GroundStone Holdings Morning Newsletter

[GroundStone Holdings]

Morning Technical Newsletter - Pound Higher Despite Warnings

Pound Higher Despite Warnings

FX traders are preparing for the onslaught of dire warnings about a “no-deal Brexit” by earlier pushing the Pound Sterling close to a 2-week trough. Expected shortly are comments from both the Bank of England and the British government on the lasting impact that the British economy would suffer if they are unable to broker an agreement before the March 28 deadline next year. Though an agreement between EU leadership and the British government was reached this past weekend, the Prime Minister is finding it difficult to get the backing she needs from her party to push the agreement through Parliament.

As at 11:21 am (GTM) in London, the GBP/USD was trading at $1.2784, up 0.37% and moving off the earlier low of $1.2733. The EUR/GBP is trading at 0.8827 Pence, down 0.44%; the pair has ranged from 0.88253 Pence and 0.88714 Pence.

Analysts Suggest Caution Till Vote

What traders are expecting to see is the estimation of just how bad a no-deal would likely be. Media reports say that the government’s assessment shows an economic impact of a decline of approximately 7.6% in 15 years as compared to less than 2% under a deal. While analysts are concerned with the report’s impact they say that until the actual Parliamentary vote there is no need for traders to panic at this stage of the game.

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DXY:

Intraday target: $97.00
Long-term target: $100

EUR/USD:

Intraday target: 1.1370
Long-term target: 1.0800

APPLE:

Intraday target: $179
Long-term target: $100

SPX:

Intraday target: $2730
Long-term target: $2000

GOLD:

Intraday target: $1227
Long-term target: $1183

USOIL:

Intraday target: $52.30
Long-term target: $43.00

BITCOIN:

Intraday target: $4050
Long-term target: $2000

ETHEREUM:

Intraday target: $117
Long-term target: $80

 

[GroundStone Holdings]

Morning Technical Newsletter-Brexit Concerns Dampen Pound Sentiment

Brexit Concerns Dampen Pound Sentiment

With a deteriorating economic outlook a possibly inevitable result of a hard Brexit, the Pound continued to slide against its two major counterparts, the US Dollar and the common currency Euro. An upcoming vote in the British Parliament on the latest proposal has no clear outcome given the lack of support by the Prime Minister’s Conservative Party. Yesterday, the Bank of England cautioned that the economic consequences of a no-deal could be even worse than the financial crisis which hit more than a decade ago. The BoE scenario suggests that the Pound could lose up to 25% of its value if a disorderly departure from the EU occurs.

As reported at 11:00 am (GMT) in London, the GBP/USD was trading at $1.2763, down 0.47% and just a few pips off the session trough of $1.2758, while the high is a distant $1.2850. The EUR/GBP is trading at 0.8893 Pence, a gain of 0.37%; in today’s session, the pair has ranged from a low of 0.88598 Pence to a peak of 0.89124 Pence.

Positive Momentum for Euro Fleeting

In the Eurozone, the EUR/USD briefly inched higher on the latest economic data. The European Commission released a number of surveys which were, with one exception, generally better than anticipated. Industrial confidence, business climate, services sentiment and economic sentiment indicator were all improved from the previous readings and beat analysts’ forecasts. The exception was the survey for consumer confidence which came in at -3.9, unchanged and as expected. The EUR/USD was trading higher at $1.1352, down 0.12% and sliding from the brief blip higher at $1.1375.

DXY:

Intraday target: $96.90
Long-term target: $100

EUR/USD:

Intraday target: 1.1360
Long-term target: 1.0800

APPLE:

Intraday target: $176
Long-term target: $100

SPX:

Intraday target: $2710
Long-term target: $2000

GOLD:

Intraday target: $1224
Long-term target: $1183

USOIL:

Intraday target: $51.50
Long-term target: $43.00

BITCOIN:

Intraday target: $4440
Long-term target: $2000

ETHEREUM:

Intraday target: $123
Long-term target: $80

 

[GroundStone Holdings]

Morning Technical Newsletter-Fed Comments Propel Markets Forward

Fed Comments Propel Markets Forward

Traders found new reasons for optimism on Thursday after U.S. Federal Reserve Chairman Jerome Powell commented that the Fed’s policy rate is now “just below” estimates of a neutral economy. Powell’s comments hinted to analysts that the Fed’s current monetary tightening policy would be ending in the near term.

U.S. stock markets soared higher on Wednesday after Powell’s comments, with the Dow Jones Industrial Average jumping 2.5 percent to see its biggest one-day climb since March 26th, and its second-best day of the year. The S&P closed up 2.3 percent and the Nasdaq closed 2.95 percent higher. The gains posted on Wednesday reversed November’s negative trend to allow both the Dow and S&P 500 to head towards the month’s end in the green.

Despite the strong uptrend in the past few trading sessions, a poll released this week by Reuters showed that the majority of analysts polled believe the bull market is still heading towards its end. Nearly 250 equity stategists were polled, and most predicted that 2018 would end up with Wall Street indexes closing lower, even if they continue higher between now and the year’s end.

Asian markets took hints from Wall Street, heading mostly higher on Thursday. The Nikkei 225 was up 0.39 percent as of 2:01 p.m. HK/SIN. The ASX 200 was up 0.58 percent and South Korea’s Kospi was up 0.12 percent. China’s benchmark indexes were both lower.

The dollar declined following Powell’s comments, and the dollar index was trading down 0.09 percent during Asia’s mid-afternoon. The greenback was down 0.41 percent against the yen to 113.21. The euro surged 0.19 percent against the dollar to $1.1388 while the pound was trading 0.14 percent higher to $1.2842.

