The Nasdaq 100, which is the strongest of the main US stock indices finally broke its 2019 uptrend on Friday, as Trump was able to feed massive uncertainty in the markets, as investors lost complete confidence in Trump & most likely any hopes for the US to avoid a recession.
 
Leading up to Friday's shocking sell off in US stocks, the muted rally we saw during last week of small moves higher was in fact made on terribly low volume, which is considerable below the daily average.
 
The low volume during a move higher in trend, was similar to the slow run higher in July 19 to new all-time highs. This was also just before a strong sell off on increased volume that occurred. If you’re paying attention this would have been a big red flag for traders & investors.
 
Another red flag for the Nasdaq 100, is that we have confirmed a lower high and lower low signaling a change in control from buyers to sellers in the daily charts.

Looking ahead for the Nasdaq 100, the support area of 7,400 is the last final confirmation required from the market before we can confirm a change of trend. Therefore Monday's trading is super important for short term direction for the Nasdaq especially if we clearly close below this area. A breach of 7,400 support would indicate the next support level of 7,025 for the Nasdaq 100
 
Lastly unless there is some miracle from the Central Banks with more intervention, and we see a big shift in bullishness. With the Nasdaq 100 somehow jumping back above its uptrend line and above the 52 day moving average (green line).  We are likely looking at the start of the end of the bull market in US stocks.

Join the Investing & Trading Community At Guruhaven 

If you enjoyed this review of the Nasdaq 100, that was originally posted for members at Guruhaven  on Sunday, you can join the community free to receive regular macro news, trading ideas, original trading content, chart reviews from Crush The Market and the Guruhaven community of traders and investors.

Join FREE using referral code: Crush19

Simply visit http://guruhaven.com/membership  

If you would like to take a look at this week's newsletter which includes the best posts on Guruhaven covering GLD, GDX, DXY, TLT, SPX, QQQ and more, simply by clicking the link  http://bit.ly/GuruHaven_WNL_22

Disclaimer: Please note all information presented here at Crushthemarket.com, Guruhaven weekly newsletter and within the Guruhaven.com website and its community platform are presented for educational purposes only,  and does not represent financial advice in any way. If you require financial advice please seek a licensed advisor who can provide these services.

Join the Investing & Trading Community At Guruhaven 

If you enjoyed this review of global markets, that was originally posted for members at Guruhaven, you can join the community free to receive regular macro news, trading ideas, original trading content, chart reviews from Crush The Market and the Guruhaven community of traders and investors.

Simply visit Guruhaven using referral code: Crush19 by http://guruhaven.com/membership

Disclaimer: Please note all information presented here at Crushthemarket.com, Guruhaven weekly newsletter and within the Guruhaven.com website and its community platform are presented for educational purposes only,  and does not represent financial advice in any way. If you require financial advice please seek a licensed advisor who can provide these services.

On Monday I discussed how Crude broke out above its resistance area & downtrend line. I said I would like to see consolidation and the 52 day MA turn back up before considering a long. Well since Monday, Oil has fallen sharply lower falling back inside the downtrend line, while also closing below $57.30 support and once again trading below the 52 day MA.
 
Given the 52 day MA is sloping down already and the setup we are witnessing this price action looks quite bearish at the moment. In the short term I'm looking for potentially a small retracement back to either 57.30 area, or a move back higher towards its downtrend line currently around $58.50.

However after the brief retracement process, I'm looking for Crude Oil to continue to roll over and head for $55.15 support as its first potential area to move towards.
 
Since on a macro level that global Manufacturing PMI's are rolling over at the moment, as well as supply rising from US Oil production its no surprise that Oil is weak at the moment. Since the last down move back a few weeks ago was around $50.60 level, its certainly possible we could reach this area over the next few weeks if we see follow through selling.

More importantly considering the 52 day MA is much lower now than 3 to 4 weeks ago, Crude Oil has the potential to move towards a lower area beyond the June lows.
 
