Altcoins Gain Momentum

Economic

Cryptocurrency

Summary:

The crypto market capitalisation hit a new high of $3.09 trillion on Monday morning (+1% in 24 hours), driven by altcoins.

Market Picture

The crypto market capitalisation hit a new high of $3.09 trillion on Monday morning (+1% in 24 hours), driven by altcoins. The Cryptocurrency Fear and Greed Index reached 90 over the weekend, with the index only higher in late 2020 and early 2021. By Monday, the index had fallen back to 83, still consistent with extreme greed.

The Altcoin Season Indicator has now risen from 23 on 4th November to 42, thanks to optimism around XRP and Dogecoin. Cardano is also gaining momentum.

XRP topped $1 for the first time in three years. On Saturday, the token climbed above $1.2, as it is sensitive to Gary Gensler’s possible departure. Under his leadership, Ripple has been in a constant legal battle with the SEC.

Bitcoin drifted down 3% on Saturday and Sunday, but on Monday, a 4% surge above $91,500 took it above this consolidation area. Institutional traders are activating at a time when retail traders are starting to lock in profits in Bitcoin and moving into altcoins.

Cryptocurrencies are perhaps the most notable market where retail is profiting at the expense of institutional rather than the other way around.

News Background

According to SoSoValue, net inflows into US spot Bitcoin ETFs totalled $1.67 billion last week, marking the sixth consecutive week of net inflows. Cumulative inflows since the launch of bitcoin ETFs in January rose to $27.46 billion.

Ethereum ETFs saw net inflows of $515.2 million last week, a record high since the funds were approved on 23rd July, which brings the total net inflows since the product launch to $178.4 million.

The distribution of implied volatility in the Bitcoin options market suggests a high probability of trading at lower levels. “The deleveraging risk could be significant,” Blofin warned.

A bill to create a Bitcoin reserve is up for a vote in the US Congress. It involves purchasing 1 million BTC (up to 200,000 BTC per year for five years). The Fed’s gold reserves will be used for this purpose. Speculation on this issue could be an important driver of Bitcoin’s rise against gold.

Solidion Technology, a manufacturer of electric batteries and components, announced that it will convert some of its cash reserves into bitcoin. The company plans to use 60% of its excess cash, all of its money market interest income and some of its future capital raising to buy the first cryptocurrency.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

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Glendon

Economic

Short selling is a popular trading strategy, especially among experienced traders looking to profit from a decline in stock prices. It involves borrowing shares of a stock, selling them at the current price, and then repurchasing them later at a lower price to return to the lender, pocketing the difference. However, when it comes to shorting stocks priced under $5, there are several important factors to consider, including liquidity, volatility, and borrowing constraints.

This article explores whether it's possible to short sell stocks under $5 and the unique risks and strategies involved.

Understanding Short Selling

Before diving into the specifics of short selling low-priced stocks, it's essential to understand how short selling works:

Borrowing Shares: Traders borrow shares of a stock from a brokerage or another investor.

Selling the Shares: These borrowed shares are sold on the market at the current market price.

Repurchasing the Shares: The trader aims to buy back the shares at a lower price.

Returning the Shares: The trader returns the shares to the lender and keeps the profit (if the repurchase price is lower).

This strategy can be lucrative in a falling market, but it carries significant risks, especially with stocks priced under $5.

Can You Short Sell Stocks Under $5?

Yes, you can short sell stocks priced under $5, commonly referred to as "penny stocks." However, doing so comes with specific challenges and considerations:

1. Liquidity Issues

One of the primary concerns when short selling stocks under $5 is liquidity. Liquidity refers to how easily a stock can be bought or sold without causing a significant price change. Stocks with lower prices tend to have lower trading volumes, meaning there are fewer buyers and sellers. This can make it difficult to enter or exit a position, and a lack of liquidity can lead to slippage, where the execution price is worse than expected.

2. Borrowing Stocks Under $5

Another challenge when short selling penny stocks is finding shares to borrow. In order to short sell, you need to borrow shares from a brokerage or another investor. However, stocks under $5 may be less likely to have shares available for borrowing. Low-priced stocks are often less in demand, which means fewer institutional investors are willing to lend them out. This makes shorting penny stocks harder to execute and more expensive if shares are available.

