Non-Farm Payrolls and OPEC the focus after turbulent day for Global Stocks

Hi guys, it's, uh, Friday 7th of December, just gone half 8 here in London. Just gonna have a quick run over the charts from overnight yesterday and look forward to what is scheduled to be pretty busy day afternoon anyway with Non-Farm and sort of the potential conclusion of the OPEC meeting to happen all today. Looking at the markets yesterday, we had quite a bit of volatility. You might be able to see just on a couple of the charts shared at the moment, the bottom one down the middle with oil. If I just make this a bit larger, you can see the price action resembles what the meeting kind of entailed in no real conclusive price action. We went higher and lower, really range-bound, choppy. And you also had the DOE in the mix there. 4 o'clock, uh, that came out. I believe this was just the time there after breaking a trend line to the downside. We are pretty much trading exactly where we were this time, um, sort of, well, almost yesterday, sort of coming up to 9 o'clock and a bit. The main movers in the market, uh, equity-wise globally, another sort of sell-off, uh, from the morning onwards. You can see S&P started the day on the the back foot coming down. And by sort of half 3, we had had quite a big fall. And same for the Dow Jones as well, had all the headlines coming out, a massive amount of points down, lower and lower, before a bit of a rally into the close. I think importantly, people will be keeping their eye on— if I just bring this over into picture here— the, uh, the S&P with the death cross, obviously closing below where we closed the week, will be will be key, and the jobs numbers may well have a bit of an impact on that. Reasons behind the recent stock moves, either to the upside or downside, have been, um, been tricky to sort of gauge. I think I was reading an article this morning, it was sent out in the research, about, you know, do equity traders really know the reasons why prices is moving? I think there's so many different factors, and that makes it very tricky to trade equities at the moment. If we go back to, uh, was it the 10th of October? Yeah, 10th of October sell-off here. You know, this sort of period, there was quite a few negative factors. You had the, um, the global sort of rates rising, or, you know, central banks starting to get a bit more hawkish. You had the IMF downgrading, um, global growth, Italy situation, Brexit, Khashoggi, Brexit, all these kind of things. I'm sure I've missed a couple out there as well that are sort of weighing on equities. And, and since then you can see it's been pretty choppy and really contained within this, this quite big range. On, on Monday, so I didn't come in, but you can see it just how clear, uh, or critical it was that we didn't close above the, the trend line here on the month. If we did, you know, it wouldn't be surprising to see us back towards sort of this area here which we found support support on the 10th of September. I think technically, point of view, was really, really important there. Um, from that technical point of view with the, the 250-day moving average, you can see that cross there. You can see we've got a confirmed close, uh, below there yesterday. So where price closes today will be pretty key, uh, going forward. The last time we had, um, the, the 250, uh, crossover, I believe, was back in 2016. And also using 2016 as the, uh, the sort of the, the comment going forward, the FTSE, as you can see, had its worst day, worst drop since 2016. And European stocks as well, uh, they're also worst day since the, the Brexit vote, uh, on the, on June a couple, well, 2 and a half years ago. So whether they can rebound into the end of the week, it remains to be seen. I think it was quite telling though just to see that bounce we saw last night, but again, no real reason behind it. If we have a look, you can see here the Dow Jones recovering quite a lot, yes, to still finish down. It's currently 100 points down for the moment. The S&P, I'll just bring that into picture as well, similar type recovery, albeit down, uh, nearly 12 points this morning. And the NASDAQ with, um, sort of the, the best recovery into sort of late last night and early down slightly. Um, non-farm payrolls today, again, obviously focus probably better looking at the dollar and when looking at the numbers, the wage growth. Um, but for equities, I think it's, it's a tricky one because what could drive price higher here or lower? I think if we were to have a really, really strong reading, then equities would come down. Um, but maybe knee-jerk reaction, bit of relief, you know, uh, sort of growth continuing could push high, push it higher. And then if it's bad, you've got the Goldilocks scenario. So equities, I feel it's a, it's a bit of a tricky