Fundamental Analysis of Forex Currency Rates FreshForex

Former investment bank FX trader: news trading and second order thinking

Former investment bank FX trader: news trading and second order thinking
Thanks to everyone who responded to the previous pieces on risk management. We ended up with nearly 2,000 upvotes and I'm delighted so many of you found it useful.
This time we're going to focus on a new area: reacting to and trading around news and fundamental developments.
A lot of people get this totally wrong and the main reason is that they trade the news at face value, without considering what the market had already priced in. If you've ever seen what you consider to be "good" or "better than forecast" news come out and yet been confused as the pair did nothing or moved in the opposite direction to expected, read on...
We are going to do this in two parts.
Part I
  • Introduction
  • Why use an economic calendar
  • How to read the calendar
  • Knowing what's priced in
  • Surveys
  • Rates decisions
  • First order thinking vs second order thinking

Introduction

Knowing how to use and benefit from the economic calendar is key for all traders - not just news traders.
In this chapter we are going to take a practical look at how to use the economic calendar. We are also going to look at how to interpret news using second order thinking.
The key concept is learning what has already been ‘priced in’ by the market so we can estimate how the market price might react to the new information.

Why use an economic calendar

The economic calendar contains all the scheduled economic releases for that day and week. Even if you purely trade based on technical analysis, you still must know what is in store.

https://preview.redd.it/20xdiq6gq4k51.png?width=1200&format=png&auto=webp&s=6cd47186db1039be7df4d7ad6782de36da48f1db
Why? Three main reasons.
Firstly, releases can help provide direction. They create trends. For example if GBPUSD has been fluctuating aimlessly within a range and suddenly the Bank of England starts raising rates you better believe the British Pound will start to move. Big news events often start long-term trends which you can trade around.
Secondly, a lot of the volatility occurs around these events. This is because these events give the market new information. Prior to a big scheduled release like the US Non Farm Payrolls you might find no one wants to take a big position. After it is released the market may move violently and potentially not just in a single direction - often prices may overshoot and come back down. Even without a trend this volatility provides lots of trading opportunities for the day trader.

https://preview.redd.it/u17iwbhiq4k51.png?width=1200&format=png&auto=webp&s=98ea8ed154c9468cb62037668c38e7387f2435af
Finally, these releases can change trends. Going into a huge release because of a technical indicator makes little sense. Everything could reverse and stop you out in a moment. You need to be aware of which events are likely to influence the positions you have on so you can decide whether to keep the positions or flatten exposure before the binary event for which you have no edge.
Most traders will therefore ‘scan’ the calendar for the week ahead, noting what the big events are and when they will occur. Then you can focus on each day at a time.

Reading the economic calendar


Most calendars show events cut by trading day. Helpfully they adjust the time of each release to your own timezone. For example we can see that the Bank of Japan Interest Rate decision is happening at 4am local time for this particular London-based trader.

https://preview.redd.it/lmx0q9qoq4k51.jpg?width=1200&format=pjpg&auto=webp&s=c6e9e1533b1ba236e51296de8db3be55dfa78ba1

Note that some events do not happen at a specific time. Think of a Central Banker’s speech for example - this can go on for an hour. It is not like an economic statistic that gets released at a precise time. Clicking the finger emoji will open up additional information on each event.

Event importance

How do you define importance? Well, some events are always unimportant. With the greatest of respect to Italian farmers, nobody cares about mundane releases like Italian farm productivity figures.
Other events always seem to be important. That means, markets consistently react to them and prices move. Interest rate decisions are an example of consistently high importance events.
So the Medium and High can be thought of as guides to how much each event typically affects markets. They are not perfect guides, however, as different events are more or less important depending on the circumstances.
For example, imagine the UK economy was undergoing a consumer-led recovery. The Central Bank has said it would raise interest rates (making GBPUSD move higher) if they feel the consumer is confident.
Consumer confidence data would suddenly become an extremely important event. At other times, when the Central Bank has not said it is focused on the consumer, this release might be near irrelevant.

Knowing what's priced in

Next to each piece of economic data you can normally see three figures. Actual, Forecast, and Previous.
  • Actual refers to the number as it is released.
  • Forecast refers to the consensus estimate from analysts.
  • Previous is what it was last time.
We are going to look at this in a bit more detail later but what you care about is when numbers are better or worse than expected. Whether a number is ‘good’ or ‘bad’ really does not matter much. Yes, really.

Once you understand that markets move based on the news vs expectations, you will be less confused by price action around events

This is a common misunderstanding. Say everyone is expecting ‘great’ economic data and it comes out as ‘good’. Does the price go up?
You might think it should. After all, the economic data was good. However, everyone expected it to be great and it was just … good. The great release was ‘priced in’ by the market already. Most likely the price will be disappointed and go down.
By priced in we simply mean that the market expected it and already bought or sold. The information was already in the price before the announcement.
Incidentally the official forecasts can be pretty stale and might not accurately capture what active traders in the market expect. See the following example.