3. High Volatility

Stocks under $5 are typically more volatile than higher-priced stocks. This means their prices can swing wildly within short periods, which creates both opportunities and risks for short sellers. While volatility can amplify profits if the stock price drops, it can also increase the potential for significant losses if the stock price moves against your position. Penny stocks are notorious for unpredictable price movements, making short selling in this space especially risky.

4. Risks of Shorting Penny Stocks

Short selling is inherently risky, but the risks are magnified when dealing with low-priced stocks. Here's why:

Unlimited Losses: When you short sell, your potential losses are theoretically unlimited because the price of a stock can rise indefinitely. This is particularly dangerous with volatile penny stocks, which can experience rapid and unexpected upward movements.

Short Squeeze: A short squeeze occurs when a heavily shorted stock suddenly rises, forcing traders to buy back shares to cover their positions, which pushes the price even higher. Penny stocks are often subject to short squeezes because their low float (number of available shares) can be easily manipulated.

Brokerage Restrictions: Many brokerages have strict rules about shorting low-priced stocks, especially those priced under $5. Some brokerages may require higher margin requirements or impose additional restrictions on trading these stocks.

5. Strategies for Short Selling Stocks Under $5

Despite the risks, some traders still choose to short stocks under $5, typically using specific strategies to mitigate potential losses:

Use Stop-Loss Orders: A stop-loss order automatically triggers a buy order if the stock price rises to a certain level, limiting potential losses. This can be especially important when short selling volatile penny stocks.

Trade with Caution: Given the high volatility and potential for unpredictable price moves, it’s important to start small when shorting penny stocks and increase your position size only once you gain more experience and confidence.

Focus on Overbought Stocks: Shorting stocks that have surged in price due to hype or speculation can be an effective strategy. These stocks are more likely to experience a price correction, presenting opportunities for short sellers.

Monitor News and Sentiment: Penny stocks can be heavily influenced by news events, rumors, or social media trends. Staying informed about news and sentiment in the market can help you predict when a stock might drop, allowing you to time your short sale more effectively.

Conclusion

Short selling stocks under $5 is possible, but it is not without significant challenges and risks. Low liquidity, difficulties borrowing shares, high volatility, and the potential for short squeezes all make trading penny stocks much riskier than trading higher-priced stocks. However, with proper research, risk management, and a disciplined approach, traders can still profit from shorting penny stocks.

Before diving into short selling low-priced stocks, it's important to fully understand the risks involved and to practice with a demo account or small positions to build experience. As with any trading strategy, short selling requires careful planning, a solid understanding of the market, and a readiness to accept potential losses.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Glendon

Economic

In today's global economy, the wealthiest nations are measured not just by their gross domestic product (GDP) but also by GDP per capita, which reflects the economic prosperity of their citizens. Some countries are blessed with natural resources, while others have built their wealth through innovation, industry, and robust financial systems. Understanding these nations’ economic standing provides valuable insights into how wealth is created and sustained on a global scale.

Here’s a breakdown of some of the richest countries in the world and what contributes to their incredible wealth.

1. Luxembourg

GDP per capita: $145,000

Luxembourg, a small European nation, tops the list with an impressive GDP per capita. Despite its size, it is a financial powerhouse, housing numerous international banks, investment firms, and corporations. The country benefits from favorable tax policies, which attract businesses and investors. Additionally, Luxembourg has a high standard of living, excellent healthcare, and a thriving tech sector.

2. Switzerland

GDP per capita: $94,000

Switzerland has long been known for its banking industry, neutrality in global conflicts, and high quality of life. With a strong economy driven by finance, pharmaceuticals, and luxury goods, Switzerland remains one of the richest countries in the world. It has low unemployment, high wages, and is home to some of the most innovative companies globally, including Nestlé and Novartis.

3. Ireland

GDP per capita: $105,000

Ireland has rapidly transformed into one of Europe’s wealthiest nations, thanks in part to its favorable corporate tax rates. The country has become a hub for major global corporations, particularly in the tech and pharmaceutical industries, with giants like Apple, Google, and Pfizer having major operations there. Ireland’s economic growth has been impressive, with a high standard of living and a thriving cultural scene.

4. Norway

GDP per capita: $85,000

Norway benefits from its vast natural resources, including oil and gas, which contribute significantly to its wealth. The country has invested its oil revenues into a sovereign wealth fund, ensuring long-term economic stability. Norway also boasts a high level of education, healthcare, and social services, providing its citizens with an excellent quality of life.

