Highlights

State of The Markets

Author: MFMTeam   |   Latest post: Fri, 22 Oct 2021, 9:21 AM

 

Stocks Mixed Amid Rising Yields

Author: MFMTeam   |  Publish date: Fri, 22 Oct 2021, 9:21 AM


STATE OF THE MARKETS

Stocks mixed amid rising yields. US stocks closed mixed on Thursday, with S&P (+0.30%) punched a new record high and Nasdaq (+0.62%) climbed higher; while Dow (-0.02%) edged lower as bond sell-off triggered yields higher. The 10Y benchmark yielded 1.69% at writing while Dollar (DXY) traded lower circa 93.50 handle.

In the commodities market, crude rally fizzled as traders took profits off the table, sending the black gold lower to $83.50 as New York closed. Gold briefly paused at $1785 after selling pressure capped the yellow metal, but has climbed back to retest the $1,800/oz as of this writing. Iron ore traded lower, back to $121.15/tn, as the US infrastructure bills remain in limbo.

In the FX space, short term traders seemed to book profits off the table as Yen, Swiss and Dollar seized the helm of demand from the comdolls. Medium term accounts seemed more cautious as Swiss seized the demand from Loonie. Long term sentiments remain unchanged. Markets look for PMI composite and more earnings reports especially from American Express (AXP), Roper Technologies (ROP), VF Corp (VFC) and Schlumberger (SLB) to name a few.

OUR PICK – No New Pick.

No new pick going into the weekend. Outflow from the US equities has become a new norm and this week is no different. About $1.3b flowed out of the domestic equities and about $530 million was channeled to foreign equities. Prior funds parked at short term money markets, about $7.9b, have moved to bond funds. As inflation concerns remain, investors seem to be jumping back to commodities like precious metals and higher yielding currencies. We see Dollar (DXY) trending lower to the 93 handle unless fresh buying comes in sooner than later. Have a wonderful weekend!

Trades updates: 

Equities: Currently we are holding 8 stocks – 7 longs and 1 short. We are long AUY (20% undervalued) with dividends yielding 2.78%, T (18% undervalued) at 8.03% yields and COG (CTRA) (14% undervalued) yielding 2.06%. CLVS is currently 21% overvalued with -7.19 z-score but Tudor Investment had stepped in recently and we decided to hold. We remain bullish with VIPS (43% undervalued with 5.59 z-score), GT (47% undervalued with 1.28 z-score) and CRON (18% undervalued with 9.18 z-score) while bearish GE (26% overvalued with 1.36 z-score).

FX & Commodities: NZD/CHF has completed all targets and AUD/CAD has completed short term targets. EUR/CHF didn’t quite work as planned, but we believe the bottom is in place. Gold (XAU/USD) remains active.

Disclaimer:

This article is for general information purpose only. It is not an investment advice or a solicitation to buy or sell any securities. Opinions expressed are of the authors and not necessarily of MFM Securities Limited or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

 

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Risk-On Sent Dollar Lower

Author: MFMTeam   |  Publish date: Thu, 21 Oct 2021, 9:29 AM


STATE OF THE MARKETS

Risk-On sent Dollar lower. US stocks continue their upward trajectory, with Dow (+0.43%) and S&P (+0.37%) briefly traded at new record highs on Wednesday, as stronger than expected earnings continue to fuel the rally. Improved risk appetite sent Dollar and bonds lower, with the spot Dollar index falling to 93.50 handle while the 10Y yields soared to 167 basis points – the highest in five months.

In the commodities market, crude rallied past the $83/bl mark – a level not seen since October 2014, after EIA reported the lowest level of inventories in three years. Gold was under pressure, below $1790/oz, as yields rose and the yellow metal lost its anti-inflationary appeal. Iron ore was little changed, trading in the $123/tn the figure as China’s steel output fell recently.

In the FX space, the comdolls continue to lead demand by wide margin across horizons, though demand for safe-haven Swiss increased as investors hedged their risks. Short term traders seemed to be taking profits on their short Yen trades, after the BoJ stimulus announcement sent Yen pairs to rally recently. Markets look for jobless claims, home sales and earnings reports from American Airlines (AAL), AT&T (T), Dow (DOW), and Intel (INTC) on Thursday.

OUR PICK – GOLD (XAU/USD)

Rising yields may cap the rise of the yellow metal. Recent bonds sell-off in anticipation of the Fed’s tapering and rate hike next year, sent bonds’ yields of various maturities higher than their coupon. The 10Y is now paying 1.65% versus 1.25% coupon, 5Y at 1.17% versus 0.875% coupon and the 2Y at 0.39% versus 0.25% coupon. The non-interest bearing gold might lose its appeal in light of rising yields. We also saw block selling orders at $1,790 levels, signaling pressure below the $1,800/oz mark.

