My Day Trading Routine As Head Of Market Analysis

Okay, very good morning. It is Wednesday the 1st of July. I'm Anthony Cheung, the head of market analysis here at Amplify Trading. Thought I would kick off today's briefing in a slightly different fashion because I had a few questions off a couple of new traders yesterday about my morning routine. And so rather than me go through this in, in kind of great detail, I thought I'd give you a quick summary about just generally how I prepare head of the market open each day. Certainly from, from my perspective, so I'm here to try and support our traders by helping them make sense of kind of structuring their day from the point of view of the things that they know that are taking place— so economic data, central bank speakers, earnings, expirations, these types of things— to other things as well that could materialize, and then helping them build scenarios about potential risks that trading strategies that they're thinking about. So hopefully I can give you just a very quick overview that could be useful for you going forward, or at least to give you an insight, the sort of things that I do in the morning. So first things first, my morning routine. I guess I call them pre-flight checks, which is before I'd recommend that anyone really puts on a trade each morning, is just going through a process of due diligence of, you know, what was the close on Wall Street, and for what reason. So last night, for example, we saw quite an aggressive spike in US equities into the close because of particularly large buy-side imbalance. Now, would that impact the way I feel about the market open this morning? Well, perhaps to a certain degree, because actually that buy-side imbalance is more of a function of the fact that it was quarter— month, quarter, and half-year end. And so a little bit of that kind of window dressing type price movement is not uncommon on those types of days. Meaning that there's no actual underlying fundamental reason for that push higher. And if we have then gone up, then it wouldn't be too much of a surprise to see a bit of that move fatigued and us to come back a little bit, compensating more for the fact that it was almost artificially lifted into the close last night. Then I kind of look at the overnight Asia session. What's happened? Is there any new news? And obviously in context of now, I'd be looking at things like any updates on, um, retaliation from China on what's been going on with this national security law in Hong Kong, for example. Is there any data? There are some more PMI numbers from China overnight. So what's happened in Asia and then how does that then influence the open as we go into the European session? So before any trades go on, it's very important to think about and catch up and make sure kind of all of the boxes are checked and so that you are making the most informed decision possible by the time that you place those, those trades or those orders in the market. One of the main things that I look at that I find particularly useful— I mean, I use a Squawk service. I mean, being kind of macro discretionary traders, we really can't operate without Squawk, and News Squawk's the best in the business. So we have an audio announcer who basically is covering everything, looking at Bloomberg and Reuters and all these different types of things. But they basically put together a snapshot of all of the major Newswise information of the main headlines. They aggregate them that have come out overnight and they put it out in a short summary. So yeah, check those guys out if that's, that's of interest. But that saves a hell of a lot of time rather than manually going through, you know, lots of different websites and things like that. They basically have a 24-hour desk, so by the time I'm kind of up looking at screens, they normally publish something shortly after 6 AM London time. I can have a read of that and I'm pretty much ready to go from a fundamental side of things. I do though myself like to have a look at basically 4 main resources: the Financial Times, Bloomberg, and Reuters. I just have a quick scan through. What I'm kind of looking for is I'm broadly aware of some of the key major themes in markets, but I like to just isolate a couple of key facts out of some of the main stories that are going on. And these publications serve as quite a good place where they give me some statistics and basically some context behind some of the initial headlines. That I find quite useful then, uh, of a base knowledge that I know where I can be more reactful then to information as it breaks throughout the day because I've got a predefined idea of what the current status quo is. And Twitter obviously is, is an awesome tool if used correctly. I mean, if you jump on our Amplify YouTube channel, um, there's— if you scroll down a few, few sections on the categories, on the playlists, you'll find I did a specific video about how to use Twitter for trading, and it is such an immense tool if you know how to curate your own feed effectively, following the right people. You get good insights, you get good timely information. And so definitely, just while I'm going about my business in the morning, particularly in a normal situation when I'm going to work, it's, it's a really great thing where I just skim through and I've got a pretty good idea as well of what