5. Qatar

GDP per capita: $60,000

Qatar’s wealth is largely derived from its vast natural gas reserves, making it one of the richest countries per capita globally. The country has used its resources to diversify into infrastructure, real estate, and tourism, turning its capital, Doha, into a major economic and cultural hub in the Middle East. Qatar’s low unemployment and high wages make it an attractive destination for skilled labor.

6. United States

GDP per capita: $75,000

The United States, with its diversified economy, is home to the world’s largest economy by nominal GDP. The country is a global leader in technology, finance, entertainment, and agriculture. Silicon Valley has birthed some of the world’s largest tech companies, while Wall Street continues to dominate the financial markets. The U.S. also benefits from its large population, advanced infrastructure, and innovative spirit.

7. Singapore

GDP per capita: $75,000

Singapore is a major global financial center, known for its strict laws, political stability, and open economy. The nation’s wealth is driven by international trade, finance, and high-tech industries. As a hub for global commerce in Asia, Singapore boasts a low unemployment rate, a highly educated workforce, and one of the highest standards of living in the world.

8. Brunei

GDP per capita: $79,000

Brunei’s wealth is primarily derived from its oil and natural gas reserves. The small nation has used its resources to create a strong sovereign wealth fund, ensuring the prosperity of its citizens. Brunei enjoys a high level of income equality, excellent healthcare, and free education, with its citizens benefiting from extensive government services.

9. United Arab Emirates

GDP per capita: $43,000

The UAE has experienced rapid economic growth thanks to its oil wealth, but it has diversified significantly into sectors like real estate, tourism, and finance. Dubai, in particular, has become a global financial hub and tourist destination, attracting millions of visitors annually. The UAE’s vast infrastructure projects, including the Burj Khalifa, symbolize the country’s impressive economic expansion.

10. Saudi Arabia

GDP per capita: $56,000

Saudi Arabia is one of the world’s largest oil producers, and its oil exports contribute significantly to its wealth. In recent years, the country has focused on diversifying its economy, with major investments in technology, entertainment, and infrastructure. Saudi Vision 2030 aims to reduce the country's dependence on oil and create a more sustainable economy.

Conclusion

The richest countries in the world showcase the variety of ways in which nations can build wealth. Whether through natural resources, financial sectors, or cutting-edge technology, these nations have developed strategies that maintain their economic power and prosperity.

The common thread among these countries is their ability to invest in sustainable economic practices, create favorable environments for business, and provide a high standard of living for their citizens. Understanding these global powerhouses offers valuable lessons in wealth creation and economic strategy, and it’s clear that with the right resources, policies, and innovation, nations can thrive in today’s competitive world economy.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Glendon

Economic

In the ever-evolving world of trading, strategies come and go, but some stand the test of time due to their precision and practicality. The ICT (Inner Circle Trader) trading strategy, pioneered by Michael J. Huddleston, has become a game-changer for many traders. Its emphasis on understanding market dynamics, institutional behavior, and liquidity sets it apart from conventional trading systems.

This article delves into why the ICT trading strategy stands out and how it empowers traders to make informed and precise decisions in the financial markets.

1. A Foundation Built on Market Logic

Unlike many strategies that rely heavily on lagging indicators or oversimplified patterns, ICT is rooted in the principles of market structure and liquidity. It teaches traders to think like institutional players, understanding:

Smart Money Concepts (SMC): ICT focuses on the movements of institutional investors, often referred to as "smart money," which drive the markets.

Market Manipulation Awareness: The strategy highlights how liquidity is hunted, such as stop-loss raids, helping traders avoid common retail pitfalls.

This logical foundation ensures traders rely less on guesswork and more on observable market behaviors.

2. Unique Tools and Concepts

ICT introduces concepts that are not common in traditional trading systems, making it a standout approach:

Order Blocks: These zones highlight areas where institutions accumulate or distribute positions, acting as high-probability entry and exit points.

Fair Value Gaps (FVG): These price gaps often signal where the market may retrace to, offering traders opportunities to enter with precision.

Optimal Trade Entry (OTE): This refined Fibonacci-based tool helps traders pinpoint ideal entry points with a high risk-to-reward ratio.

These tools provide a detailed roadmap for traders, ensuring they understand where and why price moves.

3. Emphasis on Liquidity

Liquidity is a cornerstone of the ICT strategy. Many retail traders overlook liquidity zones, but ICT traders view them as key areas for market activity. By identifying where institutional players are likely to enter or exit, ICT users can align themselves with the market’s true drivers.