DXY:

Intraday target: $97
Long-term target: $100

EUR/USD:

Intraday target: 1.1360
Long-term target: 1.0800

APPLE:

Intraday target: $176
Long-term target: $100

SPX:

Intraday target: $2725
Long-term target: $2000

GOLD:

Intraday target: $1220
Long-term target: $1183

USOIL:

Intraday target: $50.00
Long-term target: $43.00

BITCOIN:

Intraday target: $3800
Long-term target: $2000

ETHEREUM:

Intraday target: $110
Long-term target: $80

 

[GroundStone Holdings]

Education post 20/100 – How to trade better using good Risk-Reward Ratio?

Day Trading Win-Loss Ratio
Most day traders focus on the win-rate or win/loss ratio. The allure is to eventually reach that stage where nearly all their trades are winners. Don't be fooled, having a high win rate doesn't mean you'll be a successful trader or even a profitable one.
Your win rate is how many trades you win out of all your trades. For example, if you make five trades a day, and win three, your daily win rate is 3/5=0.6, or 60%. If there are 20 trading days in the month, and you won 60 out of 100 trades, your monthly win rate is 60%.
The win-loss ratio is your wins divided by your losses. In the example, assume for simplicity 60 trades were winners and 40 were losers (100 - 60). This assumes there were no "flat" trades. The win-loss ratio is 60/40=1.5. This means you are winning 50% of the time more than you are losing. A win-loss ratio above 1.0, or a win rate above 50%, is favorable, but it isn't the only story.

Day Trading Risk-Reward Ratios
A risk-reward ratio is how much you expect to make on a trade, relative to how much you're willing to lose.
Day traders want to be in and out of the market quickly, taking advantage of short-term patterns and trade signals. This typically means each trade will have a stop loss attached to it. The stop-loss determines how many cents, ticks or pips you are willing to risk in a stock, future or forex pair respectively.
Assume you are willing to risk $0.10 on stock XZYZ, buying it at $10.00 and placing a stop loss at $9.90.
Your risk is fixed at $0.10 (assuming no slippage), but you must be compensated for taking this risk with a potential profit as well. Your profit target establishes your expected payoff.
Assume, based on your analysis or trading strategy that you believe the price will reach $10.20, at which point you will take profit, resulting in a $0.20 gain.
Your potential reward is therefore twice as large as your potential risk. Your risk/reward ratio is $0.10/$0.20=0.5; in other words, your risk is half of your potential gain.
If you take a profit at $10.10, your potential profit and risk are both $0.10, so the risk/reward ratio is $0.10/$0.10=1.0. If you take profit at $10.05 your potential risk is $0.10 but your reward is only $0.05. In this case, the risk/reward increases to 2.0 showing that you are risking more to make less.

Balancing Win Rate and Risk-Reward in Day Trading
Day traders must strike a balance between win rate and risk-reward. A high win rate means nothing if the risk-reward is very high, and great risk-reward ratio may mean nothing if the win rate is very low.
Consider these guidelines when you start coming up with a day trading strategy or are looking to improve your day trading results:
A higher win rate means your risk-reward can be higher. You can still be profitable with a 60% win rate and a risk reward of 1.0. You'll be more profitable with a 60% rate and a risk-reward below 1.0.
A low win rate, 50% or below, requires winners to be larger than losers in order for you to be profitable. You can still be profitable with a 40% win rate if risk/reward is below 0.6 (excluding commissions). Ideally, if your win rate is below 50% strive for a risk/reward below 0.65, with the risk-reward decreasing the more the win rate drops. The more you lose, the bigger your winners must be when you do win.

Day Trading at Your Peak Ratios
Since day traders trade every day in all types of conditions (see How Often to Trade), most day traders should seek out a strategy that allows them to win between 50% and 70% of the time. Winning more than that becomes increasingly difficult with only minor additional payoff.
This win rate allows for some flexibility in the risk-reward ratio. Strive to make a bit more on winners than you do on losers; ideally, wins should be about 1.5 times greater than risk - if risking $0.10 try to make at least $0.15. This risk/reward ratio is 0.67. Keep the risk/reward below 1.0, that way even if you have an off day, only winning 40% of your trades, you can likely still pull out a daily profit.
Your ideal mix will depend on your trading style. But you don't need a very high win rate or a super low risk/reward ratio to be successful. Strike a balance, and strive for consistency.

 

[GroundStone Holdings]

Markets Rally on Trade War Ceasefire
Asian stocks traded higher and U.S. stock futures also rallied after the announcement of a 90-day ceasefire in the trade war between the United States and China. The Shenzhen Composite surged 3.37 percent as of 1:37 p.m. HK/SIN while the Shanghai Composite jumped 2.70 percent. South Korea’s Kospi was 1.64 percent higher, Australia’s ASX 200 was 1.84 percent higher and Hong Kong’s Hang Seng Index was lifted 2.18 percent. The S&P 500 is expected to open around 1.7 percent higher and the Nasdaq is expected to open up over 2 percent.
Despite the renewed trader optimism and the buying spree that ensued, analysts are concerned that the new ceasefire is not a real truce and that additional tensions may ensue after the 90-day ceasefire. According to the terms of the agreement, both sides have agreed to stop the implementation of further tariffs for the next 90 days, though the existing tariffs remain in place. If the leaders are unable to reach a new trade deal within the next 90 days, it is likely that new tariffs will come into effect.
The ceasefire was formalized at a meeting between U.S. President Donald Trump and Chinese President Xi Jinping, who met over the weekend at the G-20 summit in Argentina. President Trump announced that in addition to the ceasefire, China has agreed to “reduce and remove” tariffs on U.S. cars coming into China, which is now set at 40 percent. He did not specify the new level for the automobile tariffs.
Oil Prices Bounce
Oil prices surged on Monday in the hopes that the renewed trade caused by lower tariffs would boost the global economy. U.S. WTI futures were up 5.28 percent to $53.62 per barrel while Brent crude futures enjoyed a 4.79 percent upswing to $62.31 per barrel. The gains come after oil posted its weakest month in more than a decade in November, easing over 20 percent as global supply overshadowed weaker demand. Traders are now looking towards the OPEC meeting this Thursday where the world’s biggest oil producers are expected to announce whether they will be cutting production in order to keep prices stable.
DXY:
Intraday target: $96.80
Long-term target: $100

