Poll results – Rally in global stocks nearly over, further gains will be limited, correction likely by year-end

Reuters polled equity market analysts and that headline above is the summary:

In very brief summary:
  • The spread of the Delta variant of the coronavirus and the U.S. Federal Reserve’s pending plans to taper its asset purchases are likely to leave equity markets exposed to turbulence over the coming months.
  • positive earnings season catalyst now behind us
  • 66 of 107 analysts said a correction in global equity markets by end-year was likely. The remaining 41 said unlikely.
Reuters have published a long piece, with a few anecdotal remarks that you might find of further interest, here is the link for plenty more.
Reuters polled equity market analysts and that headline above is the summary:

More on Chinese stocks being delisted from indexes – this time is MSCI

MSCI move follows this from yesterday: FTSE/Russell says it will delete around 20 Chinese stocks from its indexes

FTSE/Russell said they’ll be deleting around 20 Chinese stocks after feedback on the US Executive Order that halts US investment in firms with links to the Chinese military info
MSCI is similar, will delist from July 26.
China’s abrupt crackdown on Didi hasn’t helped either.

Overnight US Market : The stock rotation continues out of high-tech and into cyclicals

Higher yields remain the catalyst

The longs in the technology stocks continue to get hammered and the rotation into the cyclical continues as fears of interest rates have traders repricing the high flyers of 2020.

The final numbers are showing:
  • S&P index -20.72 points or -0.54% at 3821.23
  • NASDAQ index -310.98 points or -2.41% at 12609.16
  • Dow industrial average rose 306.21 points or +0.97% at 31802.51
The NASDAQ index closed below its 100 day moving average for the 1st time since October 30.
Some of the oversized decliners today included:
  • Doordash -11.92%
  • Snowflake, -10.74%
  • Chewy, -8.01%
  • Zoom, -7.91%
  • Nio, -7.66%
  • Nvidia, -6.99%
  • Square, -6.74%
  • Broadcom, -6.57%
  • Palantir, -5.91%
  • Tesla, -5.86%
On the positive side, some of the Reddit meme stocks were in the big gainers:
  • Express, +62.6%
  • Gamestop, +40.1%
  • Koss, +26.79%
  • AMC, +15.52%
  • Bed Bath and Beyond, +10.32%
Airlines also rose sharply:
  • United airlines, +7.03%
  • Southwest Airlines, +6.41%
  • American Airlines, +4.94%
  • Delta Air Lines, +3.61%
Big cap high flying names of 2020 had a tough time of it today as well:
  • Facebook -3.35%
  • Amazon -1.58%
  • Apple, -4.13%
  • Netflix, -4.48%
  • Microsoft -1.79%
  • Alphabet -4.3%
Other winners included:
  • Walt Disney, +6.27%
  • Whirlpool, +3.46%
  • Ford, +3.10%
  • MasterCard, +2.9%
  • Citigroup, +2.82%
  • Cisco Systems, +2.79%
  • Exxon, +2.39%
  • General Motors, +2.29%
  • Home Depot, +2.16%

What’s the trade if Trump steals the election this year?

re we looking at a repeat of the dollar melt up in 2016?

As Biden leads in the polls, almost everyone has been talking up the case for a ‘blue wave’ and what scenarios may take place should that happen.

The straightforward one being “buy everything, sell the dollar” of course, but there are some risks associated with that once the euphoria begins to fade.

Over the past ten months, I grew from thinking Trump would easily win this election to thinking that Biden should have this in the bag, judging by the lead in the polls. But now, I’m less confident of that outcome as we approach the home stretch.
I would still argue that the base case remains for a ‘blue wave’ but Trump winning once again and stealing this election is not within the realms of being unworldly, if you ask me.
As a trader, it’s best to be prepared for all outcomes and eventualities, so what is the trade if we do see another four years of Trump in the White House after next week?
Is it going to be the total opposite of the reaction if we see a ‘blue wave’ outcome?



icolas Darvas viewed Wall Street as nothing more than a gambling casino; therefore, he set out to learn how to gamble.

I would like us to take a look at Mr. Darvas’ understanding of the stock market, as outlined in his best selling book How I Made $2,000,000 In The Stock Market, originally penned in 1960, as we recognize that what was true over 50 years ago still holds true today.  In other words, trading the market today is THE SAME AS IT EVER WAS.

Mr. Darvas experienced an “important turning point” in his stock market career when he learned that “there is no such thing as cannot in the market.  Any stock can do anything.”  With this in mind Darvas developed his “box theory” based on the following realizations:

1.  There is no sure thing in the market.  I was bound to be wrong half the time. Darvas adopted what he called the “quick-loss weapon”.  He already knew he would be wrong quite often (half the time); therefore, he decided to accept his mistakes realistically and get out of a losing trade with a small loss.  “This way, I figured, I would never sleep with a loss.  If any of my stocks went below the price I thought they should, I would not own them when I went to bed that night.  I knew that many times I would be stopped out for the sake of a point just to see my stock climb up immediately after.  But I realized that this was not so important as stopping the big losses.  Besides, I could always buy back the stock by paying a higher price.”

2.  My pride and my ego would have to be subdued.  Darvas surmised that with a win ratio of 50% his profits had to be bigger than his losses.  Breaking even was not a sustainable option.  For that to happen he would have to take many losses while letting the winners run.  Egotistical pride would have to give way to humble reality.  “As if stocks were made to conform to my new attitude, I handled this quite successfully for quite a while.  I bought with bold confidence when I thought I was right and coldly, without a hurt ego, I took my limited losses when I thought I was proven wrong.”