4. A Strategy for All Market Conditions

One of the most impressive aspects of the ICT strategy is its adaptability. Whether the market is trending or ranging, ICT principles apply. This versatility ensures traders can navigate any environment effectively, unlike many systems that perform well only in specific conditions.

5. Educational Depth

ICT is not just a strategy but a comprehensive education in trading. Michael Huddleston provides in-depth explanations of his principles, offering traders an unparalleled understanding of the markets. Many users praise ICT for not just teaching a method but for reshaping how they approach trading altogether.

6. Precision Over Randomness

ICT strategy encourages precision and clarity. Instead of entering trades based on gut feelings or vague signals, traders using ICT have a defined framework:

Identifying liquidity zones.Timing entries during key market sessions (e.g., London or New York open).Managing trades with disciplined risk management strategies.

This precision reduces emotional trading, a common downfall for many.

7. Comparisons with Traditional Systems

While conventional systems often depend on lagging indicators or oversimplified setups, ICT stands out due to its focus on leading indicators and real-time market dynamics. It doesn't rely on outdated principles like "buy low, sell high" but instead leverages where institutional players are positioning themselves.

8. Empowering Retail Traders

The ICT strategy levels the playing field for retail traders by teaching them how to spot and exploit the same opportunities institutions target. This empowerment is a significant reason for its growing popularity.

Conclusion

ICT trading strategy’s reliance on market logic, unique tools, and a comprehensive educational approach has made it a standout choice for traders. By understanding the behavior of institutional players and focusing on liquidity, ICT provides traders with the tools to make informed, precise decisions in the markets.

Whether you’re a beginner looking to grasp the fundamentals or an experienced trader seeking a deeper edge, ICT offers a path to elevate your trading game. Its innovative approach ensures it will remain a staple in the trading world for years to come.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Warren Takunda

Cryptocurrency

Bitcoin launches into a new week inches from fresh all-time highs after sealing its best-ever weekly close.

Bitcoin traders see price discovery returning in the coming week while eyeing levels toward $80,000 as a “buy the dip” opportunity.

The weekly close set another record, but November 2024 remains nothing out of the ordinary for BTC price action.

Markets are diverging over how the Federal Reserve will handle a brewing “stagflation” saga.

Whales are still buying BTC, and ETF flows are elevated despite a knee-jerk reaction to last week’s $93,500 all-time high.

Crypto sentiment gauges are getting increasingly overheated as levels of “extreme greed” reach classic blow-off top territory.

Traders prepare for BTC price volatility toward $100,000

Bitcoin saw only a modest dip into the latest record-breaking weekly close, leaving shorts on the losing end.

Above $90,000 into the week’s first Wall Street open, BTC/USD is sustaining momentum while already being up 30% month-to-date, data from Cointelegraph Markets Pro and TradingView confirms. BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_1

BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_1

BTC/USD 1-hour chart. Source: TradingView

“So far the usual weekly open bid has lifted price,” trader Skew said in one of his latest posts on X.

Skew noted that the price had held the 21-period exponential moving average (EMA) on four-hour timeframes and highlighted two key levels to start the week: $90,000 and $91,300. BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_2

BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_2

BTC/USDT 4-hour chart. Source: Skew/X

“It’d be great to see an aggressive spike to $95k-96k over the coming week,” fellow trader CrypNuevo said in a dedicated X thread over the weekend.

CrypNuevo suggested that large-volume traders may seek to liquidate newcomers closer to $100,000, resulting in more market flux before that significant psychological price barrier is reached.

“Main liquidation lvl is up, but it’d also make sense to spike up near $100k without fully reaching there, and then reverse down,” he wrote.

“Why? Because many new traders will come to the market for first time FOMOing with longs and spot buys. Easy preys.” BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_3

BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_3

BTC/USDT 1-hour chart. Source: CrypNuevo/X

To the downside, $87,000 needs to hold if the market shows signs of consolidation, he added.

Others are looking to “buy the dip” on BTC even in the event of a deeper retracement. For trader Crypto Chase, suitable entries come in the form of intraday “gaps” between daily candle wicks.

“We will EVENTUALLY pullback into a Daily gap. In bullish conditions, the first gap is the one to buy. Still have 30% of my long open from 85K~. Still looking to buy high 83 K’s if offered,” he told X followers.