Disclaimer:

This article is for general information purpose only. It is not an investment advice or a solicitation to buy or sell any securities. Opinions expressed are of the authors and not necessarily of MFM Securities Limited or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

 

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Strong Earnings Boosted Stocks Up

Author: MFMTeam   |  Publish date: Wed, 20 Oct 2021, 9:30 AM


STATE OF THE MARKETS

Strong earnings boosted stocks up. US stocks received another upside boost after Bank of America reported that 66% of the companies reporting earnings so far have beaten their estimates. Dow (+0.56%), S&P (+0.74%), Nasdaq (+0.71%) and Russell (+0.36%), all sectors in the green with utilities, IT and healthcare leading the gains. Dollar (DXY) was sold off to as low as the 93.50 mark before bidders emerged to close it above 93.80, but the index remains under pressure at writing as risk appetite returns. The 10Y yields benchmark soared to 165 basis points, the highest in five months.

In the commodities market, crude continues its upward trajectory as China reported colder weather that may result in increased demand. The black gold settled near $83/bl as New York closed. Gold remains supported as more than $39m worth of block orders flocked the futures market. Iron ore was little changed, trading in the $123/tn the figure amid staggered production in China.

In the FX space, Yen was seen synching across all horizons, while Kiwi, Aussie, Sterling, Swiss and Dollar were synching across short and medium term accounts. Investors are apparently repositioning themselves as risk appetite in the new quarter is gaining momentum. Sentiments were highly bullish in the short and medium term as the safe haven trios were sent to offers. Markets look for earning reports from Tesla (TSLA), Verizon (VZ), Anthem (ANTM) and Las Vegas Sands (LVS) on Wednesday to gauge Covid impact in the third quarter. EIA crude inventories will be in the spotlight for oil traders.

 

OUR PICK – No New Stock Pick

No new stock picks as we are at maximum equities exposure. Currently we are holding 8 stocks – 7 longs and 1 short. We are long AUY (20% undervalued) with dividends yielding 2.80%, T (18% undervalued) at 8.13% yields and COG (CTRA) (15% undervalued) yielding 2.11%. CLVS is currently 22% overvalued with -7.19 z-score but Tudor Investment had stepped in recently and we decided to hold. We remain bullish with VIPS (44% undervalued with 5.59 z-score), GT (47% undervalued with 1.28 z-score) and CRON (17% undervalued with 9.18 z-score) while bearish GE (25% overvalued with 1.36 z-score).

For high probability stock picks, please use our Trading Central services.

Note: Cabot Oil & Gas (COG) recently merged with Cimarex Energy to form Coterra Energy (CTRA).

Disclaimer:

This article is for general information purpose only. It is not an investment advice or a solicitation to buy or sell any securities. Opinions expressed are of the authors and not necessarily of MFM Securities Limited or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

 

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Equities Mixed Amid China Slowdown

Author: MFMTeam   |  Publish date: Tue, 19 Oct 2021, 10:41 AM


STATE OF THE MARKETS

Equities mixed amid China slowdown. Global equities closed mixed on Monday after news hit the wires that China’s economy grew slower (4.9%) than expected (5.1%) and sharply lower (7.9%) than previous quarter. World indexes from Dow (-0.10%) and FTSE (-0.42%) edged lower, while Nikkei (+0.62%) and Shanghai (+0.76%) eked some gains in Asian trading on Tuesday. Dollar (DXY) wobbled below the 94 handle and trending lower at writing as yields eased. The 10Y benchmark settled below 160 basis points as New York closed.

In the commodities market, crude was firm above the $82/bl as major banks continue to see supplies deficit going into winter in the aftermath of gulf coast production shutdown. Gold was under pressure but remained well bid above $1,760/oz after a 1.7% decline on Friday on Dollar strength. Elsewhere, iron ore was firm above $123.40 on spot as investors await the US infrastructure bills to be passed next month.

In the FX space, sentiments continue to be bullish as long term investors flipped Dollar to Kiwi in the demand territories, while medium term accounts sent Swiss to offers. Demand for Loonie eased off in the short and medium term as players moved into Euro and Sterling. Markets look for more earnings reports on Tuesday, especially from Bank of New York Mellon (BK), Haliburton (HAL), Johnson & Johnson (JNJ), Lam Research (LRCX), United Airlines (UAL) and Netflix (NFLX) to name a few.

OUR PICK – EUR/CHF

Improved sentiments should bode well for the Euro. Fear of market meltdown from China’s Evergrande has subsided and now markets are back on track to regular rhythm. Slowdown in China’s economy did not deter the country from issuing $4 billion of new bonds that offer higher yields than the US Treasuries. Recent improved diplomatic relations between China and Europe should also augur well for the Euro in our view.