An example of pricing in

For example, let’s say the market is focused on the number of Tesla deliveries. Analysts think it’ll be 100,000 this quarter. But Elon Musk tweets something that hints he’s really, really, really looking forward to the analyst call. Tesla’s price ticks higher after the tweet as traders put on positions, reflecting the sentiment that Tesla is likely to massively beat the 100,000. (This example is not a real one - it just serves to illustrate the concept.)

Tesla deliveries are up hugely vs last quarter ... but they are disappointing vs market expectations ... what do you think will happen to the stock?

On the day it turns out Tesla hit 101,000. A better than the officially forecasted result - sure - but only marginally. Way below what readers of Musk's twitter account might have thought. Disappointed traders may sell their longs and close out the positions. The stock might go down on ‘good’ results because the market had priced in something even better. (This example is not a real one - it just serves to illustrate the concept.)

Surveys

It can be a little hard to know what the market really expects. Often the published forecasts are stale and do not reflect what actual traders and investors are looking for.
One of the most effective ways is a simple survey of investors. Something like a Twitter poll like this one from CNBC is freely available and not a bad barometer.
CNBC, Bloomberg and other business TV stations often have polls on their Twitter accounts that let you know what others are expecting

Interest rates decisions

We know that interest rates heavily affect currency prices.
For major interest rate decisions there’s a great tool on the CME’s website that you can use.

See the link for a demo

This gives you a % probability of each interest rate level, implied by traded prices in the bond futures market. For example, in the case above the market thinks there’s a 20% chance the Fed will cut rates to 75-100bp.
Obviously this is far more accurate than analyst estimates because it uses actual bond prices where market participants are directly taking risk and placing bets. It basically looks at what interest rate traders are willing to lend at just before/after the date of the central bank meeting to imply the odds that the market ascribes to a change on that date.
Always try to estimate what the market has priced in. That way you have some context for whether the release really was better or worse than expected.

Second order thinking

You have to know what the market expects to try and guess how it’ll react. This is referred to by Howard Marks of Oaktree as second-level thinking. His explanation is so clear I am going to quote extensively.
It really is hard to improve on this clarity of thought:
First-level thinking is simplistic and superficial, and just about everyone can do it (a bad sign for anything involving an attempt at superiority). All the first-level thinker needs is an opinion about the future, as in “The outlook for the company is favorable, meaning the stock will go up.” Second-level thinking is deep, complex and convoluted.
Howard Marks
He explains first-level thinking:
The first-level thinker simply looks for the highest quality company, the best product, the fastest earnings growth or the lowest p/e ratio. He’s ignorant of the very existence of a second level at which to think, and of the need to pursue it.
Howard Marks
The above describes the guy who sees a 101,000 result and buys Tesla stock because - hey, this beat expectations. Marks goes on to describe second-level thinking:
The second-level thinker goes through a much more complex process when thinking about buying an asset. Is it good? Do others think it’s as good as I think it is? Is it really as good as I think it is? Is it as good as others think it is? Is it as good as others think others think it is? How will it change? How do others think it will change? How is it priced given: its current condition; how do I think its conditions will change; how others think it will change; and how others think others think it will change? And that’s just the beginning. No, this isn’t easy.
Howard Marks
In this version of events you are always thinking about the market’s response to Tesla results.
What do you think they’ll announce? What has the market priced in? Is Musk reliable? Are the people who bought because of his tweet likely to hold on if he disappoints or exit immediately? If it goes up at which price will they take profit? How big a number is now considered ‘wow’ by the market?
As Marks says: not easy. However, you need to start getting into the habit of thinking like this if you want to beat the market. You can make gameplans in advance for various scenarios.
Here are some examples from Marks to illustrate the difference between first order and second order thinking.

Some further examples
Trying to react fast to headlines is impossible in today’s market of ultra fast computers. You will never win on speed. Therefore you have to out-think the average participant.

Coming up in part II

Now that we have a basic understanding of concepts such as expectations and what the market has priced in, we can look at some interesting trading techniques and tools.
Part II
  • Preparing for quantitative and qualitative releases
  • Data surprise index
  • Using recent events to predict future reactions
  • Buy the rumour, sell the fact
  • The trimming position effect
  • Reversals
  • Some key FX releases
Hope you enjoyed this note. As always, please reply with any questions/feedback - it is fun to hear from you.
***
Disclaimer:This content is not investment advice and you should not place any reliance on it. The views expressed are the author's own and should not be attributed to any other person, including their employer.
submitted by getmrmarket to Forex [link] [comments]

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AUD/USD forecast: Aussie wants to keep the party going

AUD/USD forecast: Aussie wants to keep the party going

Fundamental Australian dollar forecast for today

Are the AUD/USD growth drivers exhausted?

