Global Trading Blog
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Dear Subscribers:Today the market received some pretty dissapointing macro data that only confirm that the economy is weak, which shouldn't be a surprise. Especially dismal were the numbers of Core Durable Goods. The Final GDP for the second quarter was revised downwards with an anemic 1.3%. However a weak economy is old news and the market focus was set in Spain as the government would approve and release the budget for 2013.Budget cuts were approved and tax hikes were avoided. The market reaction was favorable as this increases the odds that the ECB will print Euros and shore the spanish ... -
Dear Subscribers:An ugly day in the stock market today as investors turn to risk off mode before the much awaited "Jackson Hole" conference.The market is expecting that some new monetary stimulus will be announced in this conference and some profit taking might be occuring in case Bernanke dissapoints.Most markets are negative and our stock watchlist is also in a sea of red, something we haven't seen a while.Technically things are not looking pretty as the S&P 500 looses its 20 day moving average and the 1400 level. Concerns over Europe is touted as the culprit but there isn't much in ... -
Dear Subscribers:Stocks and markets worldwide got hammered yesterday.This technically caused the "Market Monitor" to issue another sell signal and end the questionable buy signal we had gotten.As I have mentioned week after week, we are in a trading environment filled with land mines. Uncertainty and risk are high with the ongoing Macro slowdown across the globe plus the Europe fiscal and banking crisis. However it is not easy to just go short as central banks and politicians are obsessed with monetary easing and bailouts that cause violente "rip your face rallies". It is a market for only the extremely quick where profits ... -
Dear Subscribers:After Friday's rally, the market triggered a new technical uptrend.The Nasdaq Composite had a second accumulation day after the the low established the 6th of June which indicates that some buying pressure is entering the market and a new uptrend is emerging. We didn't have confirmation from the S&P 500 with another accumulation day. Also the Nasdaq Composite and other indices will be facing stiff resistance of important technical levels and the 50 day moving average. The buying pressure, looking at the internals through the market monitor, is still weak and thus the strong hands are not buying agressively ... -
This week all the important macro releases came out with readings that were worst than expected. Since early February, macro data has been missing expectations and we saw the effect earlier this year with a very weak GDP growth for the first quarter of only 1.9%From then on things haven´t improved and Macro misses have continued. Leading indicators such as the ECRI Weekly Index or the CB Leading (rate of change) have turned negative. ECRI co-founder Laksman Achuthan states that the recession has probably started but isn't evident at the moment. Watch interview here. If we just take a look at ... -
Dear Subscribers:Despite of what you might be reading in the news, the Euro crisis is far from over.At best it is going to be kicked forward with more money printing and debt ladden bailouts.Please take 2.5 minutes of your time and see how Neil Farage speaks common sense and truth to the European parliament. -
Dear Subscribers:Today was a good example of how being systematic and having the discipline to follow your model is critical to have a chance of success in investing / trading.In the current market environment, filled with rumors, bailouts, monetary intervention and banking fraud it is even more important.I wrote last night on how silly this "Spanish Bailout" was and how it opened the door for more problems as other PIIGS will probably revolt to get a similar deal as the one handed to Spain.Also there are elections occuring in Greece this weekend and the party that opposes to the European ... -
Dear Subscribers:Last week the market reversed from the lows and a technical break down. Stocks ended with a bullish tone with the best gain week over week for 2012. During last week's bounce, we even got to see an accumulation day on Wednesday, which hadn´t occured since late April.With another accumulation day, the market will generate a new buy signal as a new uptrend should be starting. At this moment the S&P 500 futures are up 12 points because Spain requested a $125 bailout package for their banking system.Adding more debt to an over indebted system/country seems to be the ... -
Dear Subscribers:It is risk on today as QE rumors increase after FED Evans called for more easing last night.Together with this, there was a "step forward" in Europe to create a "Bank Union" that would make the sector more "responsible".The Bank Union would include tighter coordination between the regulators and a bail out tool in which banks would be recapitalized while shareholders are wiped out and bond holders would get cut in their claims and converted into share holders.Technically the market is making a big move with 100% of the components of the market monitor, showing that is a risk ... -