one. What is quite interesting though is the main sort of reason behind, uh, the, the sell-off we saw globally yesterday. And you can see we, or you may have heard that we had the, uh, the arrest of the Huawei CFO yesterday, and there's been a bit of talk overnight how the, the US may use her or this situation as sort of leverage in the, in the trade war, or the trade talks between obviously the US and China. If I bring in that chart again of the S&P— actually, give me one second just to see where we're trading. I think it might be worth just making a little note at the the sort of the point where we're trading now, little X marks the spot, and, and sort of casting the mind back to the 2nd of October, the 3rd of October, marked up here when you had Khashoggi's murder. Um, any other time you'd imagine oil would continue to make its yearly high, which it did on that day. But again, you know, the sort of chatter a few weeks later when the oil was coming down and down and down was how the US and Trump in particular used it leverage to get Saudi to lower oil price. And obviously the rectangle bottom right now is the OPEC meeting underway at the moment. So it'd be interesting to see the sort of developments with the situation that arose yesterday. And a lot of the sort of attributes to the sell-off we saw was down to the arrest of the CFO. So can that be used as leverage and we actually push higher? Inequities. I think that's one thing to consider, um, amongst other things as well. Of course, there was also— I think if we, if we just put this down to sort of a lower time frame and bring in the S&P during the recovery, or just before, you started to have some slightly more dovish comments out of the Fed, which is becoming more of a sort of regularity here, uh, sort of a wait-and-see approach was what Kaplan was saying. The FedWatch tool has dropped now from what was, you know, a few weeks back nailed on 90%. I think it's, it's dropped a fair bit. Uh, if we have a quick look and just bring that into picture, it was 68% yesterday, so it's recovered a bit this morning. If I just bring that in, you can see it's back to sort of 70%. It'll be interesting to see again where that is come the end of the day. Uh, but the Fed are starting to get, um, quite, uh, well, their talk anyway slightly is starting to get a bit more, uh, dovish. Whether this can boost equities long term or not, I think again remains to be seen. Um, going into the OPEC, uh, sort of meeting today, if I just bring in a tweet I saw earlier, I've retweeted it. Here's the plan so far. And of course the word OPEC and plan should be used very loosely together, uh, but meeting at 9 AM, continuing the talks for 3 hours, and then the non-OPEC members will join from then. Uh, the reason perhaps we had the choppy— or the reason we had the choppy price action yesterday in oil, in that no deal was, was agreed and there was negative talk about whether a deal will actually be agreed tomorrow, uh, is 1 million barrels per day cut going to be enough? A lot of analysts are at least expecting that. So I think movements today will be off those kind of numbers. And actually, we're just starting to see a bit of a spike here. So if anyone has any comments, obviously, when I'm doing the briefing, please do get them in the chat or keep an eye on, uh, on TweetDeck as well. But oil just pushing, uh, slightly higher here. Um, but yeah, yesterday, no deal, no cut agreed or, or anything. And you can see that the price action was quite choppy. I think the main thing here is the market would want for a considerable push higher to see a larger than 1 million barrel per day cut. I think if we see that, not enough, and we actually continue to drift lower, really. Also overnight, we had a couple of sort of headlines out from the Times and the Telegraph that Theresa May is going to, or needs to, delay the Brexit vote that we have next Tuesday. Obviously, we're underway in the 5-day Brexit meeting here in the UK, and the talk is that she needs to delay it to avoid a blockbuster defeat, a game-changing defeat. However, she's standing strong and it looks like that meeting will go ahead. And of course, the ramifications if it was to be a heavy loss could even be, you know, complete change of the deal, or it could be that there's the sort of a second vote referendum. All these things are sort of weighing um, on, on the pound uncertainty. But however, yesterday, and we'll have a look at the dollar, how it reacted, we actually did spend a bit of time, uh, pushing higher in the afternoon. Yes, we're sort of contained nicely still within this, uh, this trend channel, and you can see we pretty much got a test of it yesterday. Um, but we did push higher for the sort of the main part of the afternoon. Euro as well did push on and We also had the