In the second quarter, the Australian economy encountered the deepest downturn since the records started in 1959. Australia’s GDP contracted by 7% Q-o-Q and by 6.3% Y-o-Y. The RBA cut the interest rate to the record lo. The central bank has also bought AU$60 since March amid the QE program. The Aussie should have dropped in value, but the AUD/USD rate has been 32% up since the low hit in March. Doesn’t the major rule of the fundamental analysis “strong economy – strong currency” work here? Now, it perfectly works! The matter is that everything is relative in Forex!
A drop by 6.3% in Australian growth is nothing compared to the US GDP contraction by 32%. AUS$60 billion is very little compared with the trillions of dollars in the USA. In Australia, there are less than 30,000 of coronavirus cases, while there are more than six million of COVID-19 cases in the USA. Australia has managed the pandemic better than many other advanced economies, the economy is not critically weak, the RBA yield control policy allows it not to waste the monetary tools. Besides, China supports Australia’s foreign trade.

Dynamics of RBA interest rate and the Australian dollar exchange rate


Source: Bloomberg
China is the largest market for Australian exports. Although the diplomatic relations between the two countries are tense, after Canberra accused China of COVID-19 laboratory origins, the trade relations are good. Since the beginning of the year, Australia’s exports to China have increased by 75% compared to the same period in 2016, when the last official meeting of the countries’ leaders took place. The core of the China-Australia trade is iron ore. Over the past twelve months, China has imported 700 million tons of iron ore from Australia. It is twice as much as it was in 2010 when the diplomatic relations between Australia and China were much better.

Chinese imports from Australia


Source: Bloomberg
Therefore, the AUD/USD uptrend is strong for several reasons. Australia’s economy is stronger compared to others, China supports Australia’s foreign trade, the Fed’s monetary expansion is unprecedented, which weakens the US dollar. The matter is whether the major bullish drivers have exhausted? Will the Aussie continue its rally?
The analysts polled by Reuters believe the AUD/USD uptrend should slow down. The see the pair trading at 0.72 in one and three months. In six and twelve months, the exchange rate will be at 0.73 and 0.74, accordingly. These levels are close to the current one, which suggests a long consolidation period. In my opinion, it is still relevant to buy the Aussie. China has averted a new round of trade war with the US. The Australian government is working on the income tax reduction bill, which should support GDP growth. The greenback’s’ long-term outlook remains bearish. So, I recommend entering the AUD/USD longs if Australia’s job report for August is positive. The middle-term targets are at 0.75 and 0.763.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/audusd-forecast-aussie-wants-to-keep-the-party-going/?uid=285861726&cid=79634
submitted by Maxvelgus to Finance_analytics [link] [comments]

EUR/USD forecast: Dollar is drifting

EUUSD forecast: Dollar is drifting

Fundamental US dollar forecast for today

Investors are staying aside ahead of Jerome Powell’s speech and the publications of the US important domestic data

People see what they want to see. The euro fans are so enthusiastic that they prefer to ignore the flaws of the single European currency. Is the US-China trade resumed? It is not a problem! In 2018-2019, the EUUSD pair was falling amid the trade conflict escalation. In 2020, however, it will be rising in this case because of the diversification of the PBOC FX reserves in favor of the euro. Are there talks about the expansion of European QE? It is not a problem! The ECB just can’t ease its monetary policy as much as the Fed. Is there the second pandemic wave in Europe? It doesn’t matter; the illness is asymptomatic; there won’t be another lockdown.
Optimism grows stronger. However, people with accompanying pathologies most often die from COVID-19. If we transfer this metaphor to the global economic sense, the accompanying pathology of the export-led euro-area economy is a downturn of the international trade. The process started because of trade wars, and the pandemic intensified it. According to the CPB Netherlands Bureau for Economic Policy Analysis, flows of goods across borders were 12.5% lower in the second quarter than in the first quarter of the year. It is the worst drop since records started in 2000. In the three months through June, the US exports contracted by 24.8%, the euro-area exports were 19.2% down. However, the US exports account for 20% of the country’s GDP; in the Eurozone, they exceed 40%. The euro-area exporters will have a difficult time, taking into account the euro’s rapid growth.
With this regard, the USA is in a better position, which allows the White House to repeat its mantra about the V-shaped economic recovery. People see what they want to see. Larry Kudlow, the chief economic advisor to Trump, ignores the problems of the US labor market and the drop in consumer confidence to the lowest level since 2014. He stresses the best new home sales over the past 14 years, industrial recovery, and the S&P500 record highs.

