The Week that Was

Weekly Report - 23/04/2018

When it Stopped Falling

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Last week saw the firmness of the floor markets have placed under the falls of the last two months. The S&P 500 stopped falling at the 2540 level. The Nikkei at 20900, the Milan at 21850 the CAC 5050, the DAX 11800 and the FTSE at 21500.

The Week that Was


Last week saw the firmness of the floor markets have placed under the falls of the last two months. The S&P 500 stopped falling at the 2540 level. The Nikkei at 20900, the Milan at 21850 the CAC 5050, the DAX 11800 and the FTSE at 21500. All of the stock markets tracked approximately the same pattern where the levels above were retested at least once and they held. Meaning that the bears (Sellers) could not drive the price below these levels as the Bulls (Buyers) would start buying at those prices. Once stabilisation is reached buyers have, slowly, come back to the markets to continue the price rises. Currently that buying activity is not a runaway Bull stampede. However the slope of the price curve is positive, meaning that the price level is rising steadily, if not rapidly. And that is fine for us as traders as we are only interested in capturing the direction (Slope) of the price curve. We anticipate a continuation of this movement upwards because we are still at the beginning of the Earnings Reporting season and it is proving to be positive indeed. Second, the trade spat between the US and China is calming. While over $160 billion have been threatened, the actual tariffs imposed stands at $43b and is holding. The Chinese have begun to concede as they have lowered the participation rate of their firms in joint automobile ventures. Surely more are to come. It will take some time to recover those lost monies the market took away, but that market has not been crippled either.

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The Week to Come


A dominant story this week is going to be the continuing delivery of earnings reports. So far the early stocks have printed right according to expectations. There are no sure or guaranteed results in the capital markets. Only events of greater or lesser probable outcome. No certain anything. Still, so far these trades have been very reliable. This is the most active week for us at Alvexo with respect to the stocks that we trade and those reporting. Ask your brokers for details of the exact stocks and the trade set up to take advantage of the release outcomes. Another story to follow is the continuing trade tariff tit for tat spat. While that nomenclature may sound juvenile, this story is anything but childish. They threaten the rules based trading system that has been in force variably since the treaty of Westphalia (1648) but more pronouncedly since the end of the Second World War (1945). And lest we think that the US administration is behaving in its insurgent business as usual approach, think again. The Chinese president Mr. Xi (pronounced: she), has abolished one of the fundamental changes instituted by Mao Ze Dong’s successor Dung Xiao Ping to obviate the abuses and crimes that stemmed from Mao’s ruling for life. Current leader Xi has removed this obstacle from the Chinese system thus setting himself up for a long term in office. Mr. Trump is not only challenging the Chinese to reduce their restrictive trading policies but also their leader who sees China on the ascendant and perhaps the US on the descendant. This little tiff is far from over. We see opportunities in the goods currently under tariff, steel and aluminum (Alcoa, US Steel) and the many commodities that while merely threatened with tariffs, are behaving as if the tariffs have indeed been implemented. Here we think of the agriculturals because they were targeted by the Chinese to affect the regions that voted for the US president.

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