However we are getting ahead of ourselves at the moment, especially considering how bullish US stocks are presently this could come to play on Oil & stocks this week and next since they are closely correlated.
 
Either higher stock prices can support Oil prices despite the bearishness or by forcing stocks to pullback lower in the short term. Its also important to note that on occasion the two assets classes have and can move in opposite directions for a while. But its certainty worth watching closely for the rest of this week.

Join the Investing & Trading Community At Guruhaven - FREE Trial

If you enjoyed this review of Crude Oil, that was originally posted for members at Guruhaven, you can join the community free to receive regular macro news, trading ideas, original trading content, chart reviews from Crush The Market and the Guruhaven community of traders and investors.

Simply visit Guruhaven using referral code: Crush19 by http://guruhaven.com/membership

Disclaimer: Please note all information presented here at Crushthemarket.com, Guruhaven weekly newsletter and within the Guruhaven.com website and its community platform are presented for educational purposes only,  and does not represent financial advice in any way. If you require financial advice please seek a licensed advisor who can provide these services.

Copper continues to remain under pressure as it sits close to the lows reached at the start of Jan 19. The price action is in a consolidation sideways pattern over the last two weeks, as Copper prices in a slowing weak global economy.
 
This contrasts with US stocks over the last two weeks that has seen a large bounce off its recent lows on the prospects that Powell & the FED are now looking cutting rates in 2019. The prospect of rate cuts is inflationary for hard assets, however Copper is not buying this premise at least for now.

Currently the price action for Copper is sitting between 26,680 resistance & 25,940 support. In addition the price is respecting its downtrend line as well. So moving forward we would need to see a clear breakout above both 26,680 & 27,135 resistance, before we see Copper following the bullishness of US stocks. Given the weakness its more likely we see the price move towards 25,940 soon.

Platinum's price action is showing a close resemblance to Copper's price action, as it also has not seen any recent bounce in the last two weeks of trading, while also hovering near its lows reached In Dec 18 & Feb 19.
 
Why this is relevant is because Platinum is utilized in multiple industrial applications in multiple industries within the manufacturing process. So just like Copper, the price action of Platinum at the beginning of the year saw a decent rally and new uptrend formed as the markets were pricing optimism on the global economy based on a trade deal being struck between the US & China.
 
Now the deal has collapsed, the price action has collapsed along with the deal. Platinum is also in a consolidation pattern as it currently is respecting $800 support after hitting $820 resistance last week. Given that global economic macro data remains weak as global trade slows, it likely like copper we see lower prices in the short term.

So if we see a break of $800 support, look for a move towards $780. If we see a move above $820 in the coming weeks, followed by a close above the 52 day moving average price of $845 - $850, then this would indicate a shift in optimism for the global economy.

Join the Investing & Trading Community At Guruhaven 

If you enjoyed this review of Copper & Platinum, that was originally posted for members at Guruhaven, you can join the community free to receive regular macro news, trading ideas, original trading content, chart reviews from Crush The Market and the Guruhaven community of traders and investors.

Simply visit Guruhaven using referral code: Crush19 by http://guruhaven.com/membership

If you would like to take a look at this week newsletter of some of the best posts on Guruhaven covering JNJ, IBB, NIKKEI, VIX, TLT, DXY and more, simply for the link http://bit.ly/GuruHaven_WNL_15

Disclaimer: Please note all information presented here at Crushthemarket.com, Guruhaven weekly newsletter and within the Guruhaven.com website and its community platform are presented for educational purposes only,  and does not represent financial advice in any way. If you require financial advice please seek a licensed advisor who can provide these services.