the general narrative in the morning is. Fresh technical analysis, even for someone like me where I guess my, my specialism is in market fundamentals, I still go through the charts pretty much afresh each morning, starting on a higher time frame, working my way down. I like to know the kind of bigger picture of things. Where are we at the moment on some longer-standing technical levels? So for example, looking at gold this morning, see, we broke above 1,800 yesterday. On the monthly candlesticks. Now we're looking at several multi-year highs here, so quite interesting to see. Now, technical on the upside, it could open up the door really for a bigger push. And so, you know, if equities do start flagging a little bit after the push we had yesterday, could be quite an interesting day. So technical analysis, again, I'll be going through from fresh. And then checking the daily economic calendar. Now I get our traders to, you know, in a pretty distinct instinct routine of at the end of every day. So typically they're trading really the European session. So really, I cash close half 4 to 5 PM. I like to get them to get tomorrow's calendar and start pre-planning them, or at least building or visualizing what the following day might entail so that they already know then what the kind of game plan is. And so when they do those overnight pre-flight checks in the morning, they're already kind of just topping up a, a plan that's already in development at that point. So again, it helps accelerate that morning process. And then when you check the calendar on the day, it's like, has there been any additions, any new speaker events, things of that nature? Now, practical tips that I could say, um, absolutely pivotal that you assign a hierarchy to the news. Otherwise, there is no way you'd be able to efficiently, efficiently really disseminate everything that's going on. And so the way— I'll show you in a second how I go about doing that, but it's the main thing which people would come back to me saying, you know, there's just too much information out there, how do I order this kind of stuff, how do I know what to focus on? And I'll give you some more detail on that in a second. Bounce ideas with others. One thing I do for sure at Amplify is I'll speak to some of the other traders and namely Sam North, who's the chap that you see who would normally be on the briefing with me. But he, he's one of our main traders and mentors, and he trades with a much more technical orientation than, than I would look at markets. And so I do like to get a more rounded opinion. And certainly given the fact that, you know, his skill is in technical analysis, then there's certainly things that he may see that I don't. And I like to then kind of use that expertise to my advantage in that sake. So bouncing ideas off of people I think is a healthy thing. Front load your prep work. This is one of those things I said about getting in that routine the day before so it's not so arduous a process then on the morning of. And then form a plan for the day. You know, one of the, the main things that you hear traders who do this professionally always say is that, you know, you, you have a game plan and then you remain disciplined to then in action and execute that game plan. So you become less reactive, less impulsive which is kind of more reminiscent then of what a lot of retail traders' approach would be. You already know what your opportunities are, you kind of have overlaid the calendar, and you know the general market structure and timings of when those opportunities might occur. And then it's just about taking action at the right time. This is then that idea about eliminating the kind of, quote, noise, and having more focused research on what really, when you're looking through the news, what to focus on. And the main thing is I've tried to take right now, for example, and COVID-19 is probably the one thing that the market has been in the last week or two the most sensitive to. So my triangle here is trying to be representative of the fact that that is the singular most important thing that could move markets in the short term, intraday, in the markets that you're trading. So any developments pertaining to COVID are particularly important, and your attention then when you're checking the news in the morning needs to be centered around that particular subject. And/or when those timings of the updates come in an intraday basis, which is typically in the afternoon in London. Then it's the trade war. You've obviously got this recent escalation in the war of words between the US and China. So what is the latest? Have a search around what is currently being said. Very important again that you know what the current, let's say, conflict— where we're at. And so that when you see a breaking comment or a Trump tweet, you know what to benchmark it against and whether or not that's a a positive or negative outcome. And then there's things like economic data, which you can see here I've put kind of in third place because we've got some data out later today, like ADP, the private payrolls number ahead of non-farm. That's coming out, ADP, this afternoon. But even with ADP, it's, it's likely to show an improvement. But is it important? Well, I don't really think so, not so much. I mean, an improvement in all of the US data pretty much is what we've been seeing, like