All Aboard The Dow 30K Train?

Very good morning. It is Friday, 17th of January. Hope everything is going well and you've had a good week so far. I just would like to expect your tickets, please. Destination: 30,000. It almost seems now the market, if anything, has become somewhat behavioral to some extent. The confirmation, of course, of the trade war phase 1 going smoothly thus far. Markets really have just kind of grinded it out throughout the last couple of days. I mean, comparative to where we were, what, about 2 weeks ago now, week and a half ago, when, you know, markets were, you know, big swings in sentiment, there was a lot of response outside of oil into global asset prices in regards to what happened and what was unfolding, the tensions in the Middle East. But given how rapidly that de-escalated and given the relative smooth passage of this part one of the trade deal between the US and China, the markets have just continued to, to move higher. And last night we closed on the Dow up about 267 points and You can see here, if I just quickly flick onto my charts, the DAX just coming up to break through in the futures. In the center left chart here, it's R1, and we're up about 100 points there already. And US index futures continuing to edge higher, the Dow future now at 29,322. But, um, as I was just saying, this, this is a graphic of those to kind of year, or let's say 12-month performance of these US indices, and it's just been phenomenal. And outperforming has been the technology names, uh, in terms of the last 24 hours. You can see the NASDAQ Composite in these major 3 indices. So you've got the NASDAQ Composite, then you've got the S&P 500, the Dow slightly lagging in regards to how severe the rally has been. But if we have a look at this, the this is now the club of $1 trillion in US firms, uh, basically has a, has a new, a new member. So Alphabet becoming the 4th US company that's crossed the $1 trillion valuation mark. Amazon has seen some fluctuation, but generally speaking, now these, these companies just continue to power on at this point in time. From a, from a sector bases yesterday. You can see then all these tech giants performing relatively well, not underpinning some of the support from yesterday. Elsewhere in the banking sector, you can see really bright spots here for MS— Morgan Stanley up in excess of 6.5%. They had record earnings, so following in suit with some of the others that we've seen— JP Morgan earlier in the week, and, and certainly US earnings will start to ramp up in terms of the number of companies reporting next week. And then overnight, what else have we had? Well, we've had Chinese data, some gross numbers that came out. GDP— well, let me just flick over to this. GDP on a— well, depends what measurement actually that you're, you're looking at. The GDP year-to-date came in at 6.1%, and that does, as per this graphic, would indicate marked the weakest level of growth that you can see in some near close to 30 years. But this isn't a negative, um, and this is really important because press often will sensationalize certain headlines and it all sounds quite doom and gloom. China's economy growing at slowest pace in 3 decades. But in fact, if anything, this is a slightly positive situation, uh, the idea that it's not worse than it is here. And underlying the GDP, where if you actually look on the the year-on-year reading, not year-to-date, that was at 6% in the fourth quarter. And actually, that was in line with expectations. The industrial output, in fact, beat expectations by a clear percent, and retail sales was a slight beat. And as you can see here, fixed asset investment accelerated for the first time since June. So even within that data was some positive elements And, you know, market positioning is already anticipating the level of where the government in China has been already indicating this is where growth would be. So it's not a surprise. The other thing here as well, and something I was in a Twitter conversation with someone yesterday, was this notion that, you know, this was the previous situation. These are fixed kind of hard data sets from the past. And what the market is viewing now and why we've got such a kind of a risk-on mentality, at least for the moment, is that, you know, the trade deal secured eliminates any immediate fear of escalation, which really clouded global growth through the majority of the last 12-18 months. You know, remember, it was only, what, 4 months ago, in the middle of September and kind of late August, when people are really panicking about the global economy, and that led to the inversion of the yield curve. You know, things have quite, quite wildly different where we are at the moment. And importantly, the key macro factor here is the trade war has progressed, and it has progressed in a way of which then the, the key risk, although still a clear present danger, has now kind of lowered down the scale of probabilities of it becoming a real disruptor for the foreseeable future. And so for people Looking at this Chinese data, yes, growth, it's, it has been slowing for some time. So it's no way anywhere near a surprise to be at 6% level. It's within the government's target. The government in itself are taking various measures to help domestically support their economy, as too are the People's Bank of China. And people are forward-looking. And so for the moment at least, Markets continue to just trade this, this, this narrative. And, and, you know, I just wonder how behavioral the market now becomes. I mean, I remember if I go— if I look back at the Dow, I'm just trying to think when it was. I mean, this is a picture of the long-term perspective of the Dow, and I've got 30,000 marked up right at the top. But I do distinctly remember, you know, if you were to eliminate this right-hand side of the chart, I remember the conversations we were having when we first broke $20,000. I don't know if you can cast your mind back a few years, and, and $20,000 at the time was like the big figure that everyone was kind of eyeing up. If I just shift over this chart here for a moment, remember we, we hadn't never hit $20,000 at the time, and it was a really interesting psychological move or behavioral move that happened when we really broke 19,000. Like, you can see how quickly the market— I mean, it was literally within one week or so we rose the best part of 1,000 points in the Dow. You know, you can see all this kind of pent-up movement that we had through 2015, '16 when we were up what was the time record highs. And then we had this period of consolidation, and it was really interesting. Again, from a behavioral point of view, we