True Price Reflection: A Classic Divergent Trend - SP500 RUT2000 DAX Vs. HSI

A clear cut 'DIVERGENT TREND' for the past (11) consecutive trading days between US Equity Indices, NK225 compared with Hang Seng Index HSI reflects the, true sentiments where prices had a bigger impact from the trade spat. Other Asian countries have followed the price action from the 2nd largest economy with the exception from those that are well ALIGNED with US POLICY. On the other hand, tactical investors & traders do know what and how to take advantage of these market conditions where a defined trend along with price action have been moving prices in similar direction. But the fact remains is how well other traders perception sees it that way or believes otherwise would take action with US equities already on record levels.

Russel 2000 small-caps and German DAX would benefit more from these market conditions as it paces major indices to another record highs. For now US investors although concerned would still back US equities at this time which can only signal who wins in this tit-for-tat but rather the fact remains US growth is on track. 

WELCOME BACK! DOW 25000

Price Update: As of July 13, 2018

It had taken the average time line of a month & a Half to achieve and has now VALIDATED our 'Market /Price Objective. Retesting the Highs as indicated in our analysis dated, June 2nd  with alternating price action / movements between the #USD & #Equities market. Check out the Link below.

Dow Jones Industrial Ave (#DJIA) 

Currency in USD 

25,019.95 +95.06 (+0.38%)  

US Dollar Index #DXY #ICE 

Currency Index in USD
94.868 +0.040 (-0.04%)

USDJPY (SPOT) FX Rate 

112.478 -0.048 (+0.06%)

Nikkei225 #TOPIX (N225)
22,597.35 +409.39 (+1.85%)
          

S&P 500 (#GSPC) 

Currency in USD 

2,804.28 +5.77 (+0.20%)

NASDAQ Composite (#IXIC) 

Currency in USD
7,842.27 +18.52 (+0.24%) 

US Momentum Drivers Will Retest EQUITIES RECORD Highs 

On the CCY Corner: USD Dominates & Ripples Across the Board

The USD didn't want to be left behind from the party, as the #USD #DXY registered a rally last Friday well above the 94.48 breaking the May initial high of 94.29. It has been a gradual climb for the USD well within three (3) consecutive months until reaching its recent high at 95.13 while closing for the week at 94.87. 

A firm tone for USD sentiment remains suported by the recent figures from a stellar Retail Sales report, Low Jobless Claims & the  ECB statements maintaining low Interest Rates until 2019 while ending their Asset Purchase Program. However, the market is focused on the tensions arising from the USD / China trade war building up and other US allies that may also be affected. 

A 'tit-for-tat' is expected more between the two major economies and how these would directly and indirectly affect other countries in the emerging markets particularly in Asia. As the USD strength and interest rate hike have already dampened most global equities and currency value in the pacific region.

This resulted the EURO back down at 1.1562 a slight overshot from our 1.1580 objective, the USDCHF at 0.9988 high nearing a rewind towards it s parity levels. Meanwhile, CABLE have registered a low at 1.3210 which run short of our  objective at 1.3180 and the AUSSIE Dollar loosing more ground with a low at 0.7440 as the USD surged. 

The USDJPY have remained at their own 110.65 levels a tight alignment from its price range for the past 5 consecutive weeks. However. its price action and similar trajectory correlated with the Nikkei 225 Overlay USDJPY is well defined in the near term direction.

Last but not necessarily the least is the relative reaction that carried the USDCAD well above the 1.3200 levels; a fresh incentive that drove the USD strength from all sides of the global market. The near term incentives for the USD strength can draw similar market sentiments towards the Loonie as it projects a revisit of a higher record high after similar corrective moves are in place. 

US Asian & PH Investors Know How Alternatives in Trading & Investment Works

There are Smart Choices to be made!

It has been quite a grueling four (4) months since the Philippine Stock Market Index(PSEI) peaked at 9078 at the end of January 2018. And have reached a dramatic low at 7499 which can be considered as the initial base for now. As the two (2) recently encouraging price recovery have lost steam while ending the week of May 18 closing at the levels of 7672. 

The market's ability to make a decent enough follow through after weighting adjustments made on the indices, and partly influenced by the positive sentiments of US equities price action then wasn't enough to build momentum as foreign outflows still dominated the end of the trading week. 