Dynamics of US consumer confidence



Source: Bloomberg

Dynamics of new home sales in USA



Source: Bloomberg
Unlike the White House, the Federal Reserve is more cautious. Jerome Powell has many times stressed the slow GDP recovery, the necessity to take control over OCVID-19, and fresh fiscal stimulus. The Republicans and Democrats can’t reach an agreement for a new financial aid package, and the Fed has to take the responsibility. So, investors anticipate Powell’s speech in Jackson Hole to get something meaningful.
According to MUFG Bank, Powell will focus on holding low interest rates, thereby weakening the greenback. Investors expect the Fed Chair to express the Fed’s willingness to “seek a moderate inflation overshoot” and reinforce its commitment to full employment. If so, there will be other evidence that the Fed is running out of monetary tools. If the number of Americans seeking unemployment benefits falls while durable goods orders rise, the EUUSD bears can go ahead and try to break out the support levels of 1.178 and 1.1755. Otherwise, weak data and the Fed’s willingness to weaken the dollar can resume the greenback’s downtrend.
For more information follow the link to the website of the LiteForex
https://www.liteforex.com/blog/analysts-opinions/eurusd-forecast-dollar-is-drifting/?uid=285861726&cid=79634
submitted by Maxvelgus to Finance_analytics [link] [comments]

Hibiscus Petroleum Berhad (5199.KL)


https://preview.redd.it/gp18bjnlabr41.jpg?width=768&format=pjpg&auto=webp&s=6054e7f52e8d52da403016139ae43e0e799abf15
Download PDF of this article here: https://docdro.id/6eLgUPo
In light of the recent fall in oil prices due to the Saudi-Russian dispute and dampening demand for oil due to the lockdowns implemented globally, O&G stocks have taken a severe beating, falling approximately 50% from their highs at the beginning of the year. Not spared from this onslaught is Hibiscus Petroleum Berhad (Hibiscus), a listed oil and gas (O&G) exploration and production (E&P) company.
Why invest in O&G stocks in this particularly uncertain period? For one, valuations of these stocks have fallen to multi-year lows, bringing the potential ROI on these stocks to attractive levels. Oil prices are cyclical, and are bound to return to the mean given a sufficiently long time horizon. The trick is to find those companies who can survive through this downturn and emerge into “normal” profitability once oil prices rebound.
In this article, I will explore the upsides and downsides of investing in Hibiscus. I will do my best to cater this report to newcomers to the O&G industry – rather than address exclusively experts and veterans of the O&G sector. As an equity analyst, I aim to provide a view on the company primarily, and will generally refrain from providing macro views on oil or opinions about secular trends of the sector. I hope you enjoy reading it!
Stock code: 5199.KL
Stock name: Hibiscus Petroleum Berhad
Financial information and financial reports: https://www.malaysiastock.biz/Corporate-Infomation.aspx?securityCode=5199
Company website: https://www.hibiscuspetroleum.com/

Company Snapshot

Hibiscus Petroleum Berhad (5199.KL) is an oil and gas (O&G) upstream exploration and production (E&P) company located in Malaysia. As an E&P company, their business can be basically described as:
· looking for oil,
· drawing it out of the ground, and
· selling it on global oil markets.
This means Hibiscus’s profits are particularly exposed to fluctuating oil prices. With oil prices falling to sub-$30 from about $60 at the beginning of the year, Hibiscus’s stock price has also fallen by about 50% YTD – from around RM 1.00 to RM 0.45 (as of 5 April 2020).
https://preview.redd.it/3dqc4jraabr41.png?width=641&format=png&auto=webp&s=7ba0e8614c4e9d781edfc670016a874b90560684
https://preview.redd.it/lvdkrf0cabr41.png?width=356&format=png&auto=webp&s=46f250a713887b06986932fa475dc59c7c28582e
While the company is domiciled in Malaysia, its two main oil producing fields are located in both Malaysia and the UK. The Malaysian oil field is commonly referred to as the North Sabah field, while the UK oil field is commonly referred to as the Anasuria oil field. Hibiscus has licenses to other oil fields in different parts of the world, notably the Marigold/Sunflower oil fields in the UK and the VIC cluster in Australia, but its revenues and profits mainly stem from the former two oil producing fields.
Given that it’s a small player and has only two primary producing oil fields, it’s not surprising that Hibiscus sells its oil to a concentrated pool of customers, with 2 of them representing 80% of its revenues (i.e. Petronas and BP). Fortunately, both these customers are oil supermajors, and are unlikely to default on their obligations despite low oil prices.
At RM 0.45 per share, the market capitalization is RM 714.7m and it has a trailing PE ratio of about 5x. It doesn’t carry any debt, and it hasn’t paid a dividend in its listing history. The MD, Mr. Kenneth Gerard Pereira, owns about 10% of the company’s outstanding shares.

Reserves (Total recoverable oil) & Production (bbl/day)