Dear Subscribers:Doing some macro catch up today. Macro data has been in general better than expected during the last couple of days. These are valid fundamental excuses to buy the market from the current oversold levels which are being dampened by the Greek-Euro situation. We can see that the US economic surprise index has stabilized. Housing data has been better than expected and supports the idea that it has bottomed and recovery is gaining firm footing. Retail sales was the big dissapointment which came under expectations and last month was revised lower. Empire State Manufactoring Index also came in better ... -
Dear Subscribers:Market is gapping down 15 points at this moment after socialist Hollande wins the presidential election in France.Hollande promises lowering retirement age to 60, raise taxes to 75% to people who earn over 1.3 million USD a year and stopping austerity.This in my opinion is demented, especially given the fiscal condition of Europe and France.I think bond vigilantes will have a feast with French government debt and the European crisis might start to worsen from here.Technically the market started a bounce from ultra oversold conditions on April 11th and a buy signal was generated in April 25th. However breadth and ... -
Dear Subscribers:Market ends the week with a sharp sell off that terminates the uptrend signal from April 25th and causes the S&P 500 and Nasdaq Composite to breakdown below their 50 day moving average. This week we got the scenario that we didn't want to see as I highlighted on Monday's market comentary. The culprit of the break down has been the non stop macro misses coming out from developed economies. Since the uptrend started last April 25th, economic news have been very bad yet the market held up ok and continued higher until mid week.However the selling pressure caused ... -
Dear Subscribers:A series of worst than expected macro releases during the European session plus political news, with Sarkozy losing first round election to socialist Hollande and the Dutch government entering crisis, has caused the market enter into risk off mode.At this moment 100% of the "Market Monitor" is negative, with Germany, gold stocks, silver, China and emerging markets leading the downside. The S&P 500 is testing April's lows, something that I have mentioned here in the updates as probable. The bounce from the ultra oversold conditions was very weak and lacking volume. Highest turnover has been observed in down days for ... -
Dear Subscribers:Mixed macro data was released today to end a week of dissapointing economic releases. Personal Spending jumped today over expectations but personal saving declined.From Calculated Risk: This was a sharp increase in spending in February (and January spending was revised up). Using the two-month method, it appears real PCE will increase around 2.0% in Q1 (PCE is the largest component of GDP); the mid-month method suggests an increase closer to 2.9%. Chicago PMI had a slightly missed expectations but market its fifth month over 60 which is positive. UOM Consumer Sentiment was revised higher to 76.2, breaking out of ... -
Dear Subscribers:Today the market opens weak for the fourth consecutive day as Chinese & Euro Zone PMI show economic contraction. These industrial production numbers are trading below 50 in both cases and any number below this threshold implicates an economic slowdown. Read more about the Chinese slowdown here. Today we see more weakness than yesterday as a lot of important indexes such as the Russell 2000, S&P 500, Dow Jones Industrials and semiconductors have made new lows today. In the other hand, the Nasdaq remains the leader and is holding previous lows.Leading stocks are weaker today but for the moment nothing ... -
Dear Subscribers:We begin the week with "bearish" news out of China and Europe this week.China reduced its growth forecast to 7.5%, which will put pressure on emerging economies and commodities and is sitting on a $2.2 trillion local debt. This week, Greece has to have a 70% approval of private debt holders to accept a debt swap. If they don't get this % of approval from private debt holders, credit default swaps will be triggered. Also the Euro Zone PMI, decreased to 49.3 which confirms economic contraction.Furthermore, Morgan Stanley downgraded US Q1 GDP to only 1%.All in all a lot of "bearish ... -
Dear Subscribers:For the moment, the winning streak in the market is being halted at resistance.The market has not been able to breach the 1350 resistance area from its overbought conditions.Today news from Europe are the excuse to sell. Bailout money to Greece was delayed until next week after euro-zone finance ministers demanded the country's parliament first approve another round of deep cutbacks. Copper falls over 2% and retests its 200 day moving average. Losses in copper show risk aversion. For the moment, everything is going as expected. I have warned about this pullback during this week and we have positioned ... -
