Growth for US indices yesterday

The slight improvement in the situation in Turkey has led to the stabilization of world stock indices. US indicators even ended slightly on positive territory.
Dow Jones added 0.5% to nearly 25,300 points, while the broad S&P 500 rose 0.6% to 2,839.96. Nasdaq added 0.65% to its value - to 7,870.89 points.
Meanwhile, the Turkish lira rose 8 percent to 6.35 pounds a dollar after the Turkish currency hit a record low of 7.24 pounds per dollar on Monday.
The Turkish lira, which for some time on Friday lost over 20% of its value, reached a new record low on Monday. It registered a record drop of more than 15% in just one day. However, there was some recovery in value after the country's central bank announced it would step in to stabilize its national currency.

The strong dollar sank the metals and oil

The dollar continued with its exceptionally strong appreciation over other major currencies. Especially strong was the growth of the US dollar against the New Zealand dollar. The appreciation of the dollar has adversely affected metal prices. However, their decline was relatively limited. Silver is traded at levels of 15.25 dollars per ounce and gold at $1,208. Platinum lost at least its value, swapping at levels of about $820 per ounce.
Oil also fell on the first day of the new week. The reason for this was the growing tension in world trade, especially in Asia, although US sanctions against Iran support prices to some extent and lead to more limited supplies.
Brent fell 21 cents to 72.60 dollars a barrel, compared to Friday's closing price. The decline in US crude oil, which dropped by five cents to $67.60 a barrel, was far farther.
Keeping the bearish sentiment on the market, hedge funds and other financial managers have cut their oil futures positions in the US in the week ending August 7, according to the CFTC US Trends Trading Commission on Friday. Total long positions in New York and London were 9,117, to a total of 397,885, the lowest level since June 19, according to CFTC data.

The cryptocurrencies collapsed

The last two days were extremely heavy for the cryptocurrencies. More than 20% of their market value lost cryptocurrencies like ethereum and ripple. Earlier this morning, the ethereum is traded at levels of $365 per coin, while the ripple - at $0.34 per coin.
Serious decline has the bitcoin cash - down to $597, as well as the bitcoin, traded at $6,350 early this morning.
The depreciation of the cryptocurrencies occurred after the decision of the US Financial Supervision Commission to postpone its decision on VanEck's and SolidX's demands for an index based on the cost of the bitcoin. This was VanEck's third attempt to start this kind of fund.
More than $9 billion of the cost of the bitcoin was "wiped out" after the decision of the US regulator.
We can also recall that the Winklevos brothers' request for the creation of such a fund last month was also rejected. It was then that the strong decrease in cryptocurrencies levels was also started.
Market participants were hoping for a US regulator's permission for such a kind of index fund, which would be the first of its kind.
The proposal of the two investment companies, VanEck and Solid X, was to create an index fund backed by real bitcoins rather than futures on it.
Index funds are seen as a way of exposition of institutional investors to cryptocurrencies. The lack of such funds seriously limits the access of large investors to the relatively limited and not particularly liquid market of cryptocurrencies.
So far, there have been many attempts to obtain permission from the US regulator for an index fund, but none of them has been successful. The question is - how long can the regulators' rejection continue?

Pound/dollar - now where?

The growing prospect of a "Brexit without a deal" leaves GBP bulls away from the beginning of the week.
The comments of this kind supported some streams to safe havens such as the Japanese yen and the Swiss franc and proved to be one of the key factors for the sale of pounds. All this uncertainty surrounding the Brexit process continues to weigh on the striling, which in recent days has fallen away from most of its major competitors.
The bad series of the British currency continued for the 5th consecutive day and the previous lowest GBP/USD value for the year - 1.2919 was pierced. Almost immediately after this breakthrough, the cable tested 1.2900. Eventually disembarking underneath it can trigger stop orders and another sharp drop down. Especially in the absence of strong support.
The nearest level GBP can count on is about 1.2852, bottom since the end of August last year, after which the bears are likely to look at the nearly 14-month minimum 1.2774. On the other hand stabilization here and rising above the psychological 1.30 will give a sip of air to buyers who can look at 1.3049.
Still, overall, the picture around the British pound remains extremely sensitive to the news about Brexit. It is precisely the development of the UK-EU split negotiations that remain the main driver for couples including the GBP.