3.  I must become an impartial diagnostician. Instead of trying to force his will upon market direction, Darvas allowed the market to direct him by becoming intimate with a few stocks at a time and by not listening to others.  “To try to fit the market into a rigid pattern was a mistake.  As I only handled five to eight stocks at a time, I automatically separated them from the confusing, jungle-like movement of the hundreds of stocks surrounding them.  I was influenced by nothing but the price of my stocks.  I could not hear what people said, but I could see what they did.  It was like a poker game in which I could not hear the betting, but I could see all the cards.  Of course, the poker players would try to mislead me with words, and they would not show me their cards.  But if I did not listen to their words, and constantly watched their cards, I could guess what they were doing.”


EuropeFX: Everything you need to know about CFDs trading

What you need to know about trading CFDs

Contracts-for-difference (CFDs) are popular trading instruments that provide investors with unique potential opportunities to profit in specific markets. This includes taking advantage of certain assets price movement, without actually owning the asset itself.

Thousands of CFDs exist, which are now a common fixture amongst brokerages’ offerings. CFDs are quite simplistic, as profit is calculated as the difference between the entry point of the trade and its exit point.

Popular types of CFDs


Why the US dollar continues to rebound and what’s next

The pressure is on

The US dollar has extended its gains as market participants get caught wrong-footed in a rebound after multi-month lows.
The dollar looked to be breaking down yesterday and today but stabled itself and is making a move to the upside. There are two near term factors to watch:
1) The 20-year auction
The US is selling $25B in 20-year bonds at the top of the hour. Last week there was a strong 10-year sale and a very weak 30-year sale so the bond market is off balance. A higher-than-anticipted yield could boost the dollar further.
2) The FOMC minutes
The Fed is a below-the-radar risk at the moment. The strong belief in markets is that they’re creeping towards doing more for the economy but an improvement in US virus cases, decent economic data, higher inflation and the stock market at record highs might make them slow their roll. If so, the dollar could climb further
Overall, this looks like a position-squaring squeeze in a quiet mid-August market to me but you can’t take anything for granted. If it spills over into a broad risk-off move, then the dollar could have a lot of room to run.
The EUR/USD chart to me looks like a retest of the range break before a further breakout but a close over 1.19 today would add confidence.
EURUSD chart

Warren Buffett makes a big bet on gold

Buffett bought a stake in miner Barrick Gold

Barrick Gold Warren Buffett
Warren Buffett has famously disparaged gold but evidently he’s had a change of heart.
According to a Q2 13F filed today, The Oracle of Omaha added 20.9 million shares of Barrick Gold, which is the world’s second largest gold miner. He paid $563.5 million for the stake, which equates to $26.95 per share and his Berkshire Hathaway owns 1.2% of the company. It was the only new company he bought in the second quarter.
The shares closed at $26.99 on Friday but jumped about $1.00 in after hours trading.
Warren Buffett
This could indicate a massive change of heart from the world’s most famous investor, or one of his deputies.
His most-famous musing on gold was from back in 1998:
“(Gold) gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”
As recently as 2018 he repeated his misgivings about gold.
“The magical metal was no match for the American mettle,” he wrote in his annual letter while comparing the returns of both since he first invested in stocks in 1944.
Now this doesn’t necessarily mean he has a new view on gold. Barrick’s cash flows with gold steady at these levels are compelling (and other miners are even more compelling).  Still, expect much more interest in the space now that Warren Buffett has given it his blessing.
Other highlights from his Q2 13F:
  • Exited Occidental Petroleum, but added to Suncor Energy
  • Cut JPMorgan stake by 62%
  • Cut Mastercard stake by 7%
  • Aside from SU, only added to STOR and KR
  • Reduced WFC, SIRI, PNC, MTB, BK
  • Exited DAL, LUV, UAL, AAL, QSR, GS, OXY
In terms of the ones he reduced. In general Buffett doesn’t sell shares unless he plans to sell out. However at times he has to sell to stay below ownership limits.
Overall, his investment mix doesn’t exactly show confidence in the economic or stock market recovery.

Major indices close higher and at session highs. NASDAQ leads the way with Apple, Facebook, Amazon outperforming

Dow, S&P, NASDAQ close higher for the 4th consecutive month

the month of July is over and all the major indices closed higher for the 4th consecutive month. The S&P index had its second-best July performance since 2010. Apple, Amazon, Facebook all of the way after their earnings release last night. Apple rose up 10.47%. Facebook rose 8.18% and Amazon rose by 3.7%.  Alphabet was left out despite posting better earnings. Their stock fell by -3.28%.

On the downside the Dow post its 2nd straight weekly decline.
The final numbers are showing:
  • S&P index up 24.9 points or 0.77% at 3271.12
  • NASDAQ index up 157.46 points or 1.49% at 10745.23
  • Dow industrial average up 114.67 points or 0.44% at 26428.33
For the week, the NASDAQ led the way. The Dow industrial average could not make it to the unchanged level falling by -0.16%:
  • S&P index rose by 1.73%
  • NASDAQ rose by 3.69%, and as mentioned
  • Dow fell by -0.16%
For the month, the market initially tried to rotate out of the NASDAQ stocks and into the industrial/broader market, but the run up in tech stocks today and this week push the NASDAQ back into the lead:
  • S&P index rose by 5.51%.  As mentioned it was the 2nd largest July increase since 2010
  • NASDAQ index rose by 6.82%
  • Dow rose by 2.3%
For the year to date, the Nasdaq index continues to outperform, but the S&P index has moved back into the black (it dipped into the red earlier this week). The Dow remains lower on the year.
  • S&P index up 1.25%
  • Nasdaq up 19.76%
  • Dow down -7.39%
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