basically hit our key objective of $20,000, and it was like, well, why $20,000? Well, why not $20,000? You know, it's just a way of which the human mind tends to operate, and it becomes somewhat self-fulfilling. And soon as we hit $20,000, what happened was, you can see complete area of consolidation, but then we broke $20,000. Well, where next? And we hit $21,000. And again, that only took a matter of weeks. And, you know, it almost feels like we're back into that type of mentality. I mean, look how amazing the rally was at the end of 2017. Of course, we had the US corporate tax cut come in, which was a surprise that he managed actually to, to pass that key policy given his failed attempts at repealing Obamacare and the Islamic travel ban and so on from a top-level policy perspective. But if you look at the, the way we're moving at the moment, it's kind of like, well, I know we're, we're 600 points off, but that's by no means an unforeseeable target. And I just wonder whether or not this now becomes a little bit of a tractor beam I mean, I know for sure Sam's already— not ordered, he's already bought and received his DAO30,000 hat. I mean, that, that just goes to show, I don't think he's on his own. I think there's a lot of people like that. And it's almost like, well, you might see some little intraday little bumps in the road, but ultimately we're going there. And then, then you'll see the market come off a little bit once it hits its its target, and this target being $30,000. So yeah, I mean, at the moment, other than that, um, things are pretty quiet. Uh, there's not really too much else for me to talk about. T-notes and gold have been pretty sideways overnight. Uh, if anything, a little bit of a mixed bag on the correlations front because gold is actually up about $5 despite some of the equity movement. The 10-year making a little bit more sense from a traditional inverse relationship point of view, down about a tick or so. Um, that, and that's been an interesting point talking to some of the traders here this week. I think it has been a little bit of a trickier week to trade, um, because there's been the lack of a real clear fundamental driver. And so, you know, what's really important if you are trading the intraday is you've got to be flexible, you've got to be objective, you've got to reevaluate each day on the merits of its own conditions and the own calendar of events that are coming out. And, and I think what's quite difficult when you're new or you're a junior trader, it is obviously you take somewhat confidence out of the repetition and the deployment of similar types of tactics or routine. And the idea is this week has seen correlations sometimes not quite work out in their normal, in their normal way. And I guess the learning curve with experience that will come is then being adaptive to know when to, you know, when to up the size, when to not, when to trade, when to not, and to become more conservative. But this is all part of the normal evolution, I guess, of that learning and development phase. Elsewhere, final kind of two things I want to mention before then hand you over to Sam. This is ongoing as I pointed out a few days ago, Phil Hogan, who's kind of the negotiator on behalf of Europe, has been in Washington whilst these Chinese talks have also been happening. Hogan's been talking in regard to trying to find some type of international accord on tech tax, which then prompted the Americans to put in pretty chunky tariffs on French Goods to the tune of, what, $2.4 billion worth, I think it was. This is going to be quite a key subject, not so much for now in today's strategies, but for next week. There's a few more meetings that will be happening at a top level, so it's going to be something to monitor. And then elsewhere, looking at the calendar for the, the day ahead, you do have UK retail sales coming out at half 9. And, you know, this is one graphic that I wanted to show you. which is looking at the short end in fixed income to get an implied probability of the likelihood of markets positioning for Bank of England action at their interest rate decision, which happens the day after the Fed. So you've got the FOMC rate decision on the 29th and then you've got the BoE on the 30th, the day after. And if you actually look at it, the market is pricing an interest rate cut from the Bank of England and it's been a phenomenal change in expectations. This kind of dovish switch in rhetoric from majority now of the MPC members, in addition to some of the weakness of economic data. And that's why today's retail sales report could well be one of interest. As we've said, we've had some really important data throughout the week, from disappointments in, in UK growth, industrial manufacturing production, inflation. All of them would be indicative that the Bank of England, the likelihood of a cut, the evidence is growing that that could be the necessary action that needs to happen as soon as even this month. And markets reflect that with a 60-40 split in favor of a cut of 25 basis points. So be interested to see how that comes out later. I'm sure Sam will look at the chart from a technical perspective in a moment of how, how to play out that data. But Yeah, it's going to be an interesting thing to watch for today. Otherwise, what else on the calendar? If we go further forward into the morning, you've got eurozone CPI, but these are final readings, so not expecting too much from that in all honesty. So let's move forward to the US afternoon. Housing starts, building permits, US industrial production, cap utilization, University of Michigan sentiment. This is the preliminary reading, so do be aware of that. And then Baker Hughes rig count for any of the oil traders. From a speaker point of view, afternoon, Fed's Harker and Quarles speaking, the former on monetary policy. So that'll be at 2 and 5:45 PM London time. And yeah, that, that's pretty much it. There's no real major earnings coming out. Maybe one of the more industrial-linked names, Schlumberger, is reporting. State Street from the banking side. but nothing too much to, um, from an index trading point of view. All right, gonna leave it at that. That's it from me. Again, as per usual, if you are watching this and you're not already subscribed to the channel on YouTube, do remember to click that button and hit the bell icon to put on your notifications. We'll be putting out briefings as per usual every day, and we'll be covering live events on an ad hoc basis, but definitely the Fed and Abang Kamigdun and Saham will be doing live on the channel. So otherwise, I wish you a great weekend and I will see you on Monday. Thanks very much, guys.