EUR/USD:
Intraday target: 1.1365
Long-term target: 1.0800

APPLE:
Intraday target: $183.50
Long-term target: $100

SPX:
Intraday target: $2890
Long-term target: $2000

GOLD:
Intraday target: $1233
Long-term target: $1183

USOIL:
Intraday target: $53.60
Long-term target: $43.00

BITCOIN:
Intraday target: $3500
Long-term target: $2000

ETHEREUM:
Intraday target: $100
Long-term target: $80

 

[GroundStone Holdings]

Euro Higher on PMI Reports

The Euro edged higher after the release of a slew of PMI reports which predominantly showed better than expected outcomes in November for the Euro area’s manufacturing sector. Led by Germany which had a Markit PMI reading of 51.8, above the 51.6 expected, Spain, France and the European Union as a whole all showed improvement in their manufacturing sectors last month. The only major EU nation to miss the mark was Italy, which had a reading of 48.6, below the 48.8 forecast and the 49.2 reading from the previous month. With a 50.0 threshold which separates an expanding economy from an contracting one, Italy is the only major sovereign in the Eurozone which has an economy that is in jeopardy.
As reported at 10:39 am (GMT) in London, the EUR/USD was trading at $1.1345, up 0.24%; the pair has ranged from a trough of $1.13162 to $1.13798. The EUR/GBP was trading at 0.8906 Pence, up 0.32% and off the session peak of 0.89118 Pence.

Sentiment Improves for Higher Risk Currencies

In Argentina, after what some might consider a fruitful G20 summit, higher risk currencies like the Aussie and Kiwi Dollars edged higher in London trade on Monday. Both are rallying on the backs of the trade war cease-fire which was put forth by Presidents Trump and Xi. Analysts say that the de-escalation of trade rhetoric is certainly welcome news to FX market players and clearly helps to improve sentiment for currencies which are tied to the fate of the Chinese economy. The AUD/USD was trading at $0.7377, up 0.97%; the pair is moving off the session peak of $0.73935. The NZD/USD was trading higher at $0.6918, up 0.59%, and off the session high of $0.69306.

DXY:
Intraday target: $97
Long-term target: $100

EUR/USD:
Intraday target: 1.1315
Long-term target: 1.0800

APPLE:
Intraday target: $182
Long-term target: $100

SPX:
Intraday target: $2770
Long-term target: $2000

GOLD:
Intraday target: $1230
Long-term target: $1183

USOIL:
Intraday target: $52.00
Long-term target: $43.00

BITCOIN:
Intraday target: $3500
Long-term target: $2000

ETHEREUM:
Intraday target: $100
Long-term target: $80

 

[GroundStone Holdings]

Daily Macro View

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Daily Insights
Short end of the yield curve inverts. The spread between 3- and 5-year, as well as 2- and 5-year Treasury yields turned negative yesterday for the first time since July 2007, though neither are reliable indicators of a pending recession. Instead, investors are effectively putting the Federal Reserve (Fed) on notice that its projected path of rate hikes between now and the end of next year is too aggressive. Fed fund futures currently suggest we’ll likely see two hikes next year at most, which aligns with our outlook, as global investors (and the Fed) start to appreciate the effects of the Fed’s balance sheet reduction, the impact of dollar strength, and the lack of threatening wage pressures.

Manufacturing activity remains robust. The Institute for Supply Management’s manufacturing index for November (59.3) came in ahead of consensus expectations for a 57.5 reading, up 1.6% m/m. New orders were up 4.7%, while the prices component was down 10.9% (showing increasing prices), with aluminum the most cited commodity up in price. Respondents flagged shortages, longer lead times, and tariffs as headwinds, though a healthy business environment and steady orders were positives. Final US Markit PMI Manufacturing for November (55.3) came in slightly below the 55.4 estimate, though new orders increased at fastest rate since May. Overall, manufacturing activity remains firmly in expansionary territory.

Rate hike expectations drop. Market expectations for rate hikes dropped significantly last month as strengthening economic headwinds weighed on investors.

 

[GroundStone Holdings]

Morning Technical Newsletter

Oil Continues its Rally

Oil prices extended their rally on Tuesday after a day of big gains on Monday as traders remained optimistic that OPEC will announce fresh production cuts after its meeting in Vienna later this week. On Monday both U.S WTI future and crude oil futures gained around 4 percent, with the rally prompted largely by the trade war ceasefire between the United States and China over the weekend, as well as expectations of a production cut. Prices for both benchmarks were both over 1 percent higher in the late afternoon in Hong Kong, with U.S. WTI futures up 1.02 percent as of 3:01 HK/SIN to trade at $52.46 per barrel. Brent was up 1.01 percent to trade at $62.31 per barrel.
In an effort to help OPEC keep prices from falling further the Canadian province of Alberta called for producers to cut output by 325,000 barrels per day until crude stockpiles are reduced. OPEC and Russia, its oil-producing ally, will need to further reduce production by 1.3 million barrels per day in order to balance out the current high inventories.

Dollar in Trouble
The dollar was lower on Tuesday after U.S. Treasury yields fell to three-month lows, a sign that the Federal Reserve might not raise interest rates as quickly as expected. The dollar index dropped 0.37 percent to 96.86 .DXY. Following the trade truce investors regained their interest in riskier currencies, a sentiment that did little to help the greenback. The dollar fell 0.52 percent against the yen to 113.06 and 0.14 percent against the Canadian dollar to $1.3176. It was also lower against the British pound and the euro.

