be unscathed from all the Geo political tensions, trade war worries & emerging markets’ woes to march handsomely forward allaying fears of any bear market onset – for now at least. There could be just two scenarios – either the market is anticipating the resolution of these issues soon taking them as arm twisting tactics by the U.S. to subdue the trading partners or this is going to turn into something ugly. Important week ahead with the FOMC rate decision & direction of the central bank going forward with U.S. CPI numbers due as well. Not to forget the all important meeting between U.S. – North Korea can have a significant impact too. It is going to be an eventful week for the markets. Wrapping up last week all three indices scored big wins – DJIA (2.77%), S&P500 (1.62%), NASDAQ (1.21%)
Looking at the all important SPX chart – it is pretty evident that the move last week was a continuation of the bullish trend from the higher lows. As I suggested last week the $2766.80 level was surpassed with ease and the previous high (resistance) has turned into ST support for the index moving forward. As long as the $2720-$2740 holds we should expect this move to continue. The divergence in the MACD/signal line & a bullish RSI are supporting this thesis as well. Following are some of the upcoming IPOs for the U.S. markets:
VRCA (06/15) , AVLR(06/15), NEW(06/15), ADIN(06/14), USX(06/14), CHRA(06/14), FPACU(06/12), MGTX(06/08), YQ(06/08)
An interesting chart below signifying how Fed tightening has always followed some major financial events. What’s your take on it?
And here are some fun facts from last week in history (#Investopedia):
June 5, 1933: U.S. Congress enacted a joint resolution nullifying the right of creditors to require payment in gold. This piece of legislation officially marked the U.S.’ move away from the gold standard.
June 6, 1934: President Franklin D. Roosevelt signed the Securities Exchange Act into law. After the 1929 stock crash, this historic legislation prompted greater financial disclosure and transparency and also created the SEC as the stock market regulator.
June 7, 2010: The good ol’ days of Apple and the iPhone 4. Steve Jobs unveiled the iPhone 4 with features that have changed the way we communicate forever… like FaceTime! His creative genius is unparalleled and his influence on the world will last forever.
Ok, finally time to wrap up but I am not going to let you go with a comic to put a smile on your face. Enjoy your weekend everyone!