Dear Subscribers:Market continues to make new highs in a risk on day where every asset of the market monitor is positive.A supposed deal between Greece and its creditors supports European stocks and the Euro which lifts US stocks in the american session.The market is now overbought and making new stock purchases is riskier. My focus is now centered more in profit taking rather than buying.That being said, technically the market seems to be headed to the 1340-1350 area in the S&P 500, which were previous highs and should act as a magnet. The EUR/USD short cover is on its way. ... -
Dear Subscribers:Today the market gaps fueled by higher than expected growth in Chinese GDP. Emerging markets, commodities and Brazil lead the rally today on these news.Also today we got a positive Spanish bond auction. The market has completely ignored the S&P downgrades on France, Austria and the ESFS bailout fund. I think is a positive that the market stops paying attention to this rating agencies which have shown during the last 5 years or so to be most of the time wrong and late in ther risk classifications. The market has given up a big part of its gap up ... -
Dear Subscribers:Markets sell off today, something that hadn't occured in a while.Europe comes back as the culprit after a time in which it "didn´t matter".Before the open the market begun to sell off on rumors that S&P wias downgrading some European countries. This rumor is now confirmed with Austria and France losing their AAA rating and downgraded to AA+ which is only one notch. The EUR/USD which was rallying after recovering the lower trendline of its downward channel reverses hard more than 230 pips and hits new lows for the year.New longs buying the technical breakout got caught and hammered ... -
Dear Subscribers:It had been a while since we had a complete miss in US macro data. Both Retail Sales and Unemployment claims came under expectations.Retail Sales only increased 0.1% in December while 0.3% was expected. Unemployment Claims also came in higher than expected with a reading of 399K vs 373K that was concensus. Market until just some minutes was flat to barely positive due a positve bond auction in Europe in which 10 year yields of Spanish and Italian bond dropped.The EUR/USD is trying to recover the lower trendline of its downward channel. A close over 1.2810 will probably generate ... -
Dear Subscribers:Markets remain firm and now the S&P 500, Dow Jones Industrrials and the Russell 2000 are trading their october highs. However the NASDAQ Composite, NYSE Composite Index or Emerging markets are below this level. This is an overall negative divergence in the market as the new highs are not being confirmed by most indexes. We are observing some negative divergences in the indexes that are making new highs.For example the S&P 500 has a lagging Advance/Decline line and Mclellan Summation Index. Both of these breadth indicators are below the October highs. Also sentiment in the option market is pretty ... -
Dear Subscribers:Markets remain trading near their october '11 highs but are losing some momentum and unable to gain traction over this resistance.Friday, despite better a better than expected non-farm payroll, we couldn't take out October highs in most major indices. Also the EUR/USD remains very weak and trading below 1.30. A weak Euro and strong dollar is usually a bad combination for stocks and other assets.Leading stocks remain relatively strong and we are entering a generally bullish time of the year which is earnings season which is a positive.However, until we get a coordinated breakout on the important indices I ... -
Dear Subscribers:Market continues to digest the gains produced by Tuesday's gap up.Today focus got centered once again in Europe as equity markets in the old continent slide due to worries related to bank capitalization and mixed French Bond auction where yields rose.The EUR/USD tanks more than 150 pips and trades at a 15 month low. The Dollar Index rallies and is trying to break out, hitting resistance at 22.60 in the UUP. Normally you would think that with this news the market would be tanking over 2% as it had occured before in similar occasions. Not this time. Markets have held very ... -
Last Friday the S&P 500 finally took out resistance at 1260 and closed over its 200 day moving average. The Dow Jones Industrials broke out from a reverse head and shoulders pattern and closed over resistance at 12.250. The market looks more bullish, with a couple of higher lows since the October bottom and is now offering some setups in leading stocks that want to breakout higher. We still have some positive seasonality left which is also bullish.However, we still need a high volume-conviction breakout in the S&P 500 and other indices to confirm that a new uptrend has begun. ... -
Dear Subscribers:Yesterday's rally extended into the ending the day with huge gains in most major indexes and breaking the 6 day consecutive streak of the market closing lower than the open.The action of yesterday was quite historic. The Up/Down volume ratio on the NYSE Composite Index reached a historical high of 43.74. This is normally interpreted as strong accumulation and in normal times, precedes higher prices for the stock market going forward. We have had 4 similar buying episodes since the August low in the markets. This is interpreted as bullish going forward.Yesterday's action also creates a technical buy signal. Markets ... -