DXY:
Intraday target: $97.50
Long-term target: $100

EUR/USD:
Intraday target: 1.1280
Long-term target: 1.0800

APPLE:
Intraday target: $174
Long-term target: $100

SPX:
Intraday target: $2670
Long-term target: $2000

GOLD:
Intraday target: $1228
Long-term target: $1183

USOIL:
Intraday target: $51.00
Long-term target: $43.00

BITCOIN:
Intraday target: $3750
Long-term target: $2000

ETHEREUM:
Intraday target: $106
Long-term target: $80

 

[GroundStone Holdings]

Daily Macro View

Daily Insights

Stocks sliding again as bottoming process continues. After the 3-4% selloff Tuesday, the S&P 500 Index continues to slide in early trading. We view this morning’s action as progress toward a stock market bottom, and we could see enough fear today to set the stage for the next rally based on prior support levels, breadth, volume, put option activity, and other sentiment indicators suggesting a potential washout. While news that Chinese telecom provider Huawei violated economic sanctions against Iran isn’t helping, recent weakness has stemmed from three primary issues, all of which are tied to global growth concerns:

1. Trade: Initial news coming out of the G20 was positive. Despite mixed messages in recent days, progress toward a resolution has been made. Factoring all the headlines in, we continue to see a deal coming into view in early 2019.
2. Monetary policy: As expected, Federal Reserve (Fed) Chair Powell’s speech in New York last week delivered on our expectation that the Fed would not be as aggressive in 2019 as many market participants feared. On the yield curve, the more predictive inversions (2s, 10s and T-bills/10s) have not occurred, and even when they potentially do, stocks can continue to go higher based on history. Keep in mind that year-end supply issues may be distorting the short end of the curve.
3. Oil: OPEC is meeting in Vienna today and hopes for a coordinated production cut to lessen the downward pressure on oil prices remain high. Our projection was for a reduction in output of about ~1.3m barrels per day (bpd), but as of this writing (8:30 AM ET) it was unclear to what degree OPEC output would be reduced. Saudi officials threw out a smaller cut of 1m bpd. We believe supply is a much bigger issue for oil than demand, so we would not view $50 crude as an indication of increased probability of a recession in the United States.

ADP employment data misses, but labor market remains healthy. Today’s ADP employment report showed U.S. firms added 179k jobs in November, below consensus estimates of 195k, and signals that job growth in tomorrow’s November nonfarm payrolls report could fall short of the forecasted 190k increase. Meanwhile, a separate report showed initial claims for unemployment benefits fell to 231k last week but has trended higher over the past few weeks. While lower-than-expected payrolls growth and an uptick in claims may sound worrisome, investors place more emphasis on the nonfarm payroll data, and job creation levels >150k amid a very tight labor at this point in the cycle remains encouraging.

Global manufacturing divergence widens. The latest batch of global manufacturing surveys for November indicate the U.S. has strengthened its lead in terms of manufacturing health. The U.S. measures are highest (mid-to-high 50s) and held firm or accelerated last month-depending on the source-while China’s measures are at 50, the breakeven between expansion and contraction, and Europe’s measure, at 51.8, has fallen to near two-year lows. Overseas economies may benefit from fresh stimulus at some point and/or potential trade deals, but for now the U.S. economy remains the standout performer globally and remains our preference to focus asset allocations.

EM resilience. Since the September 20 peak in the S&P 500, as of December 4, the MSCI Emerging Markets (EM) Index has lost just 1.9%, much better than the 7.5% loss in the S&P 500 during that period. The developed international equity benchmark MSCI EAFE Index has fared slightly worse than the S&P 500 with a 7.8% decline. Despite this week’s confusion around what China has agreed to in trade negotiations, we view recent EM outperformance as a reflection of the market’s optimism that a deal will come into view before too long.

 

[GroundStone Holdings]

Morning Technical Newsletter - Dollar Crawls Higher in Asian Trade
Dollar Crawls Higher in Asian Trade
The US Dollar was finally seeing some recovery after struggling for traction earlier in the Asian trading session. That comes on the back of growing speculation that the Federal Reserve Bank is not likely to continue to project a hawkish outlook into 2019. Analysts and market players both believe that the Fed will pause its tightening cycle not long after they give the green light on the expected December rate hike at their next policy meeting. What is worrying markets is the steep declines in yields for US Treasury instruments, suggesting the strong likelihood that the US economy could soon be heading for a significant downturn.

As reported at 10:30 am (JST) in Tokyo, the USD/JPY was trading flat at 112.7170 Japanese Yen. Remaining in Asia, the AUD/USD was trading lower at $0.722, down 0.16% while the NZD/USD was trading at $0.6878, down 0.03%.

Markets to Focus on NFP Data
In the hours ahead, markets will focus on the release of the November Non-Farms Labor Report from the United States Labor Department. The latest poll shows that analysts believe new private sector jobs will have fallen to 200,000, down from 250,000 in October. The unemployment rate is predicted to remain unchanged at 3.7%; analysts also have predicted that the average hourly earnings will be flat at 3.1%. The Federal Reserve has a mandate to ensure full employment while maintaining price stability, so any data which impacts one or the other of their criteria is deemed a market moving event.

DXY:

Intraday target: $96.80
Long-term target: $100



EUR/USD:

Intraday target: 1.1370
Long-term target: 1.0800



APPLE:

Intraday target: $168
Long-term target: $100



SPX:

Intraday target: $2615
Long-term target: $2000



GOLD:

Intraday target: $1244
Long-term target: $1183



USOIL:

Intraday target: $53.00
Long-term target: $43.00



BITCOIN:

Intraday target: $3000
Long-term target: $2000

ETHEREUM:

Intraday target: $80
Long-term target: $60

 

[GroundStone Holdings]

Education post 21/100 – How to trade using Andrew's Pitchfork?

USE ANDREW’S PITCHFORK IN FOREX
Andrew’s Pitchfork comes from the name of one Dr Andrew, who used a pitchfork to forecast future prices, and developed a trading system many find very interesting. The system became so popular over time that the Andrew’s Pitchfork trading tool has been integrated into all trading platforms. The idea behind trading with Andrew’s Pitchfork is to find three points, called pivots; and from those three pivots, the pitchfork should be drawn. Any pitchfork has three lines, and each line starts from the three pivots mentioned above. The lines are called the upper line (UL), the lower line (LL) and the median line (ML). Out of these three lines, the most important one is the ML, the reason being that it has an important characteristic: It attracts price. There are many ways to use the Andrew’s Pitchfork, and this is because it is a matter of controversy as to how to set the three pivot points. This is the most important decision when trading with a pitchfork, as different pivot points will result in different angles for the overall pitchfork, which will then lead to different results when interpreting the market.