Disclaimer:

This article is for general information purpose only. It is not an investment advice or a solicitation to buy or sell any securities. Opinions expressed are of the authors and not necessarily of MFM Securities Limited or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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Stocks Jumped On Strong Earnings Reports

Author: MFMTeam   |  Publish date: Fri, 15 Oct 2021, 9:21 AM


STATE OF THE MARKETS

Stocks jumped on strong earnings reports. US stocks jumped higher on Thursday after major banks reported stronger than estimated Q3 earnings. Major indexes from Dow (+1.56%) to S&P (+1.71%) and Nasdaq (+1.73%) to Russell (+1.44%) all in the green, though some flights to safety were seen as bond prices rose and yields fell. The US 10Y fell to 1.52% while the 30Y to 2.02% as the Dollar dipped to 93.75 before settled higher above the 94 handle.

In the commodities market, crude was back on bids after Saudi denied calls to increase OPEC supplies, though EIA reported increased US inventories. The black gold settled around $81.30/bl and still climbing to $82/bl at writing. Inflation fears sent gold higher, piercing the $1,800/oz barrier, before settling lower around $1,795.55/oz. Elsewhere, iron ore climbed higher to $122.80/tn as markets expect supply crunch due to global supply chain issues and mining slowdowns.

In the FX space, sentiments were seen more bullish than Wednesday as Kiwi, Aussie and Loonie led the demand in short, medium and long term accounts as Dollar and Yen were offered. Medium and long term investors remain cautious with Swiss remains in bids alongside Dollar and the Comdolls. Yen pairs were spinning higher as news hit the wires that Japan’s Finance Ministry will be issuing more longer dated JGBs to lift its economy. US consumer sentiments and retail sales will be in the spotlight on Friday.

 

OUR PICK – No New Pick

No new pick going into the weekend. It didn’t surprise us that the 3 months of consistent outflow from the US equities has finally expressed itself in the form of a downward motive wave in the Dow. At the same time, we saw heavy bids in gold/silver and mining ETFs have outpaced the demand in bonds ETFs. The Fed will have to announce its tapering plan next month to retain investors’ confidence as some parts of the markets are already hedged for tapering delay and/or later/no hike. With more than $28 trillion of liabilities in the Fed’s balance sheet, rate hike would spike the interest payments. But such is the price of investors’ confidence.

Trades updates: 

Equities: Currently we are holding 8 stocks – 7 longs and 1 short. We are long AUY (21% undervalued) with dividends yielding 2.74%, T (20% undervalued) at 8.12% yields and COG (CTRA) (9% undervalued) yielding 2.12%. CLVS is currently 20% overvalued with -7.19 z-score but Tudor Investment had stepped in recently and we decided to hold. We remain bullish with VIPS (43% undervalued with 5.59 z-score), GT (47% undervalued with 1.28 z-score) and CRON (15% undervalued with 9.18 z-score) while bearish GE (26% overvalued with 1.36 z-score).

FX & Commodities: NZD/CHF has completed short term targets and AUD/CAD remains active.

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Disclaimer:

This article is for general information purpose only. It is not an investment advice or a solicitation to buy or sell any securities. Opinions expressed are of the authors and not necessarily of MFM Securities Limited or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

 

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Equities Mixed Amid Inflation Worries

Author: MFMTeam   |  Publish date: Thu, 14 Oct 2021, 9:16 AM


STATE OF THE MARKETS

Equities mixed amid inflation worries. Global equities was mixed on Wednesday after reports showed that inflation rose more than expected in the world’s largest economy. Blue chip Dow was at breakeven while S&P (+0.30%), FTSE (+0.16%), Nikkei (+1.39%) and Shanghai (+0.06%) climbed higher. Flight to safety was seen as yields edged lower with the US 10Y fell to 1.54% and 30Y to 2.04% as bond prices rose on demand.

In the commodities market, crude was little changed as traders were seen booking more profits and the black gold settled around $80.45/bl as New York closed. Gold surged and settled around $1,791.80/oz after higher inflation reports sent heavy bids for the precious metal complex. Elsewhere, iron ore consolidated around $122.30/tn as markets priced the demand given higher inflation worries.

In the FX space, King Dollar lost bids in the short and medium term accounts, though not far in demand from Loonie and Aussie in the long term accounts. Short term traders bid more Swiss, Euro, Sterling and Kiwi as Aussie, Yen and Loonie were offered. Yen was unchanged across horizons. Markets look forward to reading the jobless claims report and EIA crude inventories on Thursday.

OUR PICK – AUD/CAD

Iron Ore Vs Crude Oil. Rising crude oil prices to more than $80/bl finally added weight to the Loonie and now in the making we see strengthening iron ore price might do the same for Aussie. Waiting for the US infrastructure bill is painful but we see iron ore price might have found a floor at around $120/tn which is about 0.91CAD per AUD. We expect AUD/CAD to rise further in the short to medium term as iron ore prices stabilize and rise in anticipation of the infrastructure bill being passed. Risk to the downside remains as it might take longer for the bills to pass the US senate and this is a negative swap trade.

Disclaimer:

This article is for general information purpose only. It is not an investment advice or a solicitation to buy or sell any securities. Opinions expressed are of the authors and not necessarily of MFM Securities Limited or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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