ADP, so we'll come on to the data calendar in a bit, but ADP yesterday was worse than expected and the revision to the previous month. So another thing you got to watch out for in Non-Farm with the revision was slightly worse as well. So the dollar weakened, uh, a touch from the 115. Let's just go to the 115 so you can see this sort of area here when the data came out. We, we pushed higher albeit to sort of retrace a bit, and then the R1 broke and we pushed back on to sort of near the, the highs of the week. So dollar yesterday was, was slightly mixed. We did have a recovery into the sort of the back end of the session, um, but yeah, I think for, for the pound and the euro, I did that sort of session earlier in the week really for— and it goes for a couple markets actually, but, uh, for the, for the pound, if I'm looking to, to go long, I want this, you know, to close above or if I'm looking to go short, close below for real, for any real, uh, sort of direction there. So look, we can get a bit of a trend line on there. That's quite interesting. 1, 2, 3 tests of that, maybe a break lower. Could be Non-Farm stats or drives price there. But eyes, eyes, and, uh, eyes on your Twitter is to just sort of ground on any potential developments regarding that meeting, uh, next week, uh, as well. Looking at the, the calendar for today, I did mention it's a, it's a pretty busy one, especially as we go through into the afternoon. But before that, 10 o'clock, you have the revised figure for the GDP out of Europe. So one to, to keep an eye on. However, being the revised figure, not expecting too much in the way of movement unless we were to have, uh, you know, those lower or higher end of the ranges break quite significantly. So that's coming out at, uh, at 10 AM. And then it's a bit of a break, bit of a low, and really the driving prices— well, the driving of price is going to be more focused around probably equity markets, comments out of OPEC, and obviously potential for Brexit-related comments as well. I think it was quite interesting yesterday, we were talking in the chat, what's the chance of there being an OPEC comment coming out exactly at 4 PM when the delayed DOE was to come out? And at 3:59 you had an OPEC comment. So like clockwork, they know what they're doing. Um, but yep, going back to the calendar, 1:30, you've got non-farm payrolls. They're expected to be 200,000. So notably, ADP yesterday was a slight miss, so the market perhaps predicting today, pricing for a worse reading. So bigger reaction if it was to be, let's just say, 50K either way, would be, you know, stronger for the dollar in, in sort of that surprise perhaps due to that correlation. Uh, also keeping an eye on that revised figure. So 250 was the, the last reading uh, which, you know, you can see was, was pretty good increase on September. So I'll be looking out for the 250 revision. The 200, if it was to come in, really doesn't change too much. I think this— it's lost some of its, uh, its drama, non-farm, uh, payrolls. Certainly the headline number has anyway. So for me, unless we have to get above, I'd say, 300K, or below— I'd say below 150. I'm not too interested to, to get in straight away. Uh, going back to the calendar, you can see the, the, the thing we talk about each, uh, well, each first Friday of the month with the non-farm numbers is the average earnings, the how that can drive price going forward, uh, for the remainder of the day. Expected month on month to be 0.3, so a slight increase, uh, on that figure, and the year on year figure 3.1. So they're going to be the, the the main sort of focus come that figure at 1:30. And then you've got the unemployment rate, uh, itself, which, uh, is, is looks looking to stay in line. Also, uh, well, let's have a quick look over at the dollar, just where we trade before I go through the rest of the calendar. Just looking at that euro, you can see it really is contained at the moment this week, very choppy. Um, and again, similar, similar I should say to the pound, it's almost best waiting for you know, real, real sort of break, um, out of this, uh, sort of messy range of the last few days for a clearer direction. Um, Fed meeting— Fed raised the rates. Will they? Uh, I think it'd be a massive shock still if they were not to, but that could be a reason we do, uh, push higher here, uh, and then continue on. Or positive Brexit news as well could obviously help that. Or if the Fed continues to be dovish, um, as well. Other reasons, I think, quite, uh, the markets are evenly poised going into the back end of the year. I think there's a lot of, uh, drivers either negatively or positively. And that's what, you know, I say was making equities very hard to trade at the moment, is in that there is so many different, uh, pieces to the puzzle. Um, so one day