Hi guys, good morning. It's only a matter of seconds before we get a new fresh all-time high in the S&P 500. It spiked higher in the early Asian trade and It's a matter of moments before we get to that, uh, incredible market. It seems, uh, only to be wanting to go one direction at the moment. Uh, I read a stat this morning that maybe will give the bears hope one day, and it was how we've had 66 days, uh, in a row of trading where the market, the S&P 500, hasn't gone, uh, 1% to the upside. Last two times that happened January 2018 and October 2018, of course, where markets then proceeded to come down quite a lot. So, well, we'll see, we'll see what happens. That we all know a slow grind up is what these stock markets love. However, it might be that for Dow Jones, that 30,000 becomes a bit of a magnet, and then what will be will be. Can we make it? Before any real correction in the markets. I think you've got to favor that there would be, unless there was a major development fundamentally or the data got incredibly good. It seems as though we're gonna, we're gonna push higher. Having a look intraday at opportunities to potentially get in on this move, if we have a look at yesterday's trading for a bit of a guide along with the other previous days, you are still getting decent pullbacks, previous highs. We come back into the afternoon, let the cash open take place, and, and we, and we push higher. And you see here yesterday on Wednesday what was the morning high, uh, Phase 1 deal, okay, nothing really new, uh, and there's a drama, comes back to that area, finds level support, and we push on, uh, to the upside as well. So there's a couple opportunities, uh, where we have retraced a bit, you could argue Uh, here the previous morning area of resistance, 29,300 in the Dow, is not a bad area. Looking at S&P, you could say, uh, it's around 3,320. And the NASDAQ, um, I think there's probably a bit more to go. It's almost happening now, the classic of that, that previous high. Um, of course, as you go into the back end of the week, you know, you may well get some people wanting looking to, to take a bit of profit on these moves. But if we have a look in the evening, uh, of the last couple of days, you are getting that further push as for some reason people believe stocks to be underbought and we keep going higher and higher. So target-wise, I think, you know, for the longer term, those round numbers, uh, certainly on the Dow, will be, uh, one to focus on. There's no, obviously, horizontal resistance other than the pivot levels and potentially some Fibonacci areas people would be looking at. You can also see— this is quite interesting, which I had on my, uh, other chart— you've got a trend line that was respected the 10th and the 14th, and having broken through in the, the hours, early hours overnight, we found nice support on that. So if you're still long, uh, maybe over the last couple of days for the S&P, it would be a case of I'm happy to stay stay long as long as this trend line holds, which is— it's doing quite well. And, uh, we're just there, as you see, just hit that, uh, new all-time high yet again. Having a look over the currencies now, start off with the pound, as, uh, really from that Monday morning briefing when we were talking about is this going to be, uh, the low for a while, well, you can see just how well that trend line has been respected here. Um, However, of course, it's not out the woods, but decent, uh, first real test back of that trend line for quite some time. And anyone short will be looking to take profit there. Of course, you've got the, the rate hike now— a rate cut, as I say, priced in. What's the next step? Well, we'll have to wait and see. Looking more intraday on this market, let's just remove that trend, get the pivots on. As you can see, we're in a nice, um, well, up week for, for once. We've for the pound. I'd have a couple of trend lines on these lows just to— for more for a guide than anything. Perhaps later on we find support on one of those, uh, to make it, you know, that third test before a breakthrough, uh, and then that gives that opportunity. Pivot today, much like yesterday, seems an area where you could call it a line in the sand where the bulls would want to still have control, and it has offered a bit of support over the last sort of 24 hours, uh, and before that as well, 48 hours, for a push higher above where we're trading. The R1 is the high that we had back on the 10th, which is the low of the ape. So key level there, 130, 118. I'd have that marked up. And then as well, that comes in on this trend line we had yesterday, and then on the futures, the trend line, uh, that actually, uh, was from, let's just say, uh, the, the 31st to the 7th. That broke through yesterday but quite choppy. However, once we've confirmed that break above, you can see price did find support there. So I'd have that on in the case of any move lower, uh, the S1s and these areas of support from yesterday as well. Worth keeping an eye on. The ranges in the pounds, not massive. I wouldn't be all too surprised— let me just remove these areas to see price contained between that top