Last week price action for US stocks was remarkable from the start to the end of the week. On Monday we saw US stocks gapped lower on the threat of tariffs on Mexico by Trump. With each trading day we saw weak or negative economic news being released in the US. Yet what we saw was stocks were no longer moving lower. By the end of the week on Friday we had US Non-farm payrolls released and it was a massive miss, coming in at 75k new jobs instead of 177k estimates, but it didn’t matter. By the end of the day stocks continued to move higher, as it followed the momentum of buying that started from Tuesday. So why successive pieces of negative news & economic data being released did the S&P 500 index form a bullish engulfing pattern on increasing volume? The answer in one word is: FED.
 
Last week Mr Powell held its monthly press conference and the general point of the commentary by Powell was that the FED would do what is required to keep growth going in the US. Which the market interpreted as the FED is about to start cutting rates, with the likely hood of several cuts to come by the end of 2019. The reaction by the market was swift, as we saw the US dollar index roll over and break its uptrend, while Gold shot up this week over $100 an ounce as the market digested another pivot by the FED moving forward. Which is why I realized this week that this lows reached at the beginning of the week was likely to be the lowest prices we will see moving forward for the rest of the year.

Looking at the price action of the weekly chart for the SPX index, you can see that we have confirmed another higher low was formed, as the most recent low close was still above the lows reached back in the first week of March this year. This confirms on a weekly chart that the buyers are still in control of US stocks. The other interesting thing is that volume on the previous two weeks of falling prices was below the average volume for the index. With this week bullish engulfing candle stick pattern was formed on slightly above average volume, which also confirms the bullishness of the move.

This week I would be looking to see if there is follow through for the week in higher prices to close the week, to support the bullish pattern. If there is follow though its possible, we could see a move towards 2,930 resistance level either this week. If we see follow through buying then the likely support on a retracement is 2,873-75 level to look for in coming weeks. If we on the other hand see this move as a failed move, then prices would need to move back towards 2,785 support. However this is unlikely now the FED has given the green light for stocks to move higher regardless of how back the economy is. Well at least for now that is.
 
Lastly on a more of longer term look ahead, given the outlook of the FED and the interesting price action for US stocks, it would not surprise me at all if we see new all-time highs reached in the coming weeks or at the least next few months.

Join the Investing & Trading Community At Guruhaven 

If you enjoyed this review of the S&P 500 Index SPX, that was originally posted for members at Guruhaven, you can join the community free to receive regular macro news, trading ideas, original trading content, chart reviews from Crush The Market and the Guruhaven community of traders and investors.

Simply visit Guruhaven using referral code: Crush19 by http://guruhaven.com/membership

Disclaimer: Please note all information presented here at Crushthemarket.com, Guruhaven weekly newsletter and within the Guruhaven.com website and its community platform are presented for educational purposes only,  and does not represent financial advice in any way. If you require financial advice please seek a licensed advisor who can provide these services.

Crude Oil suffered its second weekly fall last week following Trump’s tweets on OPEC & Gas prices. So far the market appears to be paying attention to Trump’s attempt to lower Oil.

Looking closely at the weekly Crude Oil chart, we can see that prior to breaking its uptrend line this week, the price on the weekly chart moved all the way back to a previous support (now resistance) level of $64.30. Once it reached this level, it made a few failed attempts to close above resistance.

This week's follow through selling, saw the price action breach the uptrend line that began in late December ‘18 similar to when the S&P 500 market rally started. The last time Crude Oil breached its uptrend line back in Oct 18 (see circled area), we saw the price of Oil fall further. Potentially -33% lower.

However, this time the breaching of its uptrend line has so far had different movements relative to the breach last October ‘18. For one, the price action of Oil is still trading above its 10 week moving average. Back in Oct 18 when it closed below the uptrend line it also closed below its 10 week moving average.

Another interesting point is back in October ‘18, the S&P 500 weekly price action was following in very similar lock step to Oil prices, with the S&P 500 also breaching its uptrend line & closing below its 10 week moving average. However, this week the S&P 500 has made a new all time high price.