This was not really a surprise, as the market's behavior on the price recovery most often fizzles out and even pares its gains while drifting much lower from where prices came from. While most PH analyst have conveyed that inflation factors, high cost of local fuel along side consumer goods and services have creep-up. As the recent rate hike of the BSP have finally came through, as an economic policy responsiveness for higher inflation figures.

Although, other mix reports continuously states sound and solid fundamentals for the Philippines is stable with the recent positive credit rating approval received. True enough, but the up & down turns are part and partial of the growing pains for the market from the numerous share right offerings - SRO, government bonds, foreign outflows, and new corporate bonds offerings in the list. 

Click to continue 

Investing & Trading by CORRELATION is the way to ADAPT in  this type of market conditions with utmost SUCCESS! . . . Sir Alexander

CORRELATION & Price Update Across the Board:

As of May 15, 2018

#Dow Jones Industrial Average (#DJIA)   
                 DJIA Currency in USD                      

24,656.25 -243.16 (-0.98%)

#CBOE #Interest Rate 10 Year (#TNX)
Chicago Options Currency in #USD
3.059 +0.064 (+2.14%) 

              

#US Dollar Index #DXY #ICE 
Currency Index in USD
93.30 +0.633 (+0.68%)  

#USD/JPY (SPOT) Foreign Exchange Rate
CCY Currency in #USD vs #JPY
110.294 +0.609 (+0.56%)

#Nikkei225 #FUTURES Index (#NKDM18 #CME)    
                  CME Currency in #USD                      
22,775.00 -115.00 (-0.50%) 

               

#Nikkei225 #TOPIX (N225)
Currency in #JPY
22,818.02 -47.84 (-0.21%) 

PSEI INDEX (PSEI.PS)Philippine Currency in PHP
7,885.97+133.86 (+1.73%) 

iShares MSCI Philippines ETF (EPHE)

NYSE Arca - Nasdaq Real Time Price. Currency in USD
33.74+0.08 (+0.24%)

Comparative Analysis Nikkei 225

Comparative Technical Approach 

A distinct variation applied on the NK225 defining its price and chart patterns; as well as a support the derived trend analysis can be a little more complicated. There are at least over 8 valid indicators combined that draws similar conclusive information as to the true directional trend of the NK225 from where it came from. Here goes!

Two (2) Distinct & Relative Technical Trading Approach

MT101 Chart A above, indicates a combination of 6 technical indicators applied. The distinct 'Descending / Falling Wedge' formation is a classic of its own indicating an early signal of price reversal in the making. And a price break out from the first initial resistance level with enough momentum was indeed true. 

We have declassified this on our market analysis reflecting the early signals of higher probability of a price recovery contrary to the market sentiments of a stronger Yen. While a probable turn around for the USD to strengthen when the USDJPY marked a 104.63 low on March 26, 2016. Further chart references that MT101 apply the MA Cross over in relation with the USD / Japanese Yen and the Nikkei 225 crucial cross road analysis 

MegaTrade101 strategic technical approach is compared with Daryl Guppy's Chart B above which defines his analysis using the GMMA or known as the Guppy Mutiple Moving Averages. A combination of grouping near /long term variable moving averages in wide and compressed market situations as indicated on the chart. When such a compression is in agreement both price & value, expect the market to make relative good market swings. 

CORRELATION between the NK225 and the foreign exchange rates of the USDJPY has always been a part of the trading equation in oour trading and investment process. However, as part of our due diligence in supporting our fundamental market perspective by extending ways to check the best technical approach. 

Related Information: USDJPY Nikkei 225 Aligns with USD Move

USD Gains & A Follow-through Ahead of FOMC

After an array of earnings, ECB monetary stance and external UK PMI data have surrounded the #USD as it gains ahead of FOMC. The DXY is above 92.00 at the time of writing. Market sentments spilled over in Asia as the USDJPY is now above 109.20 with a session high marked at 109.70 nearing the 110.50 first line of defense.  

Meanwhile, the NIKKEI 225 is well above 22500 levels with NKDM2018 futures is trailing not too far behind at 22480. As the opening levels for May as the market have been positive as the USD's correlation prevails until such time it does otherwise. 