TRADING WITH THE PITCHFORK
To overcome this inconvenience, traders use the Andrew’s Pitchfork tool in conjunction with the Elliott Waves theory. The reason for this is that the Elliott Waves theory allows for knowing exactly where a specific wave ends, and these endings are the places for the pivots to be set on the pitchfork.

USING THE PITCHFORK IN CONJUNCTION WITH ELLIOTT WAVES THEORY
Because the Elliott Waves theory is based on both impulsive and corrective waves, there are two separate ways to use the pitchfork, both of which reflect the same thing: the fact that the price was attracted by the ML. A pitchfork comes in handy for finding the ends of specific waves under the Elliott Waves theory as well. This is very important for traders who count waves, as if the extension in an impulsive wave is respected, by the time the ML is reached, most likely the third wave in an impulsive move is completed as well.

Pitchfork with Impulsive Waves
The way to use the pitchfork tool with impulsive waves is to try to find the end of the third wave, as this is the most likely wave to extend. The three pivot points should therefore be placed as follows:

• The first pivot should be placed at the start of the impulsive wave. This would be the equivalent of the first click on the screen after selecting the Andrew’s Pitchfork tool.
• The second one should be the end of the first wave.
• The last one should be the end of the third wave.

The resulting pitchfork will resemble a rising channel in a bullish impulsive move, or a falling one in a bearish move. The distance between the ML and the other two lines in the pitchfork is always the same, as the ML stays at 50% distance. It means that the channel is basically split into two equal parts. In an impulsive wave, no matter whether a bullish or a bearish one, it is very difficult for the price to go much further than the ML. This is because in a bullish pitchfork, the price will rarely reach the UL, but will settle for the ML. By the time the ML is reached, look for the third wave in the impulsive wave to be completed, providing the extension rules are respected.

Pitchfork with Corrective Waves
The same thing is valid when it comes to corrective waves under the Elliott Waves theory, with the difference that the three pivot points that make up the Andrew’s Pitchfork are placed as follows:

• The first one at the start of the correction;
• The second one at the end of the a-wave;
• The third one at the end of the b-wave.

If, in the case of an impulsive move, the aim was to have an idea about the end of the possible third wave by the time it reached the ML, in this case the ML is used to find out the end of the c-wave. The c-wave can be the c-wave of a flat, a zigzag, or even a triangle. The idea is that its interpretation with the pitchfork is the same and, believe it or not, is very accurate, providing the Elliott Waves counting was correct.

USING ANDREW’S PITCHFORK TO SPOT REVERSALS
This way of using the pitchfork is the living proof that a trend has ended. Traders are now using a new line in conjunction with the three lines of the original pitchfork. Obtaining such a line is simple and straightforward, in the sense that all one needs to do is to connect the start of the pitchfork (or the first pivot) with the end of the pitchfork (or the last pivot). The resulting line is called the Schiff line, and it represents the bull/bear line that defines a trend. As a rule of thumb, the Schiff line should not be broken if the trend is still in place. If the Schiff line is broken by future price action, this will invalidate the pitchfork, which means that the trend described by the pitchfork is completed, and a new one started. If a new trend has started, then the previous pitchfork needs to be deleted, together with its Schiff line, and a new one for the new trend should be drawn. The big advantage when using the Schiff line is that the reversal is visible, and it is not possible to be caught on the wrong side of the market. The breaking of the Schiff line is lagging, and the market will most of the time move violently to break it. However, this doesn’t change the fact that traders are warned that the previous trend is over, and that they should reconsider the analysis. Such a break will have bearish implications in a bullish trend, and bullish implications in a bearish one.



There are other ways to use the Pitchfork. Some trading platforms use Fibonacci ratios to draw parallel lines with the ML and the UL and LL. These parallel lines are drawn at 61.8%, 161.8% or other Fibonacci ratios to find out future dynamic support and resistance levels.

 

[GroundStone Holdings]

Education post 22/100 – How to trade with the trend?
Check our post how to draw HH, HL, LL, LH and then compare with trend line. You will get very good trend presentation.

For confirmation also add MA 21 and EMA 8 indicators and check if the ema's crossed.

Check the example above to see the 3000 Pips trend move.

 

[GroundStone Holdings]

Daily Macro View

Daily Insights
Stocks sliding again as bottoming process continues. After the 3-4% selloff Tuesday, the S&P 500 Index continues to slide in early trading. We view this morning’s action as progress toward a stock market bottom, and we could see enough fear today to set the stage for the next rally based on prior support levels, breadth, volume, put option activity, and other sentiment indicators suggesting a potential washout. While news that Chinese telecom provider Huawei violated economic sanctions against Iran isn’t helping, recent weakness has stemmed from three primary issues, all of which are tied to global growth concerns:

1. Trade: Initial news coming out of the G20 was positive. Despite mixed messages in recent days, progress toward a resolution has been made. Factoring all the headlines in, we continue to see a deal coming into view in early 2019.
2. Monetary policy: As expected, Federal Reserve (Fed) Chair Powell’s speech in New York last week delivered on our expectation that the Fed would not be as aggressive in 2019 as many market participants feared. On the yield curve, the more predictive inversions (2s, 10s and T-bills/10s) have not occurred, and even when they potentially do, stocks can continue to go higher based on history. Keep in mind that year-end supply issues may be distorting the short end of the curve.
3. Oil: OPEC is meeting in Vienna today and hopes for a coordinated production cut to lessen the downward pressure on oil prices remain high. Our projection was for a reduction in output of about ~1.3m barrels per day (bpd), but as of this writing (8:30 AM ET) it was unclear to what degree OPEC output would be reduced. Saudi officials threw out a smaller cut of 1m bpd. We believe supply is a much bigger issue for oil than demand, so we would not view $50 crude as an indication of increased probability of a recession in the United States.