“The lower gaps should remain unfilled until this market has reversed/turned bearish.” BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_4

BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_4

BTC/USDT 1-day chart. Source: Crypto Chase/X

BTC price weekly close smashes records

For Bitcoin bulls, there is no denying that last week was a historic triumph.

Not only did BTC/USD seal its highest-ever weekly close for a second consecutive time at just under $90,000, but a major BTC price correction to test new support remained off the cards.

Data from monitoring resource CoinGlass puts Bitcoin’s weekly gains at 11.8%, with Q4 returns passing 40%.

On a monthly basis, November 2024 remains fairly average in terms of BTC price performance over the past 10 years. Traders, however, say this can still change. BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_5

BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_5

BTC/USD monthly returns (screenshot). Source: CoinGlass

“Historically, this kicks off 300+ days of upside,” trading account CryptoAmsterdam responded on X alongside a comparative chart of Bitcoin bull cycles. BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_6

BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_6

BTC/USD 2-week chart. Source: CryptoAmsterdam/X

Skew forecasts “a bunch” of new record weekly closes to come, with BTC/USD already attempting to fill the wick, which led to its $93,500 all-time highs on Nov. 13.

“BTC has only just begun its Parabolic Phase in the cycle,” trader and analyst Rekt Capital said, referring to his own long-term BTC price analysis.

“Historically, this phase has lasted on average ~300 days. Bitcoin is only on Day 12 of its Parabolic Phase.”

Questions over Fed’s next rate cut

A relatively cool week for US macroeconomic data belied a brewing divergence over future financial policy.

After recent data showed inflation accelerating in October, the Fed faces a recipe for “stagflation” — rising prices with rising unemployment.

This has led to mixed opinions over whether officials will lower interest rates in December, with the latest estimates from CME Group’s FedWatch Tool seeing a 35% chance of a pause in rate cuts. BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_7

BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_7

Fed target rate probabilities. Source: CME Group

“Lower interest rates were the expectation for consumers as we head into 2025,” trading resource The Kobeissi Letter commented over the weekend.

“Now, the Fed seems to be backtracking on the ‘Fed pivot.’ While more rate cuts are coming, inflation will remain elevated.”

Kobeissi noted that the coming week would see earnings from tech giant Nvidia — a potential volatility catalyst for risk assets in itself — along with speaking appearances from seven senior Fed figures.

Joining them is unemployment data on Nov. 21, followed a day later by Purchasing Managers Index (PMI) and consumer sentiment reports.

“The Fed’s top priority has been to avoid a situation with both rising unemployment and rising inflation, as seen in the 1970s,” Kobeissi added alongside a chart of the Consumer Price Index (CPI) versus unemployment.

“Has the Fed failed yet again in avoiding stagflation?”

Whales keep stacking amid fraught ETF flows

This month, a tale of mass accumulation by Bitcoin whales and institutional investors is a key factor buoying the bull case.

As Cointelegraph reported, whales have not stopped to breathe as BTC/USD charges through all-time highs and into price discovery.

Both large and small whale entities continue to add to their BTC exposure, data from onchain analytics platform CryptoQuant confirmed. BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_8

BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_8

BTC whale balance data (screenshot). Source: CryptoQuant

When it comes to the US spot Bitcoin exchange-traded funds (ETFs), the trend is the same.

“Bitcoin spot ETF holdings have increased significantly since their launch in January, from 629.9K BTC to 1.0545M BTC, representing a growth of 425K BTC,” CryptoQuant contributor MAC_D wrote in one of its Quicktake blog posts on Nov. 18.

“This corresponds to an increase from 3.15% to 5.33% of the total mined supply of 19.78M BTC, a 2.18% surge in just eight months.” BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_9

BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_9

US spot Bitcoin ETF holdings (screenshot). Source: CryptoQuant

MAC_D suggested that the resulting impact on supply and demand dynamics should force price action higher.

“The dramatic price increases observed in March and November suggest a strong correlation between accumulation and price,” the post added.

“Therefore, as more Bitcoin is accumulated through spot ETFs, we can expect the price to continue its upward trend.” BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_10

BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_10

US spot Bitcoin ETF netflows (screenshot). Source: Farside Investors

Data from sources, including UK-based investment firm Farside Investors, reveals volatile conditions for the spot ETFs, with large net inflows followed by conspicuous net outflows last week.

