ON or OFF

We have discussed previously that it is important for traders and investors to have a view on whether the global markets are in a risk on or risk off mode.

A few charts that we follow to guide us in a quick and dirty evaluation:

iShares iBoxx USD high Yield Corporate Bond Fund CFD:  Often times when we see risk off periods in the market, the High yield market gives us an early signal. Currently it is holding near the highs. This will most likely turn lower before we get an equity correction.

AUDJPY is a good indicator of market uncertainty and market stress. Yen tends to strengthen when markets are stressed. Currently the cross has bounced from the 70.00 level and is looking to test higher if it stays above the 73.50 level.

The VIX index, reacts to the mood of the equity markets, having rallied up over 23, it has retraced to a “normal level” of 16.

There a great deal of other instruments that are important to follow, but these are worth having up on your screens.  All of the above seem to be telling us that we are in a risk on mode, backed by low rates and central banks that are racing to cut rates and help the economy.

What market participants are focusing on today:

China takes measures to ease the trade war, by reducing tariffs on some U.S. imports.

Boris may be easing on his backstop stand and markets start to think he may well try for a deal before the deadline.

There was no much expected from Apple yesterday, but the market was positively surprised by new approach to pricing: phones, gaming and TV/video streaming.

The U.S. treasury bonds sold off with 10 year yields having moved from 1.46% a week ago to 1.74%.

Gold touched $1,482 an ounce from $1,553 a week ago.

U.S job openings appear to have peaked.

60% of Americans surveyed replied that they expect a recession in the next 12 months.

EM currencies such as the Mexican Peso and South African Rand have been rallying.

What to focus on tomorrow:

ECB expected rate cut (-10bps), bond buying (QE) and possibly tiering of deposits.  Something more or less, will move the market. (buying of equities?)

We look for a possible bounce in the euro short term.

German, French, U.S.  Inflation numbers, Industrial production for Europe, OPEC meeting.

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

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– Mark W

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