On Tuesday (January 30), during the US market, financial market volatility intensified, and the "Panish Index" VIX soared above the 15 mark, the highest level since August last year. The US dollar index and US stocks fell, and the " Trump market" was in danger. Before U.S. President Trump delivered a highly-watched State of the Union address, the "Hulk" appeared on the U.S. dollar index chart, which is an ominous sign for bulls. The US stock market has been heavily warned by many investment banks, and the stock market may face the risk of a pullback.
Trump's State of the Union address is imminent. "Hulk" raids USD
On Tuesday, the dollar gave up earlier gains and fell, after U.S. Treasury yields fell from recent highs, while the euro strengthened as economic data confirmed that the eurozone economy was growing at a healthy rate.
USD versus the euro will record its biggest monthly decline since July 2017, as strong global and European economy, especially in Europe, prompted investors to increase bearish bets.
Global bond yields rose on Monday, with the 10-year U.S. Treasury yield rising far above 2.70%, the highest since April 2014, prompting some investors to cut some short positions and pushing the dollar higher.
But the surge in bond yields proved short-lived as global venture capitalists are generally nervous about the stock market.
analysts said that U.S. Treasury yields rose again this week, still providing some support for the dollar. During the Asian session on Tuesday, the yield on the 10-year U.S. Treasury bond hit a high of 2.733%, the highest since April 2014, and then fell back to 2.70%.
htmlEarly within 0 days, the US dollar fell to 88.91 against a basket of six major currencies, and then rebounded slightly, falling to its lowest level since December 2014 of 88.43.
(30-minute trend chart of the US dollar index, source: FX168 Finance Network)
US dollar index fell below the high level touched by Trump's remarks that he supported the dollar's strengthening.
(Bloomberg USD Index trend chart, source: Zerohedge, FX168 Finance Network)
USD index has reached a key level... The "Hulk" has appeared, which may be an ominous warning for US dollar bulls.
(USD index chart, source: Zerohedge, FX168 Finance Network)
Co-chief investment officer of Arbuthnot Latham, a private bank based in London, said the dollar was also suppressed by the policies of US President Trump, which may lead to an increase in budget deficits.
Perdon said: "People are still doubting whether the Fed will raise interest rates and whether it will raise interest rates three to four times, but when the interest rate difference becomes larger, arbitrage trading will provide some strength for the US dollar later this year." The
4-hour chart shows that the US dollar index has been continuously blocked in the short-term upward channel of 89.60 and has fallen back. It is currently falling below the support of the lower track of the channel and breaking the Bollinger band midtrack 89.15, or opening up further downward space in the short-term.
UOB believes that the market will continue to fall in the future; two weeks ago, the US index fell below the key support level of 91.00, and has fallen wildly since then. Technical aspects show that whether from the short-term or long-term trend, the rapid and sharp downward trend of the exchange rate may be attributed to the lack of important support levels.
Overall, it is expected that it is too early for the US dollar index to bottom out, so the recent sharp drop suggests that the downward space in the future is still there; on the upward trend, 91.00 has evolved into an important resistance level, but it needs to break 92.70 to imply that the short-term low has been constructed.
EUR/USD rose moderately, reaching a high of 1.2454, still well below the three-year high of 1.2538 that hit last week.
remains optimistic about the potential sentiment of the euro zone. Antoine Lesne, head of strategy and research at European Investment Banks in January, said in January this year, more than $14.5 billion of funds flowing into European exchange-traded funds, of which more than $13 billion entered the stock market. "The dollar's fatigue is temporarily suspended, at least for now," said Teppei Ino, an analyst at Mitsubishi Tokyo UFAN Bank in Singapore . "Handling is the case, at least for now."
Ino believes that market participants may be waiting for Trump's State of the Union address later on Tuesday, and he may make further remarks about the dollar.
U.S. Treasury Secretary Steven Mnuchin expressed support for the weakening of the dollar last week and expressed support for the weakening of the dollar.Trump later tried to retract the comments, saying he ultimately hopes the dollar will strengthen.
Trump said on Monday that he will elaborate on his proposed immigration reform plan and his efforts to lower global trade barriers for U.S. exports.
US stocks are "bloody flowing" and top investment banks have issued heavy warnings: "Trump market" is at stake?
The three major U.S. stock indexes fell collectively at the opening, and the Dow Jones Industrial Average fell by about 250 points, and then the decline quickly expanded to 350 points or more than 1%. The Nasdaq S&P 500 decline also widened to more than 1%.