part, the R1, and that area there. Let's call that 131.26 and 130.68. Euro-dollar, uh, it's a, it's a, it's a market where my overall view is we do come lower, um, longer term. It's looking for that opportunity to, to get in. Of course, we broke that trend line from those lows last week. We're just starting to build up another one here on the euro from the low that we had on the 10th. You can see, let me get that drawn on, depending where you have it on those lows, I guess, you know, here is fine because you can see it's really clearly been respected. This is an opportunity, you'd argue, here, there, there, and there, making that trend a break of that. We could see a further push lower I know yesterday a couple people were looking at the, the fib level. Let's get that drawn on from the high that we had back on the 31st to that low of the year, and the 50% got hit yesterday. You can see pretty much perfectly. Reason I like this level, it's also the high of the 8th and low the 7th, and it was yesterday's R1. If you want any more resistance levels, well Yeah, you'd struggle to find much more than that. What an area. And we have come down since. Line in the sand to the upside, well, the pivot looks like a pretty good place where you could find some resistance. Probably want to see a bit of confirmation the way this market is traded. But here, uh, you've got the 50% fib. Uh, if we can get above there by the end of the week, that would be a big move. Well done to the bulls. If we break this trend line, well, it could be bye-bye for a bit for the euro. And that's, uh, the trade I prefer, the pivot. I want to see that confirmation because obviously it gives that area where buyers above, sellers below, uh, could lead to a decent-sized move. I'm gonna look over at oil. Yesterday, uh, in the afternoon of the, the trade, just before the European close anyway, uh, we broke this, this, uh, this trend channel that had been on. Of course, it was relatively, uh, roughly drawn but well respected enough. And you can see once we broke above there, got that close, we then led to a further push higher. I, you know, think that is the downside done for now for oil, unless we were to false break it, finish back in, and then yeah, let's target that low. But the break of that trend channel, you've got to be happy if you're, if you're a bull. And if you're still in that trade, you know, you've got a nice place to almost have that stop below pivot. Good area support. Yesterday's high, you can see why it was, was also those lows on the 13th before we broke down. There's your mini range, 58.38 to the downside and 88 to the upside. Let's have a quick look over at gold before I'm going to look over European equities just to wrap things up. You've got a pretty good ceiling here on the R1, the, the previous highs from yesterday overnight and then the day before that as well in the beginning of the week on the 13th. I mean, what a level you You can see here as well, on the 9th, the 10th, it was an area of resistance. Can we get above there for the week and close there? Big for the, for the bulls. And obviously then you're looking, looking at that previous double top here at 1563. Couple key resistance levels there. Through both of them, well, you're suddenly thinking about, well, hang on, let's get back up towards those highs that we had, uh, on the, well, the highs of the year and, and, uh, and so on. But They will most likely hold price, I would say, today if equities continue to push higher. To the downside, area support where you would want it to break if you were a bear— yesterday's low and then the morning midday UK time low of Wednesday. That's where I would be looking at, coming in around 1547s, uh, as well, just, uh, below where we're trading. If you are looking uh, to hold a position to go long, or you're short from up at yesterday's highs, 1554.3, interesting level, previous high from overnight Asian session, and then the morning low as well. Uh, pretty key level that I would want to, to have marked up there. Let's have a quick look then over at, uh, European equities, uh, after those all-time highs hit again on the S&P. Maybe this is where you just get a bit of profit-taking again. The DAX might have to be the one to give it an extra push, and that's just finding some resistance up on the high that we had back on the beginning of the week, just making a new high for the week there. Above here you've got a lot of, a lot of noise back from the, the 10th, so keep a watch on that. Above there, well, the DAX has, you know, made a new high for the year, and well, these equities, what's going to stop them, you'd have to say. Any questions, please do let us know. For those trading the DAX, keep an eye on that previous high on the R1. That would be an area of support you'd want to hold to stay long. A couple decent technical levels, a couple of, uh, interesting closes into the back end of the week. I'll put some of these up on my Twitter later on, but I hope you all have a great trading day. Any questions, get them in there in the chat, and I hope you'll have a great weekend ahead. And fingers crossed for an Arsenal win tomorrow.