Dear Subscribers:Market opens sharply higher today and its hitting resistance in its 50 day moving average for the S&P 500.The market has been trading in a choppy downtrend since it hit its December high and had closed lower than its opening range during 6 days in a row. As usual, dissapointing comments coming from the European Union or European Central Bank has dominated trading and dragged the market lower despite continued better than expected macro data from the US.For the moment we have not seen the sesaonal bullish bias of year end except for the powerful bounce from the end ... -
Dear Subscribers:We got the powerful bounce from deep oversold conditions that I highlighted last week. When the market monitor has 85%-90% of its assets in an oversold condition there is a lot of "powder" for an upside explotion. A catalyst, a "match" is what it is needed to light the fire and propel the markets higher from extreme pessimism.The catalyst came this week with positive black friday sales, progress in the European ESFS bailout fund and yesterday the coordinated central bank intervention.The catalysts have been coupled with positive US macro data that continues to beat expectations and suggest that 4th ... -
Markets fell hard on Wednesday to mark the sixth day of consecutive losses for the S&P 500. The continued sell off experienced by the markets made the current pre thanksgiving week one of the worst performing in history. The Euro crisis and the political deadlock of the "super committee" are the culprits of the current sell off according to the headlines.I attribute the selling to a macro problem. There is an ongoing deleveraging process in developed western economies that started in 2007. Abscent of new monetary and fiscal stimulus ( QE2 ended this June and the US & European governments ... -
A broad sell off in equity markets around the globe caused major indices like the S&P 500 and the NASDAQ composite to breach important support levels. The two consecutive down days on higher volume have technically broken the uptrend that started in early October and warns us to be cautious.Buying stocks right now is risky and one should wait until a new uptrend to emerge or wait for the to markets become extremely oversold to play a rebound trade (which has worked the best during the last three months or so). The market has remained risk averse and unable to ... -
Dear Subscribers:Before I dwelve into today's market action, I want to highlight an interview I did for the site www.wallstreetwindow.com. In this interview I discuss the current economic and market conditions, how we got here and what to expect going forward.Watch the interview here: http://www.wallstreetwindow.com/node/4113I uploaded the presentation to the "Educational Material" section of the site. However, you can download the presentation directly by clicking here. Ok back to the markets.Until the last hour of trade we were seeing a by now repetitive pattern in the market. A weak open due to negative European developments but as the american session ... -
Today before the market open I did this interview /presentation with Mike Swanson of Wall street window about the my outlook for the markets and the economy.Click here to see the presentation.Best regards, Victor Riesco -
Dear Subscribers:Risk off trade started in Asia with banks and brokers leading the downside.In Europe trading is mixed with some indexes are positive and others negative. However most of them are higher than during the beginning of the Euro session as yields of the bonds from Italy and Spain drop.There is still no agreement, but there is serious talk about implementing a Quantitative Easing program by European Central Bank. This program would monetize the debt of the PIIGS countries and lower their yields and allow them to finance their spending by weakening the Euro. This liquidity injection would be bullish for ... -
Markets rally around the world with all of the Market Monitor positive except for UNG which makes new lows.Optimism hits the market after Italian senate approves the austerity measures.This causes the Italian 10 Year Bond Yield to spike lower under 7% which was the critical level that the market was observing. Despite the market being held "hostage" to headlines from Europe that have caused high volatility with sharp sell-offs and meltups, technically the uptrend remains in place and important support levels have held despite the losses in the indexes. In order for this rally to have real legs and start a ... -
The European situation with Italy's 10 year bond yields spiking over 7% plus the mess in the Greek parliament, which still doesn't have a new prime minister, caused investors and traders to panic.Europe needs to get its act together fast and launch a massive bailout package (like TARP) and start their own QE program in order to get over this situation and avoid a sharp deleveraging. Weakening the Euro and generating inflation is a less harsh way to pay down the excessive debts. This will also stimulate exports and tourism which improves the balance of trade and bolsters GDP and ... -