it could be, you know, a dovish Fed, the other day it's trade concerns that we're going to have a deal, we're not going to have a deal, or it's fake news from Trump or its oil price continuing to go lower. At the moment, it's just sort of sifting through that data. I think it's, uh, great for short-term volatility, uh, but in terms of your sort of your swing trades for a longer holding position, it's, uh, it's a tough time. But also at 1:30, um, you know, Non-Farm is still a volatile release, absolutely, but more so you've got the sort of Canadian data which has sort of taken over that mantle of being the more volatile, uh, sort of data releases. And you've got the employment numbers out Canada as well. So for those trading the CAD, it's, I don't know, not necessarily going to be impossible but close to as you digest the numbers from the US and Canada for a possible opportunity. For those that are trading the CAD, obviously keeping an eye on OPEC and the developments of oil will be key. Yesterday we saw, um, I was bringing the CAD here, quite similar price action in that we went higher, lower, higher, lower, uh, just like oil. So it's following, uh, the price of oil there quite, um, quite well. Obviously today at 1:30 it's going to do its own thing for sure. Going into the, the back part of the, uh, the day, you've got some other numbers out. 3 o'clock, University of Michigan, their preliminary figures from December. Usually by then on non-farms the, the market volatility has died up. Today, um, that may be different because we'll be looking at that weekly close with the death cross in play on equities. Uh, is the— our European equities going to recover from their worst day in 2 years? FTSE is actually trading at a level that we traded, uh, in 1999, which is incredible to think that. But also this year we also had an all-time high, so read into that what you will. Uh, timing is, is key there, uh, of course. Um, and also oil, you know, as we come through to 3 o'clock, whether the deal even finishes today or not remains to be seen. I saw a tweet yesterday that was saying, uh, one OPEC meeting went on for 17 days. So, um, yeah, it could be a long one for OPEC there. Also worth looking at, for those that still are interested and, and trade it, Bitcoin has again pushed lower here, trading almost now— well, what's that low there we have got today? 3,240. Uh, really big fall from grace, uh, there. Speaking of Foolsome Grace, obviously equities will be the main focus, um, into sort of the close other than, uh, your oil. I think for the dollar you'll have that short-term volatility from the non-farm, but I think that's all it's going to be. I think it really has sort of lost its focus unless we were to have a really, really good or really bad number, and then you might get that FedWatch tool change to the upside or downside. So could potentially be interesting. However, recent ones not really suggesting it will be. One market just to finish on, uh, which again weekly close is massively important, is gold. So you've got, uh, this level that I just wait for this chart to update that. I mean, going back to sort of June and July time, um, you know, the, the idea of the summer rally which has happened 9 years in a row at some point, arguably. So, uh, but talking about that as a place to get in for, for gold, and it was— if I just moved the chart along to sort of when it would have been, so yeah, July time, not necessarily June, but looking at this level of support, support, and then it came and acted as resistance back then, and it was just like, if we can get a close above there, then it's the opportunity perhaps to, to get long. And We're really testing this area now, really having a go. If we can close the week above that, I think it's really significant, um, and then we could, you know, continue to push on. And if equities keep coming down, maybe gold then recovers some of its safe haven status. If we have a weak number today, the dollar weakens, which really supported gold a touch yesterday to sort of have a go at breaking out of that. Could be a decent opportunity, um, again, looking where we close the week. For quite a few of these markets is, is important. Any questions, as usual, guys, please do get them in the chat. We'll be doing a more in-depth rundown, uh, closer to Non-Farm, probably around sort of 10 past 1, quarter past 1. So obviously do tune in, uh, then as well. Um, OPEC comments will most likely be coming out into the back end of the, the morning and throughout. So obviously for oil traders really be aware. And I think it's pretty vital to book profits when they're there and make it risk-free as soon as possible. I hope you all have a good trading day. If I don't catch up with you later, a great weekend and take care, and we'll catch you in the chat.