To begin analyzing the company, it’s necessary to understand a little of the industry jargon. We’ll start with Reserves and Production.
In general, there are three types of categories for a company’s recoverable oil volumes – Reserves, Contingent Resources and Prospective Resources. Reserves are those oil fields which are “commercial”, which is defined as below:
As defined by the SPE PRMS, Reserves are “… quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions.” Therefore, Reserves must be discovered (by drilling, recoverable (with current technology), remaining in the subsurface (at the effective date of the evaluation) and “commercial” based on the development project proposed.)
Note that Reserves are associated with development projects. To be considered as “commercial”, there must be a firm intention to proceed with the project in a reasonable time frame (typically 5 years, and such intention must be based upon all of the following criteria:)
- A reasonable assessment of the future economics of the development project meeting defined investment and operating criteria; - A reasonable expectation that there will be a market for all or at least the expected sales quantities of production required to justify development; - Evidence that the necessary production and transportation facilities are available or can be made available; and - Evidence that legal, contractual, environmental and other social and economic concerns will allow for the actual implementation of the recovery project being evaluated.
Contingent Resources and Prospective Resources are further defined as below:
- Contingent Resources: potentially recoverable volumes associated with a development plan that targets discovered volumes but is not (yet commercial (as defined above); and) - Prospective Resources: potentially recoverable volumes associated with a development plan that targets as yet undiscovered volumes.
In the industry lingo, we generally refer to Reserves as ‘P’ and Contingent Resources as ‘C’. These ‘P’ and ‘C’ resources can be further categorized into 1P/2P/3P resources and 1C/2C/3C resources, each referring to a low/medium/high estimate of the company’s potential recoverable oil volumes:
- Low/1C/1P estimate: there should be reasonable certainty that volumes actually recovered will equal or exceed the estimate; - Best/2C/2P estimate: there should be an equal likelihood of the actual volumes of petroleum being larger or smaller than the estimate; and - High/3C/3P estimate: there is a low probability that the estimate will be exceeded.
Hence in the E&P industry, it is easy to see why most investors and analysts refer to the 2P estimate as the best estimate for a company’s actual recoverable oil volumes. This is because 2P reserves (‘2P’ referring to ‘Proved and Probable’) are a middle estimate of the recoverable oil volumes legally recognized as “commercial”.
However, there’s nothing stopping you from including 2C resources (riskier) or utilizing 1P resources (conservative) as your estimate for total recoverable oil volumes, depending on your risk appetite. In this instance, the company has provided a snapshot of its 2P and 2C resources in its analyst presentation:
https://preview.redd.it/o8qejdyc8br41.png?width=710&format=png&auto=webp&s=b3ab9be8f83badf0206adc982feda3a558d43e78
Basically, what the company is saying here is that by 2021, it will have classified as 2P reserves at least 23.7 million bbl from its Anasuria field and 20.5 million bbl from its North Sabah field – for total 2P reserves of 44.2 million bbl (we are ignoring the Australian VIC cluster as it is only estimated to reach first oil by 2022).
Furthermore, the company is stating that they have discovered (but not yet legally classified as “commercial”) a further 71 million bbl of oil from both the Anasuria and North Sabah fields, as well as the Marigold/Sunflower fields. If we include these 2C resources, the total potential recoverable oil volumes could exceed 100 million bbl.
In this report, we shall explore all valuation scenarios giving consideration to both 2P and 2C resources.
https://preview.redd.it/gk54qplf8br41.png?width=489&format=png&auto=webp&s=c905b7a6328432218b5b9dfd53cc9ef1390bd604
The company further targets a 2021 production rate of 20,000 bbl (LTM: 8,000 bbl), which includes 5,000 bbl from its Anasuria field (LTM: 2,500 bbl) and 7,000 bbl from its North Sabah field (LTM: 5,300 bbl).
This is a substantial increase in forecasted production from both existing and prospective oil fields. If it materializes, annual production rate could be as high as 7,300 mmbbl, and 2021 revenues (given FY20 USD/bbl of $60) could exceed RM 1.5 billion (FY20: RM 988 million).
However, this targeted forecast is quite a stretch from current production levels. Nevertheless, we shall consider all provided information in estimating a valuation for Hibiscus.
To understand Hibiscus’s oil production capacity and forecast its revenues and profits, we need to have a better appreciation of the performance of its two main cash-generating assets – the North Sabah field and the Anasuria field.

North Sabah oil field
https://preview.redd.it/62nssexj8br41.png?width=1003&format=png&auto=webp&s=cd78f86d51165fb9a93015e49496f7f98dad64dd
Hibiscus owns a 50% interest in the North Sabah field together with its partner Petronas, and has production rights over the field up to year 2040. The asset contains 4 oil fields, namely the St Joseph field, South Furious field, SF 30 field and Barton field.
For the sake of brevity, we shall not delve deep into the operational aspects of the fields or the contractual nature of its production sharing contract (PSC). We’ll just focus on the factors which relate to its financial performance. These are:
· Average uptime
· Total oil sold
· Average realized oil price
· Average OPEX per bbl
With regards to average uptime, we can see that the company maintains relative high facility availability, exceeding 90% uptime in all quarters of the LTM with exception of Jul-Sep 2019. The dip in average uptime was due to production enhancement projects and maintenance activities undertaken to improve the production capacity of the St Joseph and SF30 oil fields.
Hence, we can conclude that management has a good handle on operational performance. It also implies that there is little room for further improvement in production resulting from increased uptime.
As North Sabah is under a production sharing contract (PSC), there is a distinction between gross oil production and net oil production. The former relates to total oil drawn out of the ground, whereas the latter refers to Hibiscus’s share of oil production after taxes, royalties and expenses are accounted for. In this case, we want to pay attention to net oil production, not gross.
We can arrive at Hibiscus’s total oil sold for the last twelve months (LTM) by adding up the total oil sold for each of the last 4 quarters. Summing up the figures yields total oil sold for the LTM of approximately 2,075,305 bbl.
Then, we can arrive at an average realized oil price over the LTM by averaging the average realized oil price for the last 4 quarters, giving us an average realized oil price over the LTM of USD 68.57/bbl. We can do the same for average OPEX per bbl, giving us an average OPEX per bbl over the LTM of USD 13.23/bbl.
Thus, we can sum up the above financial performance of the North Sabah field with the following figures:
· Total oil sold: 2,075,305 bbl
· Average realized oil price: USD 68.57/bbl
· Average OPEX per bbl: USD 13.23/bbl