A new drop for precious metals and oil

Noble metals and oil dropped today after the US dollar rises again. Gold again returned at a trading rate of $1,210, and we can see a psychological limit test of $1,200 per ounce.
The silver is traded at levels of $15.30 per ounce, or close to the lowest levels for the last one year. Platinum is exchanged at 825 dollars per ounce.
Meanwhile, the price of oil fell somewhat after its strong rise at the start of the week. Data released indicated a reduction in oil and petroleum stocks in the United States, in enforced sanctions against Iran.
US crude oil fell by nearly 30 cents to $69 a barrel, and the Brent to $73.80 a barrel.
We can recall that the Brent came back at trading levels above $74 a barrel after US sanctions against Iran came into force yesterday. It is expected Iran's production to cut by about 1 million barrels, from its current level to nearly 3 million barrels.

J. Gundlach: Decrease your US stocks positions!

The popular investor, Jeffrey Gundlach, advised investors to cut their exposure to US stocks and diversify them with other markets, such as India and Japan.
In an interview, the head of DoubleLine Capital also said he expects at least two Fed rises in interest rates this year.
Gundlach, confirmed his position from last June that an increase in 10-year US Treasury interest rates, above the psychological limit of 3%, would cause serious trouble for US stocks. Such an action would certainly mark the end of the three-decades-long bullish bond market.
Gundlach's position is very close to that of another legendary bond investor, Bill Gross, according to which bonds will enter the bear market when interest rates on 10-year securities are 2.6%. And these interest rates had already passed.
With regard to shares, Gundlach reaffirmed his view that other markets, beyond the US, are far cheaper and have a significant catching-up potential.

The Fed still has time to observe the dynamics of employment

The statistics on the labor market published in the US turned out to be quite contradictory. On the one hand, the published data, including statistics on the growth rates of wages in July, coincided with market expectations (an increase of 2.7% year-on-year). But the data on unemployment and the number of jobs created outside the agricultural sector, diverged with market expectations. The unemployment rate in the US in July fell below 4% of the working-age population and was 3.9%. To a record low of May 2018 (3.8%), unemployment this time did not reach, but is already approaching this level, and the US economy - to full employment.
As for the number of new jobs outside agriculture, their number in July was 157 thousand, which is 17% below market expectations. In principle, this meaning can be further clarified or revised by the US Department of Labor, however, it may be that the dynamics of this indicator may again postpone the increase in the interest rate in the United States. It is usually believed that an increase of this figure by 200 thousand jobs a month adds about 3% to the US GDP. Now the growth was much less.
Fed noted that when deciding on the interest rate, inflation indicators and labor market conditions are necessarily taken into account. It's not excluded that at the next meeting the Fed can again postpone the decision to raise the interest rate, if this indicator of the labor market will again grow at such a low pace. However, it is possible that this is a temporary phenomenon, most likely related to seasonal factors, this indicator has a property to fluctuate strongly from month to month, so the Fed has time to observe the dynamics of employment and assess the state of the labor market.

Pound fell to 11-day low due to BoE concern

Today, the Bank of England Governor Mark Carney has completed what he did not finish yesterday - expressed obvious concern about Brexit without an agreement.
Carney said in an interview with BBC Radio that the possibility of Brexit without an agreement is inconveniently high.
According to him, it is absolutely in the interests of the UK and the EU to have a transitional agreement, Brexit without an agreement is highly undesirable. This Brexit is likely to mean higher prices over a period of time.
After these comments, the pound sterling fell to an 11-day low.
On Thursday the Bank of England raised interest rates, but at a subsequent press conference, Mark Carney said that there are signs of a softening of business confidence. He also noted that the negotiations between Great Britain and the EU are in a critical phase. All this contributed to the fall of the pound. In addition, as The Guardian, the pound fell against the backdrop of Carney's phrase that monetary policy should walk, and not run, to stay in place, as the natural level of interest rates is slowly rising.
Officials of the Bank of England's committee yesterday also said that to restrain consumer inflation, there will be a constant tightening, but based on futures on central bank funds, investors do not expect a further rate hike until next year.

What to expect from NASDAQ?

In recent days, the big US and European indices have experienced difficulties and slowed their growth amid worries about a global trade war. Tensions between the United States and China continue to rise after US Trade Representative Robert Laitizer announced that the US is considering increasing duties from 10% to 25%.
Looking at what is happening with the NASDAQ index and the rest of the world's largest indexes since the beginning of the year, we will notice that at the end of January we had a fairly deep correction (around 12-13% on NASDAQ). But this adjustment was very easily accepted by the market and new buyers quickly entered.
After this correction, which ended in February, the S&P 500 and Dow Jones did not manage to mark new highs. The same thing happened in the European indexes. Only the French CAC40 managed to reach a new peak, but failed to keep it. In contrast, NASDAQ gained a 6% lead and remained the only bullish base index.
The technology companies that have the greatest weight in the so-called FANG (Facebook, Amazon, Netflix, Google) and Apple continue to grow (except for the results of the reports).
This means that cash managers are starting to invest in just one group of shares, and if there will be some adjustment in these companies, there will be tremendous problems for long positions in NASDAQ.
Still, my expectations are that NASDAQ is likely to continue to rise in the short to medium term (next 1-2 weeks).