ADP employment data misses, but labor market remains healthy. Today’s ADP employment report showed U.S. firms added 179k jobs in November, below consensus estimates of 195k, and signals that job growth in tomorrow’s November nonfarm payrolls report could fall short of the forecasted 190k increase. Meanwhile, a separate report showed initial claims for unemployment benefits fell to 231k last week but has trended higher over the past few weeks. While lower-than-expected payrolls growth and an uptick in claims may sound worrisome, investors place more emphasis on the nonfarm payroll data, and job creation levels >150k amid a very tight labor at this point in the cycle remains encouraging.
Global manufacturing divergence widens. The latest batch of global manufacturing surveys for November indicate the U.S. has strengthened its lead in terms of manufacturing health. The U.S. measures are highest (mid-to-high 50s) and held firm or accelerated last month-depending on the source-while China’s measures are at 50, the breakeven between expansion and contraction, and Europe’s measure, at 51.8, has fallen to near two-year lows. Overseas economies may benefit from fresh stimulus at some point and/or potential trade deals, but for now the U.S. economy remains the standout performer globally and remains our preference to focus asset allocations.
EM resilience. Since the September 20 peak in the S&P 500, as of December 4, the MSCI Emerging Markets (EM) Index has lost just 1.9%, much better than the 7.5% loss in the S&P 500 during that period. The developed international equity benchmark MSCI EAFE Index has fared slightly worse than the S&P 500 with a 7.8% decline. Despite this week’s confusion around what China has agreed to in trade negotiations, we view recent EM outperformance as a reflection of the market’s optimism that a deal will come into view before too long.

 

[GroundStone Holdings]

Morning Technical Newsletter-Oil Takes the High Road as Stock Markets Collapse

Oil Takes the High Road as Stock Markets Collapse
A meeting between OPEC members and their oil-producing allies on Friday resulted in an agreement to cut oil supply by 1.2 million barrels per day starting in January. The production cuts will include an 800,000 barrel per day cut by OPEC countries and a 400,000 barrel per day cut by non-OPEC oil producers. Oil prices spiked on Friday after news of the agreement. Brent prices were also supported on Monday by the shutdown of Libya’s El Sharara oilfield, though U.S. WTI futures were trading lower.

U.S. WTI futures were trading at $52.38 per barrel as of 3:15 p.m. HK/SIN on Monday, down 0.44 percent. Brent crude futures were up 0.28 percent to $61.84 per barrel. Despite the cuts, not all traders expected prices to be supported as OPEC expects, due to increasing production in the United States and President Donald Trump’s public acknowledgement that he prefers prices to be as low as possible. A downward global economic outlook may also reduce demand which would push prices lower. On Monday, Japan, the world’s third-largest economy and fourth-biggest oil consumer, reduced its third quarter GDP growth down from initial forecasts. The recent global stock plunge also has traders concerned about global economic growth in the coming year.

Stocks Continue Downward Spiral
Global stock markets tanked on Friday, with Wall Street’s benchmark indexes closing no less than 2 percent lower. The Nasdaq lead the losses, plunging 3.05 percent on the day. The S&P 500 and the Dow Jones Industrial Average slumped 2.33 percent and 2.24 percent respectively. The losses extended into Monday’s Asian trading session, with markets trading in a bloody sea of red. Australia’s ASX 200 was down 2.27 percent and Japan’s Nikkei 225 trailed closely behind, easing 2.12 percent. Hong Kong’s Hang Seng Index was down 1.32 percent while the Shenzhen Composite was 1.39 percent lower. The Shanghai Composite was 0.82 percent lower.

The losses were prompted by growing fears that rising tensions between Washington and Beijing could sabotage chances for a trade deal within the current 90day deadline. Weaker than expected data out in recent days from Japan, China and the United States also sent traders running away from the markets with no sign of if or when they’ll be returning.

DXY:

Intraday target: $97.00
Long-term target: $100



EUR/USD:

Intraday target: 1.1370
Long-term target: 1.0800



APPLE:

Intraday target: $165
Long-term target: $100



SPX:

Intraday target: $2606
Long-term target: $2000



GOLD:

Intraday target: $1238
Long-term target: $1183



USOIL:

Intraday target: $50.00
Long-term target: $43.00



BITCOIN:

Intraday target: $3225
Long-term target: $2000



ETHEREUM:

Intraday target: $80
Long-term target: $60

 

[GroundStone Holdings]

Daily Macro View

Daily Insights

Retesting October-November lows. The S&P 500 Index fell 4.6% last week, its worst week since March, leaving the index in line with the lows of the latest correction. Losses were driven primarily by three issues: the risk that U.S.-China trade talks fall apart (see below), concerns about a Fed policy mistake, and sharply lower oil prices (see below), all of which contributed to increasing concerns about slowing global growth or recession. In today’s Weekly Market Commentary, we summarize our views on these issues and discuss prospects for a stock market rebound based on technical analysis.

We continue to see the U.S-China trade dispute as the biggest headwind for stocks. Against that backdrop, it is understandable that stocks threw a tantrum last week after U.S. trade officials walked back part of the apparently overly-optimistic recount of the Trump-Xi meeting at the G-20 summit. While no resolution has been reached, we continue to view the emergence of a path toward progress favorably and expect an agreement in the coming months, despite mixed messages from both sides and the arrest of a Chinese telecom executive. In this week’s Weekly Economic Commentary, due out later today, we provide some insight regarding the outcome of the G-20 meeting and what we expect over the next ~90 days as the two sides re-instate negotiations.