Anasuria oil field
https://preview.redd.it/586u4kfo8br41.png?width=1038&format=png&auto=webp&s=7580fc7f7df7e948754d025745a5cf47d4393c0f
Doing the same exercise as above for the Anasuria field, we arrive at the following financial performance for the Anasuria field:
· Total oil sold: 1,073,304 bbl
· Average realized oil price: USD 63.57/bbl
· Average OPEX per bbl: USD 23.22/bbl
As gas production is relatively immaterial, and to be conservative, we shall only consider the crude oil production from the Anasuria field in forecasting revenues.

Valuation (Method 1)

Putting the figures from both oil fields together, we get the following data:
https://preview.redd.it/7y6064dq8br41.png?width=700&format=png&auto=webp&s=2a4120563a011cf61fc6090e1cd5932602599dc2
Given that we have determined LTM EBITDA of RM 632m, the next step would be to subtract ITDA (interest, tax, depreciation & amortization) from it to obtain estimated LTM Net Profit. Using FY2020’s ITDA of approximately RM 318m as a guideline, we arrive at an estimated LTM Net Profit of RM 314m (FY20: 230m). Given the current market capitalization of RM 714.7m, this implies a trailing LTM PE of 2.3x.
Performing a sensitivity analysis given different oil prices, we arrive at the following net profit table for the company under different oil price scenarios, assuming oil production rate and ITDA remain constant:
https://preview.redd.it/xixge5sr8br41.png?width=433&format=png&auto=webp&s=288a00f6e5088d01936f0217ae7798d2cfcf11f2
From the above exercise, it becomes apparent that Hibiscus has a breakeven oil price of about USD 41.8863/bbl, and has a lot of operating leverage given the exponential rate of increase in its Net Profit with each consequent increase in oil prices.
Considering that the oil production rate (EBITDA) is likely to increase faster than ITDA’s proportion to revenues (fixed costs), at an implied PE of 4.33x, it seems likely that an investment in Hibiscus will be profitable over the next 10 years (with the assumption that oil prices will revert to the mean in the long-term).

Valuation (Method 2)