Total net outflows for the two days through Nov. 15 passed $750 million, after Bitcoin’s spike to new all-time highs.

Crypto “FOMO” brings price warning

Crypto social media is “very reliably” flagging the peak of each BTC price run, research says.

Analyzing social media volumes for specific terms such as prices, research firm Santiment said that “hype” around the future hits highs alongside price itself.

“Bitcoin’s incredible run has now topped out at a new all-time high price of $93,490,” it said on Nov. 13.

“The hype across social media platforms is calling the tops very reliably, with the biggest signal came as $100K+ BTC price speculation poured in right at the ATH 4 hours ago.” BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_11

BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_11

Crypto social media data. Source: Santiment/X

Santiment added that signs of mass “FOMO” should be taken as a “caution flag,” implying that market upside could reverse.

The latest readings from the Crypto Fear & Greed Index correspondingly show levels of “extreme greed” last seen in the run-up to Bitcoin’s old long-term peak in March.

The Index hit 90/100 on Nov. 17, just five points off classic market turnaround territory. BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_12

BTC Price Weekly Close Nears $90K — 5 Things to Know in Bitcoin This Week_12

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

Source: Cointelegraph

Risk Warnings and Disclaimers

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Warren Takunda

Stocks

December S&P 500 E-Mini futures are up +0.09%, and December Nasdaq 100 E-Mini futures are up +0.35% this morning as market participants looked ahead to an earnings report from semiconductor stalwart Nvidia, a new batch of U.S. economic data, and comments from Federal Reserve officials.

In Friday’s trading session, Wall Street’s major averages closed sharply lower, with the benchmark S&P 500 and tech-heavy Nasdaq 100 falling to 1-1/2 week lows and the blue-chip Dow dropping to a 1-week low. Applied Materials slumped over -9% and was the top percentage loser on the S&P 500 and Nasdaq 100 after the largest U.S. maker of chip-manufacturing equipment provided a disappointing FQ1 revenue forecast. Also, AST SpaceMobile slid more than -9% after reporting a wider-than-expected Q3 loss. In addition, Pfizer fell over -4% after Wolfe Research initiated coverage of the stock with an Underperform rating and a $25 price target. On the bullish side, Palantir Technologies surged more than +11% and was the top percentage gainer on the S&P 500 after announcing that it will transfer its stock exchange listing from the New York Stock Exchange to the Nasdaq.

Economic data released on Friday showed that U.S. retail sales grew +0.4% m/m in October, beating the +0.3% m/m consensus, while core retail sales, which exclude motor vehicles and parts, edged up +0.1% m/m, weaker than expectations of +0.3% m/m. Also, the November Empire State Manufacturing index unexpectedly rose to a 2-3/4 year high of 31.20, stronger than expectations of -0.30. In addition, U.S. industrial production fell -0.3% m/m in October, in line with expectations, while manufacturing production fell -0.5% m/m, in line with expectations. Finally, the U.S. October import price index unexpectedly rose +0.3% m/m, stronger than expectations of -0.1% m/m.

Boston Fed President Susan Collins stated on Friday that a December interest rate cut remains on the table, highlighting that the Fed’s decision will depend on incoming data. “I do see the policy stance as being in a restrictive place, and over time normalizing that, I think, is going to be important,” Collins said. Also, Chicago Fed President Austan Goolsbee said that if inflation continues to move toward the central bank’s 2% target, interest rates will be “a lot” lower over the next 12-18 months. However, he agreed with Fed Chair Jerome Powell, noting that policymakers are not rushing to reduce borrowing costs.

Meanwhile, U.S. rate futures have priced in a 61.6% chance of a 25 basis point rate cut and a 38.4% chance of no rate change at the conclusion of the Fed’s December meeting.

Market participants will focus on earnings reports from several prominent companies this week, with semiconductor giant Nvidia’s report on Wednesday drawing the most attention. Retailers such as Walmart, Target , Lowe’s , TJX Companies , and Ross Stores , along with notable companies like Palo Alto Networks , Snowflake , Intuit, Deere , and Medtronic , are also scheduled to release their quarterly results this week.

Investors will also be monitoring a spate of economic data releases this week, including the U.S. S&P Global Composite PMI (preliminary), the S&P Global Manufacturing PMI (preliminary), the S&P Global Services PMI (preliminary), the Philadelphia Fed Manufacturing Index, Building Permits (preliminary), Housing Starts, Crude Oil Inventories, Initial Jobless Claims, Existing Home Sales, the Leading Index, and the University of Michigan’s Consumer Sentiment Index.