Dear Subscribers:A rough awakening for american markets occurs this morning after yesterday's promising close on most indexes, which reversed losses and ended positive and near the highs in most world markets. Overnight the clearing firm LCH decides to raise the margin for italian bonds and this creates fear in the financial markets, sending the Italian 10-Year Bond yield over 7% (very near the crisis level of 8%) and the EUR/USD dropping over 200 pips which is about -1.6%. The S&P 500 index has been trading with a very strong negative correlation with the Dollar Index and especially the EUR/USD and ... -
Yesterday's early weakness was erased with a strong afternoon rally that led world markets to close near their highs.As mentioned in yesterday's update, the market uptrend remains in place but is pressured by some short term overbought conditions and all the political and macro distorsion coming out from Europe.Markets remain sensible to headlines related to Europe. This creates a choppy and volatile trading environment.Today, the market started the american session with strength after selling off and then bouncing during the futures markets.This strength however was erased when Italy approves the budget put forward by prime minister Silvio Berlusconi was approved ... -
The market uptrend that started in early October, after the markets reached a deeply oversold condition, continues into November despite a complicated political and fiscal situation in Europe and with the US economy facing sluggish growth & double dip recession fears.Developed economies are striving to "kick the can" as much as they can to avoid a massive develeraging that would stunt growth and raise unemployment for a long time. As I highlighted last week, the powerful bounce that lead to a historic rally in October made most world markets reach extreme short term overbought conditions. Last week almost 90% of ... -
The majority of world markets are selling off today on renewed concerns on the PIIGS situation and a slightly dissapointing Non-Farm Payrolls report.Europe woes continue today as Italian 10 Year Bond yields climb to 6.2% and threaten to cut off financing and cause fiscal distress. Portugal and Ireland got bailed out when their 10 year yields climbed to 8%. The spread between 10 year German Bonds and 10 Year Italian Bonds are at a record 4.4%.In the G20 meeting Italian Prime Minister Berlusconi argued that the situation was under control and that Italy did not need aid from International Monetary ... -
Dear Subscribers: Markets continue to display high volatility due to the events that are ocurring in Europe. The Greek Prime Minister called for a public referendum on Monday to see if the country accepted the terms imposed by the EU in order for Greece to receive the bailout funds, get a haircut of 50% on its debt and remain in the Euro zone. The referendum could cancel all the hard work done by European politicians to contain the debt contagion and bailout Greece if they choose to reject the conditions imposed by the EU. This uncertainty caused a sharp sell off early this ... -
Dear Subscribers: World markets celebrate with a powerful rally the agreement in the European Union to lend 110 billion Euros to Greece and that banks take a voluntary "haircut" of 50% to the debt lent to this country. There is also an agreement to add capital to European banks once they have written down the losses for the Greek haircuts. The result is a powerful rally in all markets across the world. There is a strong risk appetite as the Dollar Index tanks with treasuries. The S&P 500 breakout over its 150 day moving average and the resistance of 1260 which was ... -
Dear Subscribers: A day with high volatility that had not been observed in a while is being experimented by the markets today. We are back to "political trading" that generates distorsions in the market and makes it hard to determine market direction. Today the European leaders are holding a conference to iron out the bailout plan for the debt ladden PIIGS countries. The market rallied before the start of the american session and optimism was founded on the approval of the German parliament to lever up the ESFS bailout fund. During the open of the american session the market "sold the news." The ... -
Dear Subscribers: News from Europe and Macro data worst than expected try to spoil the "bulls" party. The expected and definite plan to "bailout Europe" that was supposed to be released tomorrow has been postponed until next Sunday. It appears that an agreement is basically done between the European leaders but some details need to be ironed out and this is taking longer than expected. This puts some downward pressure on the markets that dislike uncertainty. It is also being rumored that the Europeans will start their own "Quantitative Easing" program in order to "finance" the huge debt problems the PIIGS countries are facing. ... -
Dear Subscribers: Market continues to display great strength and basically reach the target of 1260 in the S&P 500 which were the lows in previous corrections. Despite the market being overbought short term we continue to observe a lot of strength in leading stocks which is necessary for the rally to sustain and keep on pushing forward. In Europe, the situation appears to be stable and that an agreement to lever the ESFS bailout fund will be reached. This week we have a lot of important macro data released. The most important release will be the Advance GDP of the third quarter. GDP ... -