Consumer Confidence yesterday, so it takes a lower, uh, kind of priority in that order of things. And so by default then, if I'm just selecting these 3 major themes that really are the driving fundamentals of markets right now, well then everything else I kind of not ignore, but I give lesser attention to because it's not going to be so impactful on the prices of the products that I'm looking at. So hopefully that makes a little bit more sense. Again, it's a very top-level overview. This is the sort of thing I'd work with our traders on quite lengthily because this really is my, my specialism in preparing for these sorts of things. But hopefully you found that, you found that useful. But look, let's, let's have a look at the charts and let's get back to the briefing. This shouldn't really take me too long. It's been a relatively quiet open, or a commencement of the second half of 2020, I'd say. Follows, of course, the best quarterly performance in more than two decades A lot of those headlines flying around yesterday, but look, I would take them with a little bit of pinch of salt. As I always say, context is, is kind of key. And obviously we had that massive correction in markets in March and then this phenomenal stimulus effort to, to create this almost V-shaped recovery, certainly not in the economy but at least in the equity market that we have seen. So I think that's a little out of context to really be amplifying that type of commentary. But, you know, yesterday again we had the consumer confidence posting its biggest rise since 2011. People making a bit of a mountain out of a molehill, I feel, on the back of that, because actually, if you think about it, cutoff date for that survey was actually 18th of June. So it was shortly before states like Texas and Arizona reimposed new restrictions after their fresh outbreak of COVID-19 cases. So I think it's a little bit rich to be jumping all over that thinking, yeah, this is great, consumer confidence is rocketing higher. I think perhaps getting a little ahead of yourself. Japan generally quite light overnight. Sentiment capped on confidence among large manufacturers. So they have something called the Tankan survey, which came out overnight and that actually fell to the lowest level since basically the global financial crisis in '09. Asia slightly positive in terms of China. Sydney and Seoul, South Korea. Hong Kong was actually closed, and obviously that's quite an interesting localized area to keep an eye on, just given the ongoing security law that's just been implemented from China. Equity markets, as I said, we paired a little bit. You can see here the DAX is currently down 50 points, the NASDAQ and S&P also slight negative. So you can see that extremity of the pop that we had with that, that right into the close big buy-side imbalance that we had. And so now that that's faded, we consolidated overnight, a little bit of pushback down to pivot. I don't think it's untoward or surprising. And we did have the Federal Communications Commission designate Huawei Technologies and ZTE Corp as national security threats. Another slight— although it's more repetitive commentary, again, a slight evolution of the ongoing conflict between the US and China at the moment, which does keep markets kind of a little bit fragile to developments on that front. So yeah, equity's a little bit negative, as that has meant that T-notes have just been rising a little bit as Europe has come in. Gold remains fairly elevated. As I said before, technically gold becomes quite interesting now. Topside and downside levels of this range are going to be quite key, and we're trading just about $1.50 off that initial high that was seen yesterday afternoon. So this is the kind of trading range of the near term that's going to be quite important. But if I put this on a monthly, of course, we're now— now that we've vaulted $1,800, that was the cap here, um, of price activity in 2011 and 2012-13. And so it's going to be super interesting now to see how the rest of this week unfolds, um, and do we start to see kind of push up in toward, you know, levels where we start approaching up to around, you know, this is open now the door to a higher push to 1850, 1900, so on and so forth. So it had been a pretty stern obstacle, as you can see, that we had in April and May's price activity. But June, then closing that month and managing above there, I think is quite important going forward. So yeah, certainly today and the sessions for the rest of this week, I'm going to be interested to see whether or not gold can really push on from here. Because again, it just acts as a nice reassurance— reinsurance policy almost. Although there seems to be some positive developments in US data and things of that nature, you know, with the risks on just global geopolitics, then the trade war, and then the COVID developments, of course, you know, it seems like a logical place to park at least some exposure at this time being for the medium-term trade. Um, so yeah, that's the overall kind of charts this morning. Oil, you can see we had a little pop here in oil. I'll just circle this one here at around 9:30 last night. Of course, we had the regular API crude oil inventories. So quick glance at those, it was a drawdown of 8.156 million. Expectations were for a draw of just 2.7, so it's a very bullish headline. Gasoline