(Source: CNBC, FX168 Finance Network)
(5-minute chart of US stocks, source: Zerohedge, FX168 Finance Network)
B.Riley FBR chief market strategist Art Hogan said, "The stock market rose unilaterally at the beginning of this year, and people now realize that this is unsustainable. With the rising global interest rates, you also see some cracks."
stock market started strong in 2018. As the US stock market rises steadily, all sectors of the market realize that the bubble of US stocks is constantly expanding. days ago, three well-known investment banks successively issued warnings on the "Trump market".
A strategist at Goldman Sachs said the possibility of a pullback in the stock market in the next few months is "very high". "The correction signal is flashing" and advised customers to prepare for the callback," said Peter Oppenheimer, chief global equity strategist at Goldman Sachs on Monday.
Oppenheimer said that the US stock market hit its best start since 1987 in 2018, but the market may face the risk of a melt-up period in the future.
Goldman Sachs' bear market risk indicator shows that the indicator has reached 69%, reaching a decade-long high, close to the previous level before the outbreak of the "Internet bubble" and "credit bubble". However, Goldman Sachs believes that the current stock market is expected to not experience a "shocking collapse". With the low core inflation rate in the United States and the Federal Reserve's monetary policy still relatively loose, U.S. stocks are more likely to usher in a short-term downward correction rather than falling into a bear market.
Goldman Sachs pointed out in the report: "In bull markets, it is not uncommon for stock markets to fall 10% or 20%, and there are many examples of such retracement in history. Generally speaking, a 'bull pullback' often falls by an average of 13% in four months and only takes four months to recover. This will be short-lived and is expected to evolve into a long bear market."
In addition, according to an evaluation report by BofAML, a large amount of cash flow into the stock market is conveying a strong "sell" signal, which has been a reliable indicator in the past.
Bank of America Merrill Lynch said in a report that investors injected $33.2 billion into the stock market in the week before Wednesday. This is not only a record of capital flows, but also an active fund, which alone has attracted $12.2 billion in funds.
In comparison, all categories of equity funds totaled $278 billion for the full year of 2017, meaning that the flow of funds last week alone accounted for 12% of the previous year's entire year, according to Morningstar.
As major stock indexes climb to new records, funds continued this week and poured into the stock market one after another. Dow Jones Industrial Stock Average Index has risen 7% so far this year.
Bank of Merrill Lynch chief investment strategist Michael Hartnett explained that Bank of America Merrill Lynch’s bull and bear indicator has soared to 7.9, the highest since March 2013, and approached the "sell signal" of 8 for the first time in five years. Since 2002, the investment bank's bull and bear indicator has sent 11 sell signals with a hit rate of 100%.
Hartnett said that in the short term, the S&P 500 is expected to fall back to 2686 points around February or March, which will mean a decline of nearly 6%. He believes that the US dollar is the key catalyst to determine whether US stocks will make a sharp correction downward. Learning from history, the previous exchange rate dispute between the United States and Europe triggered the US stock market crash in 1987. Bank of America Merrill Lynch predicts that the U.S. stock trading volume will increase significantly in 2018, and the bubble in the U.S. stock market will further expand.
In addition to Goldman Sachs and Bank of America Merrill Lynch, Citi also pointed out that the recent trend of the US stock market is a "highlight" indicator that the stock market is overbought in the short term.The relative strength indicator (RSI) of the S&P 500 index on the weekly chart reached a record high. If it retreats to the trend line of this cycle, it means that the market will pull back by more than 20%.
(Picture source: Bloomberg, FX168 Finance Network)
During the US market, the "Panish Index" VIX rose above 15 for the first time since August 18 last year.
Financial Blog Zerohedge wrote that in 2018, a strange phenomenon occurred, where the volatility index and stock markets rose together (until the last few days, it was driven by the fanaticism of panic buying in calls, betting on rising enthusiasm rather than falling protection).
(VIX index and S&P 500 futures two-hour trend chart, source: Zerohedge, FX168 Finance Network)
But in the past two days, as the market suddenly turned to buy downside protection, the volatility index rose sharply.
(S&P 500 index rises and falls bets on trading volume, source: Zerohedge, FX168 Finance Network)
This also made the VIX index break through the downward trend in the past two years.
(VIX index two-hour trend chart, source: Zerohedge, FX168 Finance Network)
As the CitiFX technical team warned: "We are now closely monitoring the two major double bottom necklines after the merger (14.5%-14%), because if the breakthrough is made, it will imply that the rise will have the potential to expand to 20%. "
This article is from FX168 Finance News Agency
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