Financial markets find ways to shift freely at its own pace when least expected. But for those with a keen analytical eye for detail can still provide unsuspecting signals before anyone could realize it. Only to find out after the fact that the market have moved.

A typical market trade for the #USD index at 88.25/45 low range dated Feb 21 and trading above 92.00 basis pt. in early US session. As of May 1, 2018 starting at the European session DXY at 92.11 basis point and followed through into the US session currently trading at 92.52. With equities in triple digit decline. 

These prices have now VALIDATED 
all 'Related Trade Positions' in Spot FX, Futures and ETFs. 

Reference to Market Call
 Strategies USD Probable Turn in the Making dated Feb 21, 2018

USD Positive FX & EQUITIES Backdrop: Fundamental / Technically motivated Market Drivers

As the USD steadies, we see that the NK225 index has just made a weekly new high at 22488.28 though currently trading at an intra-day's Asian session correction at 22420.19, still a in triple digit up change from the previous closing price at 22319.61.

And these strategies have been taken from our trade analysis led by the futures market on the #NIKKEI 225 by effectively trading the NKDM2018 and the relative correlation of Japanese Equity Index and the USD / Yen correlation exchange rate direction.

This simply shows the extent of the 'CORRELATION' between the NIKKEI 225 and the USDJPY moving towards a 109.47 registered high after breaking though 108.80 the previous day. The pressure on the YEN's weakness was more from the USD gaining lost ground assisted by the 10 Year Treasury Yield slightly over the 3% threshold. But seemingly making a corrective move slightly below these levels.

Moving forward a steadier market outlook would be expected as the coverage of the NORKOR's willingness towards  a peaceful Korean peninsula takes place, as a meeting between Kim Jung Un and South Korean President Moon is underway. Which would pave the way for both Washington and North Korea for a dialogue in the upcoming summit.    

A positive USD backdrop from US earnings report, Geopolitical tension and trade war easing from US meeting with China while the ongoing meeting of North and South Koreas takes place. For now, these market conditions are conducive to a more stable financial market that depicts a far better relationship between fundamental and technically motivated  market drivers. 

USDJPY NIKKEI 225 Aligns with USD Move Above 90.70

Staying ahead of the market is an advantage but not to be completely complacent. One week before April close the #USD would remain above this levels to sustain its recovery. Tracking #ICE #DX futures #VOI trailing Spot #DXY crucial to determine trend direction. DXY at 90.70 basis point. VALIDATED AS OF APRIL 22, 2018

UPDATE: DXY record high at 91.07 basis point as of US session 4.24.18

#USDJPY has finally moved as of April 22, 2018 reaching 108.55 in US trading sessions influenced by the acceleration of the USD index above the 90.70 basis point from the 10 year US treasury Yield nearing the 3% mark. With #VOLATILITY present in both sides of the market, and with #LIQUIDITY in abundance, it doesn't take much for prices to move back in either direction especially from a decline to a recovery.

The US #Nikkei 225 futures below chart have reacted positively with the #NKDM2018 trading at 22210 up by +110.00 = +0.50%. Which would bring Tokyo's next NK225 trading expected to be in the same triple digit when it opens in Asian session. However, the advantage of anticipating a market move in Asia has already been absorbed with the USDJPY rise above the 108.00.

Sustaining these levels would give another boost for the Nikkei to be able to continue where it originally left off. That is when there would be no serious and unexpected actions from the BOJ to say otherwise.

Reference: Japanese Yen & Equities at Crucial Cross Road - Yen Related Trades

Tail Wagging FX & Equities' In Both Directions

Follow where CONVICTION is stronger!

To no surprise, the market place have reflected price volatility as a common ground with the current  price action in the US trading session. US equities particularly with the DOW's failure to stay afloat above 25k is swaying from triple digit changes between highs and lows which comes relatively easy and see investors shifting gears or simply changing hands quickly with price action narratives.

Especially with the most recent report on the President's steel and aluminum tariff plans drew a quick rebuttal plan of action from the EU counter balance and have made the markets react in both market directions. A probable Trade War in the making have already proven depressing for the USD Index which also slipped below 90.05 losing momentum from the previous move and trading at 89.61.