In addition, Chicago Fed President Austan Goolsbee, Kansas City Fed President Jeffrey Schmid, Fed Governor Lisa Cook, Cleveland Fed President Beth Hammack, Fed Governor Michelle Bowman, and Fed Vice Chair for Supervision Michael Barr will be making appearances this week.

The U.S. economic data slate is mainly empty on Monday.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.456%, up +0.61%.

The Euro Stoxx 50 futures are down -0.29% this morning, with investors cautiously awaiting key Eurozone inflation data, remarks from European Central Bank policymakers, and Nvidia’s earnings report later this week. Technology and energy stocks led the declines on Monday, while food and beverage stocks outperformed. Meanwhile, market participants are awaiting the Eurozone inflation reading scheduled for Tuesday, which will help gauge the outlook for European Central Bank policy. Investors will also pay attention to speeches from ECB policymakers this week, including Chief Christine Lagarde later today, along with the November flash PMI data from across Europe, due on Friday. In corporate news, Melrose Industries Plc climbed over +8% after reporting a 7% increase in revenue for the four months ended October 31st.

Eurozone’s Trade Balance data was released today.

Eurozone September Trade Balance was at 12.5B euros, stronger than expectations of 7.9B euros.

Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.21% and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.09%.

China’s Shanghai Composite Index closed lower today, giving up earlier gains despite fresh policy support from Chinese authorities. Losses in software and consumer service stocks led the overall market lower on Monday. The China Securities Regulatory Commission issued guidelines on Friday, urging listed companies to improve shareholder returns through actions such as mergers and acquisitions, employee stock incentive programs, cash dividends, and share buybacks. RBC BlueBay Asset Management’s portfolio manager Siguo Chen stated that the document represents a continuation of Beijing’s effort to stabilize the market in the short term and, over the medium term, to close loopholes and improve market efficiency. Meanwhile, Morgan Stanley downgraded Chinese equities to a slight Underweight from Equal Weight, citing earnings, foreign exchange, geopolitical risks, and domestic policy as factors likely to exert pressure into 2025. In other news, the Chinese Finance Ministry will lower export tax rebates on refined oil, solar power, batteries, and non-metallic mineral products from 13% to 9%, effective December 1st. In corporate news, Lingyi iTech Guangdong slumped over -8% after the magnetic material components maker announced plans to issue approximately 2.14 billion yuan in convertible bonds. Investors are now looking forward to China’s upcoming Loan Prime Rate decision later this week.

Japan’s Nikkei 225 Stock Index closed lower today, tracking Friday’s losses on Wall Street amid growing uncertainty about the pace of U.S. monetary policy easing. Japanese stocks also came under pressure from a sharp yen rebound on Friday. Pharmaceutical and defense stocks led the declines on Monday. The Cabinet Office reported on Monday that Japan’s core machinery orders, which exclude those for ships and electric power companies, fell for the third consecutive month in September. Meanwhile, the yen weakened after Bank of Japan Governor Kazuo Ueda stated that the timing of the central bank’s next policy adjustment would hinge on the economy and prices. “There are countless uncertain and changing factors, including the U.S. economy. Rather than waiting for clarity on all of them, we will make appropriate policy decisions, looking at data and other information available by each policy meeting,” Ueda said. Investors are now focusing on Japanese trade data, set for release on Wednesday, and inflation data, due on Friday, which are anticipated to offer additional insight into the outlook for the economy and monetary policy. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +12.49% to 26.12.

The Japanese September Core Machinery Orders came in at -0.7% m/m and -4.8% y/y, weaker than expectations of +1.4% m/m and +2.2% y/y.

Pre-Market U.S. Stock Movers

Nvidia fell over -2% in pre-market trading after The Information reported that the company’s new Blackwell AI chips were experiencing overheating issues when connected to server racks designed to hold up to 72 chips.

Tesla surged more than +8% in pre-market trading after Bloomberg reported that President-elect Donald Trump’s transition team will make a federal framework for self-driving cars one of the Transportation Department’s priorities.

CareMax plummeted about -28% in pre-market trading after the medical services company filed for Chapter 11 bankruptcy protection in Texas on Sunday.