Leading indicators still pointing positive. Risk of a full-blown trade war with China and some potentially concerning market signals have increased fears of recession. One such signal is the inversion of the short end of the yield curve, including the spread between 2- and -5 year Treasuries. But the yield curves that have historically been more predictive of future recessions (2-year and 10-year, and 3-month and 10-year Treasuries) have not inverted. And even when they potentially do, stocks can continue to go higher for a year or two based on history. When we look at signals from the bond market alongside our other favorite leading indicators, we still see low odds of recession in the coming year.

Oil has a supply problem. Sharply lower WTI crude oil prices are also being cited by some as a sign of looming recession. But oil’s weakness has been driven mostly by supply issues, including Iran sanctions, record levels of U.S. production, and elevated domestic inventories. We think OPEC’s decision to cut 1.2 million barrels of production last week is a positive step and will help stabilize prices.

Brexit vote put on ice. In a last minute decision, British Prime Minister Theresa May decided to postpone tomorrow’s Brexit vote. Over the weekend, May insisted the vote would take place despite expectations that it would fall short by a large margin. We’re not convinced the vote will ever happen, but headline volatility is likely to persist as the UK approaches the March 29, 2019 deadline for leaving the European Union.

 

[GroundStone Holdings]

Morning Technical Newsletter- Pound Hovers Near 20-Month Lows on Brexit Delays

Pound Hovers Near 20-Month Lows on Brexit Delays
Plagued by concerns about the upcoming Brexit, the British pound has sunk to levels not hit since April 2017. The currency was flogged most recently by yesterday’s announcement that the British government will postpone a Brexit vote in Parliament that was originally scheduled for today. On Monday the pound slumped 1.7 percent against the dollar. It also traded down against the euro. On Tuesday, the sterling recouped some of its losses, gaining modestly against its two primary trading partners. The sterling was up 0.14 percent against the greenback as of 1:18 p.m. HK/SIN, to $1.2575. It was trading at 0.9037 against the euro. The pound is down over 7 percent since the beginning of 2018.

According to British Prime Minister Theresa May, the decision to delay the parliamentary vote was based on her concern that the Northern Irish would cause her proposal to lose, despite widespread support from other leaders. Despite May’s optimism, her critics have claimed that the deal is a sellout for the United Kingdom and that it will reduce the region’s influence while clinging to many of the EU rules May was trying to extricate the UK from.

Stock Markets Seek Direction
Asian markets were mixed on Tuesday after a volatile trading day on Wall Street saw the three benchmark indexes eke out modest gains. Chinese shares were trading in positive territory after Beijing announced that it was still involved in trade talks with the United States. The Shenzhen Composite was up 0.48 percent and the Shanghai Composite was up 0.28 percent. Hong Kong’s Hang Seng Index gained 0.04 percent, while Australia’s ASX 200 gained 0.29 percent. Japan’s Nikkei 225 eased 0.41 percent in the early afternoon. Analysts expect increased volatility in the coming days as traders wait to hear about the latest round of U.S.-Sino trade negotiations.

DXY:

Intraday target: $97.70
Long-term target: $100



EUR/USD:

Intraday target: 1.1260
Long-term target: 1.0800



APPLE:

Intraday target: $167
Long-term target: $100



SPX:

Intraday target: $2606
Long-term target: $2000



GOLD:

Intraday target: $1238
Long-term target: $1183



USOIL:

Intraday target: $50.00
Long-term target: $43.00



BITCOIN:

Intraday target: $3225
Long-term target: $2000



ETHEREUM:

Intraday target: $85
Long-term target: $60

 

[GroundStone Holdings]

Daily Macro View

Daily Insights

Another big reversal off the lows. The S&P 500 Index once again found support near the bottom end of its recent range, this time bouncing significantly off the intraday lows. At its low’s, the S&P 500 was down 1.9%, but managed to finish in the green. You have to go back to February 6th the last time that happened. This comes on the heels of last Thursday, when the S&P 500 bounced nearly 3% off of the intraday lows – the largest intraday reversal since February 9. Don’t forget, February 9 was also the intraday low for 2018. Bottoms are a process and we are encouraged by these reversals off of support.

Bonds have done their job. Over the past month while the S&P 500 Index has lost 5% on a total return basis, Treasuries have gained 2% based on the broad Bloomberg Barclays Treasuries Index. Does that mean sell stocks and buy Treasuries? We don’t think so. However, this latest performance does underscore the value of moving up in quality with fixed income allocations at this stage of the business cycle as we have suggested for suitable investors.*

Despite the latest rally, we still see long rates going higher.We would not chase Treasuries here even though we believe shoring up quality of fixed income portfolios makes sense at this point. Given our expectations for economic growth, inflation and Federal Reserve (Fed) policy going forward, we think rates go higher from here. We continue to see 3.25% at a reasonable near term target to the upside, with potentially an additional 0.25% to 0.5% of upside in 2019. From a technical analysis perspective, we believe the odds favor the 2.80% support level on the 10-year Treasury yield holding in the near term.

Renewed trade talks off to promising start. Following a phone call between U.S. and Chinese officials to kick off the latest round of trade negotiations, President Trump announced that Beijing has “agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40%.” Also reportedly discussed on the call were China’s purchases of agricultural products, as well as changes to fundamental Chinese economic policies. Further details were not made available, but the developments are an excellent sign of progress.

U.K. PM making the rounds (again) after canceling Brexit vote. British Prime Minister Theresa May is traveling around Europe today as she meets with key officials in search of tweaks to the deal for which yesterday’s vote was postponed. However, European Commission president Jean-Claude Junker indicated the European Union is willing to give the U.K. further clarifications on Brexit but will not renegotiate the treaty. A “no-deal” result, where the U.K. still leaves the European Union but without terms in place, is an outcome that would be very messy and desired by almost no one; however, the odds are increasing.