was draw 2.5, cushioning a slight build. But overall price movement in reaction to that was higher. However, there wasn't been too much in the way of a sustained kind of reaction to that. And now we're kind of just forming— there was some price movement. I'm just keeping an eye on here. You've got the pivot, a kind of relatively loose trend line coming in from the bottom of some of the price activity prior to the infantry release last night to where we're trading at the moment, which kind of coincides at around the daily pivot. For today. And then you've got the— on the upside, just keeping an eye as well, it's been tested 3 times on that descending trend line, which would come in at around 3975 here if we were to bounce back up. So let's have a quick look at a few other things that are going on. What's the latest on COVID? The latest on that is Anthony Fauci, it's probably a name that you've heard before. He's the US government's top infectious disease specialist. He's basically warned lawmakers that coronavirus cases could rise to 100,000 a day if behaviors don't change. But he has always been on the kind of more pessimistic view, but I guess that's his job given his job title and role. But just worth bearing that in mind. That comes after European Union extended a travel ban on Americans yesterday, and I'm sure Trump's not going to be particularly happy about that. So again, it kind of fuels that protectionist reaction, if you like, for United States, which in itself becomes quite a, um, a spot of contention for potential renewed risk in regards to what he says on the eurozone as well as other potential trading partners going forward other than that of China. Some other headlines on the virus front to be aware of. Bloomberg were reporting that a strain of flu virus spreading in Chinese pigs has shown it can also infect humans. So this isn't COVID-19, this is a separate pathogen. So yeah, if that were to happen, that is bad news, but I'd say it's way too early for us to start jumping to those kind of conclusions. But I thought it was just worth pointing out On the flip side, you know, I can't just talk negatives. Weekly deaths involving coronavirus in England and Wales fell to their lowest in 12 weeks, so that's certainly a positive as far as the UK government is concerned, which on US Independence Day, so this Saturday on the 4th, they're looking to go to their next phase of loosening the lockdown. But as I've said before, and as we have seen what's happened in the likes of United States of America, it's going to be particularly interesting in the UK to see how things perform form over the period of the next 2 to 3 weeks, given that incubation kind of period of the virus. But as we've seen in the likes of Leicester in the East Midlands— I think it's the East Midlands in the UK— how the government's taking an approach of localized lockdowns, which I think is a much more prudent way of managing than trying to minimize the economic impact of what delaying reopening of the economy could be. On the China front, this was a tweet from your man Donald last night, again having another pop shot at China. As I watched the pandemic spread its ugly face all across the world, including the tremendous damage it's done to the USA, I become more and more angry at China. People can see it and I can feel it. So that was one, and that was quickly followed by this one which was, "This is a battle to save the heritage, history, and greatness of our country," and then obviously his kind of slogan, MAGA 2020. So to me, this is kind of the 101 marketing or framing that Donald Trump uses when he's utilizing a system like Twitter where he can directly communicate without the kind of influence then of other media sources. So one is China, and that is framing the fact that, you know, the renewed pickup in virus cases has nothing to do with the management of the reopening of the economy. It's just, it's this enemy that is China, and it's their virus, and it's their fault. And then secondly as well, it's that kind of reminiscent of that Brexit, take back control, our borders, which obviously does resonate, and it gives people that kind of, um, that thought of, you know, that things used to be better in the past. And it really taps into that core human psyche and belief. And this type of wording that he's using is definitely looking to counteract things like a lot of these social and civil movements that are happening at the moment, like Black Lives Matter, for example. Talking about heritage, history, how great the country used to be, it's preserving and saving that from foreign interference. You know, these are all very much Trump utilizing this type of language to frame a certain narrative that certainly he's going to be pumping into the election. So he was— he did these two tweets back to back, and I think that that's quite— it was just quite a a good representation, I think, of his kind of tactical approach at this point in time. Other than that though, from Trump, um, as I said, the Federal Communications Commission designated two of the big tech companies, which have been something that China hasn't taken kindly to. Uh, the US have deemed them as national security threats. China apparently will announce reciprocal curbs on branches of US media in the country and strongly urge the US not to escalate suppression of Chinese