The metals and the brent become cheaper

The appreciation of the US dollar after the Fed hinted that it would raise more interest rates this year, had an adverse effect on the prices of precious metals and oil.
Silver fell to 15.40 dollars per ounce, while platinum fell to 815 dollars per ounce. Gold is traded early this morning at $1,217 an ounce.
Oil has also been affected by the appreciation of green money and has continued its decline since the last two days. On Wednesday the raw material lost 2.5% of its value.
Earlier this morning, the Brent was traded at $71.90 a barrel and US crude at $68.4.
Oil prices are influenced by the effects of continuing tensions in world trade, but market participants are worried about any slowdown in economic growth around the world.

EUR/USD after the ECB meeting

The ECB meeting is already in the history. In general, it can be summed up that it did not produce anything more serious like news. The euro wondered where it would go against the dollar, but eventually chose to go down, falling below 1.1650. Earlier in the day, the single currency traded at levels of about 1.1700 after the good development from Trump and Juncker meeting.
Overall, the ECB decided to keep its base rate unchanged. Draghi also confirmed that 30 billion stimulus would gradually be reduced to reach zero by December 2018.
At the press conference, Draghi once again confirmed the plans of the financial institution to maintain the current interest rate by the summer of next year to ensure continued steady convergence of inflation over the medium term to levels near two percent.
Of course, the future decisions of ECB will continue to be predetermined by the outgoing macrodata. This was accepted by market participants as a signal that if the trade war resulted in a more serious slowdown in economic growth and inflation, the central bank could be much less aggressive about its interest rates.
In June, the ECB announced its plans to end its massive bond purchase program in December, hinting that interest rates are likely to remain at the current low levels until at least the summer of 2019. The ECB reaffirmed that any possible change to the current plan would depend on the current economic data.
According to technical analysts, the euro may try to retest the psychological limit of 1.1500 against the dollar, and the test will determine the further movement of the currency pair. Decline below this limit can be seen as a very negative signal and lead to further losses for the single currency towards 1.13-1.12. Otherwise, a failed breakthrough, as well as returning at trading levels above 1.1700, will require conditions to boost the euro's appreciation.

New ESMA regulations for forex traders

The European Securities and Markets Authority (ESMA) has published a new regulations for forex brokers, CFDs and binary options providers. The document was adjusted to add a section explaining the position of the mega-regulator in the issue of certification and provision of cross-border financial services to retail customers.
In relation to trading CFD contracts in Europe, the Authority changes the leverage in the range from 1:30 to 1:5, depending on the volatility of the underlying asset (the so-called historical price behavior). Also, the document sets standards for forced close out of the position (margin close out). That is, the stop out - level (in percent), when the provider is forced to close the client's position, will be the same for all traders with this asset.
Moreover, new measures of protection against negative balance are introduced. According to the regulator, this will provide a more guaranteed limit of possible losses to retail customers.
In addition, the European regulator is making crypto-currency instruments (CFD contracts) within the limits of these restrictions. Also, the ESMA regulator completely prohibits the trade in binary options in Europe.
My favorite broker ActivTrades provides its retail clients with options to mitigate these restrictions by opening a Professional Trading Account, or to open an account in ActivTrades' new Bahamas office.

Gold, silver and platinum with new bottoms (2)

The Bloomberg Commodity Index, which tracks the performance of commodities, declined 10% from its nearly three-year high in May, and its sell-offs began to shift to other assets.
This is clear from the performance of the mining companies, the worst performing sector this month, as part of the European Stoxx Europe 600 Index. This is not a big surprise, given the poor performance of the metals.
The weakness of the raw materials was also transferred to the currencies of the raw-producing nations. Almost all 22 key commodities in the Bloomberg Commodity Index fell from their peak in May, with the exception of live cattle, cotton and orange juice. Copper, which is often used as a barometer for the state of the world economy, fell by as much as 18% over the period.
The burning trade war and the uncertainty about Chinese demand for raw materials is one of the main reasons for the depreciation of raw materials. While there is uncertainty about China, raw materials will continue to be under pressure, according to market observers.