Small business optimism dips as producer prices rise. Data out this morning showed that the NFIB Small Business Indexdeclined month over month (MoM) but remains elevated. A tight labor market was among the top reasons for tempered optimism that helped push the percentage of employers planning to raise wages to near 30-year highs. Employers’ expectations to increase compensation comes as the Producer Price Index (PPI) ticked up 0.1% MoM in November but was down sharply from October’s 0.6% increase thanks to falling gas prices. Excluding food and energy, the core PPI was up 0.3% MoM, and 2.7% YoY, declining from the prior month and providing some additional support for the market’s signals that the Federal Reserve should slow its pace of hikes.

 

[GroundStone Holdings]

Morning Technical Newsletter - Pound Recovers after Rough Night

Pound Recovers after Rough Night
The Pound Sterling recovered from the overnight 20-month trough despite continued threats to the Prime Minister's position by members within her own party. Theresa May has said that she would fight any challenge, though there are now enough votes to force a no-confidence vote against her; that vote is scheduled for later today. Analysts say that they are not positive the challenge will succeed, as it will mean those who voted against her would be blamed for the hard Brexit outcome. Moreover, they say that a failure to oust her would mean that Ms. May would likely intentionally isolate the party members who voted against her.

As reported at 11:38 am (GMT) in London, the GBP/USD was trading at $1.2525, up 0.32% and off the session low of $1.2478. The EUR/GBP was trading at 0.9046 Pence, down 0.19%; the pair has ranged from a trough of 0.90250 Pence to a high of 0.90690 Pence in today's trading session.

Pound Traders Wary Ahead of Vote
Analysts are divided about the outcome of today's vote; some believe Ms. May to be safe because it took such a long time for her party to find the votes needed to trigger the call for the no-confidence vote. Moreover, they believe that those party members who do vote against her have too much at stake to lose if they can't ensure a win. Other analysts feel the vote there is a greater likelihood that she will be ousted. Regardless, analysts are in agreement that market players are in for a roller-coaster ride afterward, with volatility especially high if she is defeated or only narrowly escapes defeat.

DXY:

Intraday target: $97.50
Long-term target: $100



EUR/USD:

Intraday target: 1.1340
Long-term target: 1.0800



APPLE:

Intraday target: $166
Long-term target: $100



SPX:

Intraday target: $2630
Long-term target: $2000



GOLD:

Intraday target: $1242
Long-term target: $1183



USOIL:

Intraday target: $50.40
Long-term target: $43.00



BITCOIN:

Intraday target: $3300
Long-term target: $2000



ETHEREUM:

Intraday target: $89
Long-term target: $60

 

[GroundStone Holdings]

Daily Macro View - May to face confidence vote on Brexit.

Daily Insights

May to face confidence vote on Brexit. UK Prime Minister Theresa May will face a vote of confidence after the required 48 letters of “no confidence” were received from MPs following her three-stop tour across Europe yesterday. The meetings were an attempt to seek changes to her existing deal after she was forced to abandon a planned Parliamentary vote due to a lack of support. She could be replaced as early as mid-January if a simple majority of 158 Conservative MPs vote in favor. With the March 29 deadline looming for the UK to break from the EU, with or without a Brexitdeal, along with Italy’s ongoing budget scuffle with EU officials and broader European economic data trending in the wrong direction, we continue to suggest avoiding or minimizing tactical exposure to the region.

Is a shutdown coming? President Trump threatened to shut down the U.S. government next week in a discussion with Senate Minority Leaders Chuck Schumer and House Minority Leader Nancy Pelosi yesterday. So what does it mean for stocks if this happens? The good news is the S&P 500 Index has gained during each of the previous five shutdowns going back 23 years. We will take a closer look at this potential event later today on the LPL Research blog, but it’s worth noting that another, more important, debt ceiling debate will take place next summer.

Oil slide keeps inflation in check. Consumer Price Index data out this morning showed prices declined month over month, thanks to oil’s continued decline in November, which offset increases in an array of other areas including: shelter, used cars/trucks, medical care, and recreation. Meanwhile, the core reading (ex food and energy) was unchanged from the prior month but increased 2.5% year over year. Though not the Federal Reserve’s preferred inflation measure, it should keep it on track to raise rates at next week’s monetary policy meeting.

 

[GroundStone Holdings]

Morning Technical Newsletter - Pound Higher on May Relief

Pound Higher on May Relief
The Pound Sterling edged higher during Thursday trade in London after the Prime Minister managed to eke out a win after the Parliamentary no-confidence vote on Wednesday. Analysts say that despite the relief over Ms. May's success, this time, that the Pound is still unlikely to see too much in the way of gains given the fact that the Parliament is still uncertain of the way forward for the Brexit. Theresa May is planning to seek the assistance of her European counterparts, likely asking for more concessions to make the Parliamentary proposal more palatable to her party.

As reported at 11:24 am (GMT) in London, the GBP/USD was trading at $1.2657, up 0.21% and moving away from the session peak of $1.2687; the low was recorded at $1.2610. The EUR/GBP was trading at 0.8993 Pence, down 0.05%; the pair has ranged from a low of 0.89729 Pence to a peak of 0.90147 Pence.

ECB in Focus
While the Pound has taken the market's attention in recent days, markets will focus on today's decision by the European Central Bank. For the most part, analysts expect the bank to reign in the quantitative easing efforts, but what is really the question is their outlook for rate hikes moving into 2019. Analysts believe that, given the economic situation in the Eurozone, and especially in Italy, Mario Draghi, the current head of the ECB, is likely to express caution for a rate increase in the near term. Currently, the EUR/USD is trading at $1.1379, up 0.07%.

DXY:

Intraday target: $97.50
Long-term target: $100



EUR/USD:

Intraday target: 1.1330
Long-term target: 1.0800



APPLE:

Intraday target: $166
Long-term target: $100



SPX:

Intraday target: $2630
Long-term target: $2000



GOLD:

Intraday target: $1242
Long-term target: $1183



USOIL:

Intraday target: $54.00
Long-term target: $43.00



BITCOIN:

Intraday target: $2800
Long-term target: $2000



ETHEREUM:

Intraday target: $80
Long-term target: $60