So going forward we have to be open minded that we could see further pull backs ahead for Oil, while at the same time also looking out for the possibility that this could be a pullback / consolidation, within a long term rally even though its broken its uptrend level.

To become more bearish with Oil, we have to see a breach of its current support that it has so far been respected at $61.45, as well as a close below the 10 week moving average this week. If that happens, our next level of support to look for is around $59.

Conversely, to become bullish on Oil, we need to see support of $61.45 held this week, with a clear break above its $64.30 resistance level. If we see this occur, this would be a very bullish signal & a likely move to $67.70 would occur shortly after.

So for now we have to wait and watch to see what unfolds to gain a better understanding on where we head next.

If you enjoyed this review of Crude Oil, that was originally posted for members at Guruhaven, you can join the community free to receive macro news, trading ideas, education along with chart review requests on your favorite positions & trades from Crush The Market and other traders and investors.

Simply visit Guruhaven using referral code: Crush19 by clicking here

If you would like to take a look at this week newsletter of some of the best posts on Guruhaven covering GLD, GC_F, USO, CL_F, SPX , QQQ, AUDUSD, DXY, BTC , and more, simply Click Here

Disclaimer: Please note all information presented here at Crushthemarket.com, Guruhaven weekly newsletter and within the Guruhaven.com website and its community platform are presented for educational purposes only,  and does not represent financial advice in any way. If you require financial advice please seek a licensed advisor who can provide these services.

US Macro Data

The chart below shows the last 2 years of US economic data summarized under 'soft data' which comprises of various surveys on the US economy, 'hard data' which comprises of all actual macro economic data as a whole. 'Hope' which is survey's based data on sentiment on the economy.

From mid 2017 you can see clearly all 3 categories peaked and have been making lower highs and lower lows since then, as the macro data continues to weaken further. This is a trend that has been occurring in most countries around the world. Because of this increasing trend of weak economic data overall, I've been bearish on the US economy for some time now.

This has also let me to suggest there is a high probability of a US recession occurring either in 2019 or early 2020 based on these trend. In fact if you strip out the increase in US Government spending in the last GDP quarter the US would of already reached a negative GDP print.

S&P 500 Chart = Bullish Stocks

Please note: Chart was taken from close 22nd March

Since I'm a trader as well as an investor, I have had to learn to sometimes hold an opposing view that contradicts each other when viewing charts as a trader. Taking the close of the S&P500 chart from Friday, we can see the current trend of US stocks as an index since the end of December, looks a whole lot different to the economic data chart shown on the above chart.

The current trend is moving higher with successive higher lows (green circles) with the green lines highlighting this overall strength. If you look at left side of the chart below from Oct 2018 - Dec 2018 period you can see a different weak down trend, with the market giving clues and warnings (black circles forming lower highs) for US stocks before the sharp declines in late Nov & Dec 18.

Once we broke support in Mid Dec (red circle) we saw a sharp decline for the next 2 weeks. Coming back to current trend in March 19, as a trader I have to keep a bullish stance overall even with the strong selloff we experienced on Friday 22nd March. The bullish stance will hold unless I see the S&P500 close below its most recent higher low around 2740 level. Followed by a confirmed lower high on the charts.

If this doesn't occur then as a trader I need to view any subsequent pullback in stocks, which is likely to continue this week as a healthy consolidation within an uptrend. This explains my reasoning why as a trader I'm bullish US stocks overall, while as an investor I'm bearish the US economy.

If you enjoyed this review of the US economy and the S&P 500, that was originally posted for members at Guruhaven.com, you can join the community free to receive macro news, trading ideas, education along with chart review requests on your favorite positions & trades from Crush The Market and other traders and investors. Simply visit Guruhaven using referral code: Crush19 by clicking here

If you would like to take a look at this week newsletter of some of the best posts on Guruhaven, simply Clicking Here

Disclaimer: Please note all information presented here at crushthemarket.com, Guruhaven weekly newsletter and within the Guruhaven.com website and its community platform are presented for educational purposes only,  and does not represent financial advice in any way. If you require financial advice please seek a licensed advisor who can provide these services.

