All Clear?

Based on the markets reaction yesterday and today to the developing Coronavirus, it seems that the general consensus is that this is primarily a Chinese issue and that it is not a major global event. The markets took to heart the large Chinese stimulus, strong U.S. manufacturing data and a PMI which came in better than expected. The daily reported growth rate of the virus has slowed slightly, combined with only a few cases of death outside of China, these developments are supporting the current bounce in risk.

We have seen Copper, Oil and other growth related commodities get hit hard the past couple of weeks.

Over the past month Gold has been unchanged while:

Soybeans: -6.3%

Copper: -8.2%

Natural Gas: -14.8%

Brent Crude: -20%

The short term, risk on risk off moves for the next week will be based on the view regarding the Coronavirus containment:

https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

Specifically on whether the daily increase in cases slowly slides from the 18/19% range currently being observed and if the number of cases outside China increase over the next week. The market seems to be waiting for the all clear to buy equities, sell bonds and gold while looking for buying opportunities in some of the beat up commodity markets. The market believes that China will be aggressive in supporting the domestic economy to meet the target of 6% growth.

Charts:

USDJPY is holding and looks to test the upper end of the range. Looking for a breakout.

Brent Crude looks as though it will test resistance at the $55 and $57.50. But will need help from OPEC.

Is gold up to it’s old trick of building support before breaking higher or has the move we have seen since August of 2018 come to an end?

We think there is still more upside in this move and see support at the $1,560 and $1,550 level with the next support down at $1,540.  Resistance is at the recent high of just over $1,600

Contact us if you are interested in receiving real time trading signals. In doubt? Check out our track record below!

TickerDate OpenedEntry PriceStopTarget PriceCurrent Price% Change
Long EURCHF Put Option, Strike 1.0650, Expiry 15.4.20202020/01/151.0757 (0.00620)1.06961 (0.00526)-0.56%

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2018: 45 Trades, Hit Ratio 53,66%, Profit +35,87 %
2019:   31 Trades, Hit Ratio 45,16%, Profit +26,97%

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