media further. This was according to the Global Times, which is kind of the mouthpiece of the Chinese government. Overnight, and then the US Treasury Secretary Mnuchin was speaking alongside Jerome Powell yesterday to the House, reiterated he's working with the House and Senate to pass additional COVID financial relief by the end of July, uh, believes China will live up to its trade agreements, but there is concern about the lack of COVID trans— Transparency. So a couple of key things there from Mnuchin as well. One, there's a couple of these kind of more consumer-oriented packages for relief that's going to expire towards the end of this month, and it's important that they get something else, or at least a belief that something else is coming. So that's part one. Two, China are fulfilling their obligations despite the pop shops then that the president is giving them on the trade front. And then three, it's kind of, well, there still is the fact that China are quite a lack of transparency on that front. So it's kind of, uh, given and taking on that relationship side with China from the Treasury Secretary. So that kind of summarizes that situation. Definitely something to monitor going forward for sure. Um, calendar-wise then for today, as we go further forward into the morning, you do have the German unemployment rate and change to keep an eye on. That will just be ahead of 9 AM London time. And then you've got the UK Manufacturing PMI coming out at 9:30. This will be a final reading alongside the same for the eurozone this afternoon. As I mentioned, you've got ADP National Employment. It's actually, actually expected— it was previously a negative 2.76 million, it's expected at 3 million. We've got a range of 1.25 to +9 million at the high. So as you can see here, we are expecting a spring back to— basically, if we go on a 25-year chart here, it's going to be one of the best numbers we've ever had. It's what we're about to print. So a continuation of this strong V. I mean, expectations are we're going to— ADP is going to print up and around here. Could be, if at the top end of analyst ranges, up at 9 million, which would be up here, which would be a phenomenal— uh, it would be a kind of a V-shape but with a little extra sauce on top, just to, just to really show how strong the recovery has been. The other data point that we've got then is ISM Manufacturing, and again, that's expected to go from 43.1 to 49.5, which basically eradicates any of the downward movement that we've had on the back of the, the national lockdown on the commencement of COVID which impacted the April and May figures. So we're kind of back on track, almost like in that data nothing ever happened. I get the risk here, of course, is that we know US data has been particularly strong. That City Surprise Index has been at record high territory. So these things I don't think are going to surprise markets and perhaps not causing a massive move in the market. If anything, if we continue to get such awesome data— I mean, we heard already from Jerome Powell's speech from yesterday how things are improving perhaps a little bit better than expected. And if that in itself, could that in time start to become a little bit of a negative? Because then it kind of reduces the emphasis of the Fed to continue to do more. I don't think we're near that point yet because all of the tools and facilities the Fed have put in place back in March, we've only used an absolute fraction of the capacity of which those could go up to. So I think he's always got the flexibility where he can sound a little bit more optimistic and actually help confidence generally. But I think to think that the Fed are going to start unwinding things is a fallacy because they haven't even begun using these facilities. And so all they would need to do is just switch the button on, start using them more if the market started to turn. So yeah, at the moment, you know, it's hard to see a trigger point that would cause a big meltdown in markets at at this point. So, you know, at least for now, it's kind of the show goes on for the time being. So other than that, we've got the FOMC minutes this evening. Obviously could be quite interesting, uh, given the fact that the last meeting, of course, is when we had the update. We had the summary of economic projections. They said rates were going to remain low through that of 2022. I must I must admit though, you know, whenever minutes are released, they are somewhat dated. Perhaps even now the world's moved on a little bit further. We've had some more COVID developments. We've also had some more economic data since then, which generally is surprised to the upside. So perhaps the minutes worth monitoring, but again, I'm not sure how market moving they're going to be in all honesty. Speaker-wise, ECB's Panetta speaking shortly, another hour's time or so. Bank of England's Haskell midday at a conference in Brighton. And that's, that's pretty much it. So look, that's it from me. I'm gonna wish you guys a good day. I'm gonna let you get on. I hope the, the start of the session about the morning routine overview was useful. Just drop me a comment if you have any questions, or if you want to see more stuff like that in future briefings from me. I'd be happy to, to do so. But guys, have a good day, and I'll see you same time tomorrow. Thanks very much.