With the release of this week's Gurhaven newsletter, we cover some of the top posts from Guruhaven.com from last week. I review just what's going on with Silver, with the likely levels to look out for. Plus our traders and investors from Guruhaven discuss US markets, NASDAQ, Forex, China and more. To view the Silver review and for the round up of great content Click here for the latest newsletter

If you enjoyed the recent newsletter and are looking for macro news, trading ideas, education along with chart review requests on your favorite positions & trades from Crush The Market and other traders and investors, visit GuruHaven HQ & join the community free with referral code: Crush19 by clicking here

Disclaimer: Please note all information presented in the Guruhaven weekly newsletter and within the website and its community platform are presented for educational purposes only,  and does not represent financial advice in any way. If you require financial advice please seek a licensed advisor who can provide these services.

Guest Article Written By: Robert Blake

When the US Federal Reserve raises interest rates it always affects the US dollar. In this case, the hike would normally reduce the inflationary pressure, and as a result appreciates the dollar. The latest decision to raise the target for the fed-funds rate to a range between 1.75%-2%, in June of this year, was due to a stronger economy and a healthy US jobs market.

We mentioned previously on Crush the Market how interest rates have been steadily rising since 2015.
With three to four increases forecasted for 2018, the graph of the Fed “dot plot” below illustrates how eight policy makers expect four or more quarter-point increases for the year.

Traditionally, interest rates in the United States averaged about 5.72% from 1971 to 2018, with Money Cafe reporting a high of 20% in March 1980 and a record low of 0.25% in December 2008.

Higher interest rates generally mean a lower economic growth, but also slower inflation. In the past, the best way to achieve full employment and stable prices was to set the inflation rate of the dollar at 2%, which would grow the economy at a healthy pace. The Fed hiked this year, in response to a growing economy and fear of rising inflation, increased interest rates by a quarter of a percentage point. Jerome Powell, Chairman of the Federal Reserve, remarked that the “economy is doing very well,” following the rate hike announcement. The graph below shows the historical Fed rates over a period of 47 years.

Historically, even with low interest rates the US dollar enjoyed favorable exchanges rates in relation to major currencies like the Euro or the Pound. Investopedia reveals that this is in part due to the US dollar being the reserve currency for much of the world. As a result of higher interest rates and a strengthening dollar, more Forex traders will be hedging on the US dollar.
FXCM outlines that the Forex market trades an average volume exceeding $5 trillion daily, and the current Fed interest rate plays a factor in determining the value of the US dollar. 

However, it is mainly its perception as a safe haven in uncertain economic times, which has been the main reason for its high value in relation to other currencies. However, it is mainly its perception as a safe haven in uncertain economic times, which has been the main reason for its high value in relation to other currencies.

Bloomberg reported how the dollar spot index, which tracks a number of global currencies against the US dollar, rose temporarily immediately following the Fed announcement.

As was expected, however, the trend that the Federal Open Market Committee (FOMC) is following seems to indicate that it’s stepping up the pace of rate hikes, stating that economic growth should continue regardless. While the course of the increases will remain gradual, the perceived aggressive pace demonstrates how the FOMC is looking to tighten policy amid falling unemployment levels (which fell to their lowest of 3.8% in May) and national growth.

The following chart illustrates the historical date of the price-adjusted US dollar index published by the FOMC.

For now, the economic forecast indicates that core inflation will reach the Fed's target of 2% by the year’s end with an overall economic growth of 2.8% for 2018. As such, with a fourth and final hike projected for this year, the Fed indicated that it will expect more rate hikes in 2019. Despite the recent hikes, as part of their long term forecast, the committee indicated that they still see the rate increasing to 2.9% and peaking at 3.4% by 2020, with an estimated GDP increase of 2.4% in 2019 and 2% in 2020. In addition to upwards estimates for GDP and inflation, the committee also estimated a cut to their original unemployment projection, from 3.8% to 3.6% for the full year. Despite the current political turmoil in the US, the economy continues to look positive.

