Sunday, September 23, 2018

Focus on US EQUITY Market SUSTAINABILITY

Keeping a DEFENSIVE Stance 

It's a busy week ahead with US economic data from Consumer Confidence, Durable Goods, FOMC Funds Rate Decision among others in European side and particularly GDP figures! As China declined the US proposed tariff meeting, highly relevant news to watch would be a couple of speeches coming from Fed Chair J Powell after rate decision, ECB President Mario Draghi in Brussels and BOJ Kuroda in Osaka would add more life in market activity. 

For now, Aussie Dollar have stalled and drifted apart from its recent price recovery as the news on China declining to attend US proposed trade talk. Limiting a corrective stance for the AUDUSD at 0.7269 in early Asian session. Likewise, sentiment & price action spilled over into the NZDUSD after making a stronger comeback price at 0.6670 as of writing.

Until such time market activity would improve by mid-week where market participants would be focused on price reaction when most of the data reports are released by then. However, the USD had every chance last week to further correct to levels that maybe deemed appropriate before the next take-off occurs. This is expected heading into December's intended rate hike for the year making a resilient USD well above its moving price average. It would not be a total surprise if and when prices regain their true original trend direction coming from continued US economic growth with US equities on record levels and other probable external factors that would contribute positive strength on sentiments.

Focused on market sustainability is quite important at this time, as we remain with some cognitive biases on USD Futures & ETFs anticipated acceleration based on Fed rate schedules until December 2018. Although, watching really well, equity markets resiliency no additional trade positions and expectations of higher percentage ROE for the rest of the 4th quarter. But when they do add up, taking a defensive stance would not be bad after all. Especially with the recent DOW and SP500 record high levels can be considered exceptional performance of an extended bull market.

As we draw a line on hold with passive / fixed-income investments; instead of pouring more into the ever increasing Bond market with yields steadily moving towards our objective for the 4th quarter which is now maintaining well above the 3.00 levels. Recent data reports from Bloomberg reflected that the amount drawn-out from equities have delivered twice the amount into the bond market. And this also has a lot to do with USD funds repatriated back into the US found its place.

With that said, being the last trading week of the 3rd quarter, we do expect volatility to increase further, as the market is fundamentally driven from all directions. Having to preserve what has already been made is important, while remaining defensive and keeping a protective cushion in unexpected events that may cause a market misdirection will always be in place. 

It is the right thing to do!

4 comments:

  1. Price Update as of Sept 24, 2018 US Session

    #SP500 at 2,916.26 down by -13.41 (-0.46%)
    #DOW at 26,616.36 down by -127.14 (-0.48%)
    #NASDAQ at 7,953.05 down by -33.90(-0.42%)
    #10-Yr Bond at 3.076 up by +0.008(+0.26%)
    #USD #DXY at 93.975 down by -0.241 -0.26%
    #EURO at 1.1765 up by +0.002325 +0.20%
    #GOLD at 1199.375 up by +2.965 +0.25%

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  2. Initial reactions on the first trading day after the SP500 Reshuffles.

    #SP #GICS Reshuffles by creating a new #CommunicationsServices Sector category from #InfoTech, and #ecommerce reclassified to #consumerdiscretionary would certainly be watch. As ripple effects into the 4th qtr. trading is expected in the weeks ahead! Let's see how markets reacts to these adjustments!

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  3. #ADP Backs #GreenBuck #DXY at 95.54bp
    Price Update: Major US Indices at Record Highs

    As of Oct 3, 2018 US session
    #SP500 at 2,938.35 up by +14.92 (+0.51%)
    #DOW at 26,935.93 up by +161.99 (+0.61%)
    #NASD at 8,042.21 up by +42.66 (+0.53%)
    #RUSSELL2K at 1,658.45 up by +2.41(+0.15%)

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  4. The way we approach its weakness for now is quite independent as it would likewise be used as a buffer strategy that once the FED raises rates the USD would be coming from its low pre-adjusted levels coming into the 4th quarter 2018.

    And this would be well in line with our projection for 10 year US yields to stay above 3% and relatively closer to 3.35% presumed range objective in the near term in the 4th quarter & early into-mid term quarter of 2019.

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