No different with the FX / currency market where we have seen a quick turn around for the EURO when it marked 1.2180 with a low at 1.2154 level, CABLE at 1.3750, low at 1.3711 and the USDJPY at 105.50 with a low at 105.25. Which actually sparked a price recovery after marking our price objectives and is currently at 1.2410, 1.3883 and 106.20 respectively.  

US #Equities spilled over the #NK225 and recovered to a high at 21551 just in time with the #USDJPY at 105.50 with an extension at the 105.25. This levels were practically aligned that is why we mentioned that a contrary move was indeed in the making. With the USDJPY making a price recovery trading at 106.20 motivated by a technical divergence

And this proves to be the #VALIDATION of both before and after the fact. A typical market play reflecting #VOLATILITY is present in both sides of the market. Friday's #JOBS report would be the clincher for the rest of the week.

Alternative Trade Strategy: Equity Index, Futures & Currency Markets

Adapting to Bear Market Conditions 

Market disruption from President Trump's declaration of Steel and Aluminum Tariff which could turn into a TRADE WAR and add to INFLATIONARY pressure have driven the USD back down. This 'protectionism' behavior has been played by Trump for sometime which gives the market the condition of uncertainty that leads to equities in the decline. 

This was breaking news during Fed Chair J Powell's testimony when equities where actually recovering higher and the DXY was above 90.50 level that resulted again into a market turn around and currently below the 90.00 mark. While the DOW in another triple digit sell off at 24315 as of this writing. And then again today's drop is no exception as bears are practically in control of the market at this time.

As we made mention that the markets are surrounded by all sort of drivers, whereas fear of another massive decline may well be in the making viewed by other analyst. Although, triple digit move when added altogether is quite substantial. And the trade war has been added to the equation for a really bearish market outlook at this time.

As we have been quite fortunate picking the right market instruments in a relatively declining market. And the NIKKEI 225 futures (describe below) have been more aligned with current market conditions with the USDJPY doing the same. Flight to quality indeed has been proven true time and again.

Let's see and keep a clear watch when a 'rest in motion' across the market can provide us a better glimpse heading into the last few weeks of the 1st quarter trading of 2018. Although, we'll remain with the USD time frame as it has been defined with the Fed's schedule of rate hikes.

Widening Price Differential Between #Equities #USD Index

The three major indices have again reiterated their point of bullish sentiments with the #DOW marking a new record high at 21681.53; #SP500 at 2463.54 and the #NASDAQ at 6341.83 in June while the Nikkei 225 Average trailing behind, but still above the 20k levels. 

As Facebook marking a high at 160.32 and Alibaba at 152.25 leading the surge; while Amazon refuses to give anything below USD1000 struggles to keep its prices afloat at the end of the trading week. But the market's ability to maintain a continuation of its bullish sentiments are well supported contrary to the negative figures in CPI and Retail sales. Likewise, this resulted a considerable push for the #USD - #DXY to its psychological price support at 95.05 /10 closing for the week. Click below to view other charts.

Widening Price Differential Between #Equities #USD Indexes

Finally! - #NK225 Breaks 20K in Asian Market

Last Market & Price call on the NK225 dated March 06, 2017 have finally been confirmed with prices breaking above the expected 20k mark in the Asian Trading Session. With a registered high @20230 to this writing, indeed followed suit the price action record highs set in the US Equity Indices market. 

All these price action has not been made easy for other investors who had to face a lot of market distractions in geopolitics, other relative fundamentals of the market creating a bearish misdirection. As shown on the circled portion of the chart. Although, these prices have nonetheless been able to navigate through these uncertainties created by full bodied price values on US stocks may lead to corrective moves unexpectedly.

With that said, the #NK225 and the FX #USDJPY markets are now ripe to continue its trajectory moving forward into the end of the 2nd quarter trading. Of course, not without a few bumps along the way. Where we can find that the certainty of a June rate hike in the US. A price recovery for the USD though may be temporary in price action shall remain supportive for the USDJPY. Meanwhile, there will always be some daily pullbacks on these markets heading into the release of NON-FARM figures this Friday in the US session.

Price Action on the NK225 have been both technically & Fundamentally

motivated as described on this chart figure A.