Author Bio: Robert Blake is a freelance financial adviser and consultant. Since gradating from university he has started writing finance articles online to help give readers a clearer understanding of the US and global economy. In his spare time he can be found visiting financial seminars.

Thanks for reading this post.

Remember to share this with your friends by clicking on the Facebook & Twitter Icon's Below.

Make sure you Subscribe to Crush The Market - Choosing from the 3 options: 

Facebook, Twitter or RSS Feed on the top right side toolbar for latest posts and market updates.

Disclaimer: This post is for educational purposes only, and all the information contained within this post is not to be considered as advice or a recommendation of any kind. If you require advice or assistance please seek a licensed professional who can provide these services.

Stellar Run

Netflix has been on a tear over the last 12 months as investors continue to focus on the rampant rise of subscriber growth especially in the international market. From the image below you can see that domestic growth has been steadily rising in the US, however the real star has been international growth as Netflix has been introducing its content into several new countries.

Even more surprising has been the record surge in the stock from the start of this year now having risen 30% year to date.

Netflix stock jumped higher today in the futures market after the stock closed for trading as the market digested the earnings report. I have added the latest jump taken from CNBC.com where the stock has moved a further 8% after a strong day leading up to the earnings release. It seems the company cant do no wrong.

What Investors Are Ignoring

One of the key reasons why Netflix subscriber growth has been so spectacular has been due to the fact that Netflix pricing for its streaming services is extremely low. This is even more evident when you compare it to traditional cable / pay TV companies.

By keeping the pricing low its placed a huge strain on its cash flows, as the company has been spending record amounts of its cash as its business model clearly inst sustainable even though company is growing so quickly. With the chart below you can see its latest cash burn was staggering at $523 million for the most recent quarter.

Whats even more worrying is the company is forecasting to burn through a total of $4 Billion in 2018.

Original Content Is Its Achilles Heel

The other key reason for the massive cash burn for Netflix is its huge budgets spent on generating its own original content. Not only has it been rising every year for the last five years, but its expected to hit $7.5 + Billion based on forecasts. (See Below)

The company's historical content spending is as follows:

2018: $7.5-$8 billion (forecast)
2017: $6 billion
2016: $5 billion
2015: $4 billion
2014: $3 billion
2013: $2 billion

Netflix content also outpaces its competitors own content budgets by a significant amount with a spend of approximately double its closest competitors content budget.

The end result of Netflix business model is the company is knowingly placing huge strains on its balance sheet with the loss of billions in cash each year and rising debt which is sitting around $20 Billion to fund its yearly cash burn.

For the moment none of this matters as stock investors cheer the company on by bidding it higher and higher rewarding the company for such reckless spending that it clearly cannot sustain.

Why Low Rates Are Important?

Netflix like many companies listed in the US are more reliant than ever on low interest rates to fund their business model. If US Government 10 year bond yields continue to move higher it will spell disaster for Netflix and other companies who continue to accelerate their debt levels to fund their losses.

If yields move beyond 3% it will mean significantly higher interest payments and accelerate already high cash burn levels which could ultimately lead to bankruptcy under their large debt levels. However until that day its celebrations all round for investors as the fundamentals don't matter at all.

Thanks for reading this post.

Remember to share this with your friends by clicking on the Facebook & Twitter Icon's Below.

Make sure you Subscribe to Crush The Market - Choosing from the 3 options: 

Facebook, Twitter or RSS Feed on the top right side toolbar for latest posts and market updates.

Disclaimer: This post is for educational purposes only, and all the information contained within this post is not to be considered as advice or a recommendation of any kind. If you require advice or assistance please seek a licensed professional who can provide these services.