Dear Subscribers: Today the S&P 500 breaks out over the range that it has been during the last two months and a half. The market reach 1236 points, its highest level since August 4, 2011 The next target for the S&P 500 is 1260 points, March and June support from where the market bounced. What drives optimism today in the markets are two rumors: Ben Bernanke gathered with some senators to discuss the posibility of a new montery stimulus to bolster the weak economy. The FED wants to monetize mortgage backed securities, something that was done during the first QE during 2009 and ... -
Dear Subscribers: Today is Columbus day and it is a bank and bond market holiday, however the NYSE is online and stocks celebrate with huge gains. Optimism is generated by the announcement of the presidents of France and Germany, Nicolas Sarkozy and Angela Merkel, that they have a solid plan to recapitalize troubled European banks. This "definitive" plan will be revealed in details in early November. In this moment the S&P 500 is up nearly 3% and for the first time since July 28th, it is trading over its 50 day moving average. This a positive technical achievement which shows that the ... -
Since the end of July the stock market has been very weak. We've had a couple of days in which markets fell over 6% and various in which we had 3%+ losses.After the deep sell off in August, the S&P 500 traded on a very volatile range between 1220 and 1120.The market broke down from its 1120 support and things were looking pretty grim. However yesterday during the last hour of trading the market had a sharp reversal on European news and recovered this level.I personally think that the market will start a powerful move either to the downside or ... -
Dear Subscribers: On monday the markets started the week in a deeply oversold condition. We have seen some bounces that have moments turned into strong rallies but the breadth and leadership has been very weak. The majority of stocks that have lead the market uptrend have not been participating and many of them have sold off this week. The most oversold assets that had made new lows have been bouncing. Silver, copper, china and emerging markets have staged bounces but these assets have been the laggards and not the leaders. The weak leadership in the rallies makes me think we will probably get another ... -
Dear Subscribers: Markets rebound around the globe after reaching an extreme oversold condition. Optimism is generated because European leaders intend to leverage the ESFS in order to give it the necessary funds to bailout and help the finances of the troubled PIIGS nations. The S&P 500 rebounds to 1190 and is once again near the resistence zone that hasn't been breached in previous rebounds. Macro data today was "less bad" and the market reacts in a favorable manner. The rebound today is being led by the most oversold indexes or stocks, some of them made new lows last week. Leading stocks have ... -
Dear Subscribers: Yesterday Wall Street closed with a second consecutive day of gains that got halted at it highs twice when the S&P 500 hit its 20 day moving average that is acting as short term resistance. Volatility has persisted during the Asian & European session with the S&P futures at one point being off more than 1% and now before the market open they are open near 1% to the upside. Today's important macro data release, Retail Sales, dissapoints with a flat number (0%) while an increase of 0.2% was expected. Note that retail sales, at least in nominal terms, are ... -
Dear Subscribers: Yesterday the market was extremely volatile with S&P 500 futures trading in a over 40 point range, being down over 2% in pre market trading to end about 1% positive at the close. Yesterday's late rally was due to rumors that stated that the Chinese Sovereign Fund would buy Italian debt and ease the pressure for financing from this country. This hysterical trading of the markets is due to very sensible conditions present right now. If the PIIGS situation isn't managed correctly, we could be entering a "domino effect" of defaults and banks imploding which would cause deep economic ... -
Dear Subscribers: Fear takes control of the market once again due to negative news pouring out of Europe. Rumors that Greece is entering default this weekend and that Germany is readying a plan to shield and save its banks from this scenario puts the market on a major "risk off" trade today. Also one of the memembers of the Europe Central Bank, Stark, quits because he doesn't agree with the PIIGS countries bond purchases that this institution has been conducting. In a day with extreme risk aversion, everything is selling off today except the dollar index and treasuries. Even gold and ...
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I’M VICTOR RIESCO
I’m a financial analyst and professional investor from Santiago, Chile. I’m the owner of Global Trader, a brokerage and trading .
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