Trump does not like the Fed's policy

When Donald Trump does not like something, he does not bother to share it. Even if this can have consequences on financial markets. Last week, the US president criticized the Fed's policy.
According to the president, every time when Us economy goes up, FED wants to raise rates. And Trump's really not happy about this.
And Trump's comments have led to a certain decline in the dollar against other major currencies on Thursday.
The yuan has been distinguished from the depreciation of the dollar. The Chinese currency has fallen to over one year's bottom.
Investors continue to worry about the decline of the yuan against the US dollar. The Chinese currency reached 6.8106 yuan per dollar, with the psychological limit of 6.8 being exceeded for the first time in more than a year.
China Central Bank announced a rate of 6.7671 yuan before opening the market on Friday, which was the lowest level in a year.
According to analysts, Trump's remarks can trigger investors who think buying dollars to postpone their deals.
Trump's comment on Thursday is not the first in which the president expresses dissatisfaction with the strong dollar. Earlier, in interview with Wall Street Journal Trump had said even more openly that the dollar was "too strong".

Gold, silver and platinum with new bottoms (1)

What happens to raw materials should seriously stress investors on global stock markets. Because they have entered a correction phase and traditionally it is believed that the direction of commodity price movements points to the situation in the growth of the world economy.
Copper, which has often predicted short-term GDP growth with very high precision, saw a decline of more than 18% from its peak in May. In the light of the appreciation of the US dollar, copper fell below $6,000 (18% of its peak in May), and US crude oil tested $68 a barrel.
Gold fell below $1,202, and platinum rested near a 14-year low at levels below $800 per ounce. Silver, another industrial noble metal, is about to test the psychological limit of $15 per ounce.

Decline for US indices

US indices ended last week on a negative territory, dragging the Asian indexes on their last trading day for the week. The broad US S&P 500 declined by 0.4%, while the Dow Jones blue chip index lost 134.79 points, or 0.53%. Technological Nasdaq was the least loss - 0.37%.
Otherwise, Japan's Nikkei 225 lost 0.66% of its value, and the South Korean crude fell 0.2%. The Hong Kong Main Index recorded a loss of 0.5% several hours before closing the market.
Investors continue to worry about the decline of the yuan against the US dollar. The Chinese currency reached 6.8106 yuan per dollar, with the psychological limit of 6.8 being exceeded for the first time in more than a year.

A Simple Gold Trading System (3)

What does gold look like today and what signal does it give, based on trading system requirements?

As we can see from the chart above, gold is currently trading below its 10-month moving average. That is, the trend for precious metal can be predetermined as a downward trend, and investors who want to buy gold are well worth waiting for the metal to return above that average. And this is most likely to happen when gold rises above the psychological limit of $1,300 per ounce.
In other words, be patient and wait for a confirmation that the downward trend in gold is exhausted.

A Simple Gold Trading System (2)

What was the result of this system?

Backtests of the system since 1971 show that it has earned investors an income of 16.8% a year when gold was bought (its price was above its 10-month moving average) and income of 2.9% when it was sold (the price was below the 10-month moving average).
For comparison, following the simple buy-and-go strategy for gold for the period under review has yielded an average annual return for investors of 8%.
In short, investors were definitely supposed to be in gold when they had a "purchases" signal.
Summarized, the system results look like this:
Between 2001 and 2012, the system has given frequent "buy" signals.
Between 2012 and 2015 dominated "sell" signals.
In 2016, the system gave signals for purchases in the first half of the year and a signal for sale from mid-October.

A Simple Gold Trading System (1)

The simple things are the ones you have to stick to when trading in the financial markets - this is advice given to investors by not one and two great investors, including the genius Warren Buffett.
In this line of thought, I will now introduce you a simple gold trading strategy that you can use as a second opinion when investing in the noble metal.
In fact, at this moment of uncertainty, more and more investors are looking at gold. Relations between the US and China are strained, and the official start of the "trade war" was also given in the beginning of the month.

What is the strategy?

The strategy is represented by experts from the Daily Wealth and includes long positions in gold if its price is over its 10-month moving average and shortening if the price of gold is below it. It just sounds simple, right? Yes... So we have met the requirement for simplicity.

Oil with dramatic loss yesterday

The oil price was exceptionally strong yesterday. The Brent lost $3.49 of its value, or 4.6%, to finish the first day of the week at $71.48 a barrel with delivery in September. This was the lowest closing date since April last year.
US crude oil fell by 2.95 dollars, or about 4.2% to 68.06 dollars a barrel. Its lowest closing level since 21 June.
The Trump administration, in addition to conducting active political talks with Russia and Saudi Arabia to boost production, plans to resort to US strategic reserves to stem the fall in oil prices.
The average selling price of oil rose 16% since the beginning of the year, resulting in serious dissatisfaction with Trump's policy.
The sanctions imposed by the US on Iran are largely among the main reasons for the rise in oil prices in international markets.
According to the International Energy Agency, US state producers are expected to raise their daily production by 143,000 barrels in August, compared to a year earlier.