Source: Barchart

Risk Warnings and Disclaimers

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Warren Takunda

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The Pound to Dollar exchange rate (GBP/USD) selloff has reached oversold conditions, as per the Relative Strength Index (RSI), which is now at 30.

A reading of 30 and below indicates that an asset is oversold and that a reversal must occur. This could involve either a period of consolidation or a recovery.

These oversold conditions, combined with the broader sense that the 'Trump trade' is due a breather, suggest that GBP/USD could record a modest weekly gain.

GBP/USD has fallen for seven weeks in succession, and the trend is negative.

The pair last week sliced below the 200-day moving average, which serves as an official signal that the trend has flipped from bullish to bearish on a multi-week basis.

Given this, any strength will likely be shallow and there remains a real risk that it could invite USD buyers to reload ahead of another leg lower in GBP/USD.

Pound to Dollar Week Ahead Forecast: Fade the Trump Trade_1

Above: GBP/USD has fallen below the 200-day moving average, but the RSI is oversold (lower panel).

The sharp decline in GBP/USD reflects a realisation that the U.S. Federal Reserve won't cut interest rates by nearly as much as was the base-case expectation in the summer months, ensuring a significant readjustment in expectations in the USD's favour.

Underpinning the view is the U.S. economy's ongoing outperformance against others and expectations for inflation to remain above the 2.0% target for an extended period. A driver of this expectation is Trump's desire to raise import tariffs and cut taxes.

Trump has made a series of controversial appointments to his top team, which has signalled that the administration intends to make as much progress as soon as possible, unlike during his first term.

The Dollar's post-election surge reflects a market getting ahead of the agenda.

GBP/USD investment bank consensus forecasts: The end-2024 and 2025 guide from Corpay has been released. It shows a sizeable uplift was made to the consensus forecasts for GBP/USD.

But, the risk is that the market has gone a bit too far, and investors might want to see some real statements regarding policy, to flesh out the reality.

In the absence of such a development, the space grows for the market to cover recent USD strength.

Regarding event risk, UK inflation data is due for release on Wednesday.

UK inflation is expected to have risen to 2.2% year-on-year in October from 1.7% in September, indicating an acceleration in inflation.

Economists at the Bank of England and the Office for Budget Responsibility recently upgraded their forecasts for the near term in the wake of the October budget, which saw the government announce a big increase in spending.

Also, household energy prices are rising again, so the easy part of the 2024 deflationary process is now behind us.

Core inflation is expected to remain at a sticky 3.2%, driven by strong services inflation. If these figures come in weaker, the pound could come under pressure, as this would open the door to a potential Bank of England interest rate cut in December.

"The services rate is set to remain hovering close to 5% y/y. A significant downside surprise would be needed to meaningfully boost the likelihood of a December rate cut," says Sam Hill, Head of Market Insights at Lloyds Bank.

Should inflation beat expectations, the Pound-Dollar exchange rate could well rally back to its recent highs as investors reinforce expectations that the Bank of England will only be able to cut at a quarterly pace in 2025, meaning just four further rate cuts are likely.

We are particularly interested in the UK's PMI data, due on Friday, as they should incorporate the fallout from the October budget.

There are reports that business sentiment and hiring intentions took a hit following the budget, and this could be reflected in a poor PMI reading. If this is the case, the Pound-Euro exchange rate could close in the red for the second consecutive week.

"In the two weeks since the budget, various big names in the UK retail and hospitality sector have warned that Reeve’s hike to employers’ national insurance contributions would led to a jump of costs to consumers. Others have indicated that it could lead to job losses," says Jane Foley, Senior FX Strategist at Rabobank.

The Bank of England could well respond to signs of a slowing economy by cutting interest rates again next month, judging that it can cut rates further without stoking inflation. It would suggest that the Bank thinks that if growth is allowed to collapse, then inflation would drastically undershoot current expectations in 2025-2026.

Any signs that it will accelerate the rate cutting process would weigh on the Pound.

Source: Poundsterlinglive

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BTC/USD 1-hour chart. Source: TradingView

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BTC/USDT 1-hour chart. Source: CrypNuevo/X

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Crypto social media data. Source: Santiment/X

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Pre-Market U.S. Stock Movers

Source: Barchart

Pound to Dollar Week Ahead Forecast: Fade the Trump Trade

Above: GBP/USD has fallen below the 200-day moving average, but the RSI is oversold (lower panel).

Source: Poundsterlinglive

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