Of course, there are a lot of assumptions behind the above method of valuation. Hence, it would be prudent to perform multiple methods of valuation and compare the figures to one another.
As opposed to the profit/loss assessment in Valuation (Method 1), another way of performing a valuation would be to estimate its balance sheet value, i.e. total revenues from 2P Reserves, and assign a reasonable margin to it.
https://preview.redd.it/o2eiss6u8br41.png?width=710&format=png&auto=webp&s=03960cce698d9cedb076f3d5f571b3c59d908fa8
From the above, we understand that Hibiscus’s 2P reserves from the North Sabah and Anasuria fields alone are approximately 44.2 mmbbl (we ignore contribution from Australia’s VIC cluster as it hasn’t been developed yet).
Doing a similar sensitivity analysis of different oil prices as above, we arrive at the following estimated total revenues and accumulated net profit:
https://preview.redd.it/h8hubrmw8br41.png?width=450&format=png&auto=webp&s=6d23f0f9c3dafda89e758b815072ba335467f33e
Let’s assume that the above average of RM 9.68 billion in total realizable revenues from current 2P reserves holds true. If we assign a conservative Net Profit margin of 15% (FY20: 23%; past 5 years average: 16%), we arrive at estimated accumulated Net Profit from 2P Reserves of RM 1.452 billion. Given the current market capitalization of RM 714 million, we might be able to say that the equity is worth about twice the current share price.
However, it is understandable that some readers might feel that the figures used in the above estimate (e.g. net profit margin of 15%) were randomly plucked from the sky. So how do we reconcile them with figures from the financial statements? Fortunately, there appears to be a way to do just that.
Intangible Assets
I refer you to a figure in the financial statements which provides a shortcut to the valuation of 2P Reserves. This is the carrying value of Intangible Assets on the Balance Sheet.
As of 2QFY21, that amount was RM 1,468,860,000 (i.e. RM 1.468 billion).
https://preview.redd.it/hse8ttb09br41.png?width=881&format=png&auto=webp&s=82e48b5961c905fe9273cb6346368de60202ebec
Quite coincidentally, one might observe that this figure is dangerously close to the estimated accumulated Net Profit from 2P Reserves of RM 1.452 billion we calculated earlier. But why would this amount matter at all?
To answer that, I refer you to the notes of the Annual Report FY20 (AR20). On page 148 of the AR20, we find the following two paragraphs:
E&E assets comprise of rights and concession and conventional studies. Following the acquisition of a concession right to explore a licensed area, the costs incurred such as geological and geophysical surveys, drilling, commercial appraisal costs and other directly attributable costs of exploration and appraisal including technical and administrative costs, are capitalised as conventional studies, presented as intangible assets.
E&E assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an E&E asset may exceed its recoverable amount. The Group will allocate E&E assets to cash generating unit (“CGU”s or groups of CGUs for the purpose of assessing such assets for impairment. Each CGU or group of units to which an E&E asset is allocated will not be larger than an operating segment as disclosed in Note 39 to the financial statements.)
Hence, we can determine that firstly, the intangible asset value represents capitalized costs of acquisition of the oil fields, including technical exploration costs and costs of acquiring the relevant licenses. Secondly, an impairment review will be carried out when “the carrying amount of an E&E asset may exceed its recoverable amount”, with E&E assets being allocated to “cash generating units” (CGU) for the purposes of assessment.
On page 169 of the AR20, we find the following:
Carrying amounts of the Group’s intangible assets, oil and gas assets and FPSO are reviewed for possible impairment annually including any indicators of impairment. For the purpose of assessing impairment, assets are grouped at the lowest level CGUs for which there is a separately identifiable cash flow available. These CGUs are based on operating areas, represented by the 2011 North Sabah EOR PSC (“North Sabah”, the Anasuria Cluster, the Marigold and Sunflower fields, the VIC/P57 exploration permit (“VIC/P57”) and the VIC/L31 production license (“VIC/L31”).)
So apparently, the CGUs that have been assigned refer to the respective oil producing fields, two of which include the North Sabah field and the Anasuria field. In order to perform the impairment review, estimates of future cash flow will be made by management to assess the “recoverable amount” (as described above), subject to assumptions and an appropriate discount rate.
Hence, what we can gather up to now is that management will estimate future recoverable cash flows from a CGU (i.e. the North Sabah and Anasuria oil fields), compare that to their carrying value, and perform an impairment if their future recoverable cash flows are less than their carrying value. In other words, if estimated accumulated profits from the North Sabah and Anasuria oil fields are less than their carrying value, an impairment is required.
So where do we find the carrying values for the North Sabah and Anasuria oil fields? Further down on page 184 in the AR20, we see the following:
Included in rights and concession are the carrying amounts of producing field licenses in the Anasuria Cluster amounting to RM668,211,518 (2018: RM687,664,530, producing field licenses in North Sabah amounting to RM471,031,008 (2018: RM414,333,116))
Hence, we can determine that the carrying values for the North Sabah and Anasuria oil fields are RM 471m and RM 668m respectively. But where do we find the future recoverable cash flows of the fields as estimated by management, and what are the assumptions used in that calculation?
Fortunately, we find just that on page 185:
17 INTANGIBLE ASSETS (CONTINUED)
(a Anasuria Cluster)
The Directors have concluded that there is no impairment indicator for Anasuria Cluster during the current financial year. In the previous financial year, due to uncertainties in crude oil prices, the Group has assessed the recoverable amount of the intangible assets, oil and gas assets and FPSO relating to the Anasuria Cluster. The recoverable amount is determined using the FVLCTS model based on discounted cash flows (“DCF” derived from the expected cash in/outflow pattern over the production lives.)
The key assumptions used to determine the recoverable amount for the Anasuria Cluster were as follows:
(i Discount rate of 10%;)
(ii Future cost inflation factor of 2% per annum;)
(iii Oil price forecast based on the oil price forward curve from independent parties; and,)
(iv Oil production profile based on the assessment by independent oil and gas reserve experts.)
Based on the assessments performed, the Directors concluded that the recoverable amount calculated based on the valuation model is higher than the carrying amount.
(b North Sabah)
The acquisition of the North Sabah assets was completed in the previous financial year. Details of the acquisition are as disclosed in Note 15 to the financial statements.
The Directors have concluded that there is no impairment indicator for North Sabah during the current financial year.
Here, we can see that the recoverable amount of the Anasuria field was estimated based on a DCF of expected future cash flows over the production life of the asset. The key assumptions used by management all seem appropriate, including a discount rate of 10% and oil price and oil production estimates based on independent assessment. From there, management concludes that the recoverable amount of the Anasuria field is higher than its carrying amount (i.e. no impairment required). Likewise, for the North Sabah field.
How do we interpret this? Basically, what management is saying is that given a 10% discount rate and independent oil price and oil production estimates, the accumulated profits (i.e. recoverable amount) from both the North Sabah and the Anasuria fields exceed their carrying amounts of RM 471m and RM 668m respectively.
In other words, according to management’s own estimates, the carrying value of the Intangible Assets of RM 1.468 billion approximates the accumulated Net Profit recoverable from 2P reserves.
To conclude Valuation (Method 2), we arrive at the following:

Our estimates Management estimates
Accumulated Net Profit from 2P Reserves RM 1.452 billion RM 1.468 billion

Financials

By now, we have established the basic economics of Hibiscus’s business, including its revenues (i.e. oil production and oil price scenarios), costs (OPEX, ITDA), profitability (breakeven, future earnings potential) and balance sheet value (2P reserves, valuation). Moving on, we want to gain a deeper understanding of the 3 statements to anticipate any blind spots and risks. We’ll refer to the financial statements of both the FY20 annual report and the 2Q21 quarterly report in this analysis.
For the sake of brevity, I’ll only point out those line items which need extra attention, and skip over the rest. Feel free to go through the financial statements on your own to gain a better familiarity of the business.
https://preview.redd.it/h689bss79br41.png?width=810&format=png&auto=webp&s=ed47fce6a5c3815dd3d4f819e31f1ce39ccf4a0b
Income Statement
First, we’ll start with the Income Statement on page 135 of the AR20. Revenues are straightforward, as we’ve discussed above. Cost of Sales and Administrative Expenses fall under the jurisdiction of OPEX, which we’ve also seen earlier. Other Expenses are mostly made up of Depreciation & Amortization of RM 115m.
Finance Costs are where things start to get tricky. Why does a company which carries no debt have such huge amounts of finance costs? The reason can be found in Note 8, where it is revealed that the bulk of finance costs relate to the unwinding of discount of provision for decommissioning costs of RM 25m (Note 32).
https://preview.redd.it/4omjptbe9br41.png?width=1019&format=png&auto=webp&s=eaabfc824134063100afa62edfd36a34a680fb60
This actually refers to the expected future costs of restoring the Anasuria and North Sabah fields to their original condition once the oil reserves have been depleted. Accounting standards require the company to provide for these decommissioning costs as they are estimable and probable. The way the decommissioning costs are accounted for is the same as an amortized loan, where the initial carrying value is recognized as a liability and the discount rate applied is reversed each year as an expense on the Income Statement. However, these expenses are largely non-cash in nature and do not necessitate a cash outflow every year (FY20: RM 69m).
Unwinding of discount on non-current other payables of RM 12m relate to contractual payments to the North Sabah sellers. We will discuss it later.
Taxation is another tricky subject, and is even more significant than Finance Costs at RM 161m. In gist, Hibiscus is subject to the 38% PITA (Petroleum Income Tax Act) under Malaysian jurisdiction, and the 30% Petroleum tax + 10% Supplementary tax under UK jurisdiction. Of the RM 161m, RM 41m of it relates to deferred tax which originates from the difference between tax treatment and accounting treatment on capitalized assets (accelerated depreciation vs straight-line depreciation). Nonetheless, what you should take away from this is that the tax expense is a tangible expense and material to breakeven analysis.
Fortunately, tax is a variable expense, and should not materially impact the cash flow of Hibiscus in today’s low oil price environment.
Note: Cash outflows for Tax Paid in FY20 was RM 97m, substantially below the RM 161m tax expense.
https://preview.redd.it/1xrnwzm89br41.png?width=732&format=png&auto=webp&s=c078bc3e18d9c79d9a6fbe1187803612753f69d8
Balance Sheet
The balance sheet of Hibiscus is unexciting; I’ll just bring your attention to those line items which need additional scrutiny. I’ll use the figures in the latest 2Q21 quarterly report (2Q21) and refer to the notes in AR20 for clarity.
We’ve already discussed Intangible Assets in the section above, so I won’t dwell on it again.
Moving on, the company has Equipment of RM 582m, largely relating to O&G assets (e.g. the Anasuria FPSO vessel and CAPEX incurred on production enhancement projects). Restricted cash and bank balances represent contractual obligations for decommissioning costs of the Anasuria Cluster, and are inaccessible for use in operations.
Inventories are relatively low, despite Hibiscus being an E&P company, so forex fluctuations on carrying value of inventories are relatively immaterial. Trade receivables largely relate to entitlements from Petronas and BP (both oil supermajors), and are hence quite safe from impairment. Other receivables, deposits and prepayments are significant as they relate to security deposits placed with sellers of the oil fields acquired; these should be ignored for cash flow purposes.
Note: Total cash and bank balances do not include approximately RM 105 m proceeds from the North Sabah December 2019 offtake (which was received in January 2020)
Cash and bank balances of RM 90m do not include RM 105m of proceeds from offtake received in 3Q21 (Jan 2020). Hence, the actual cash and bank balances as of 2Q21 approximate RM 200m.
Liabilities are a little more interesting. First, I’ll draw your attention to the significant Deferred tax liabilities of RM 457m. These largely relate to the amortization of CAPEX (i.e. Equipment and capitalized E&E expenses), which is given an accelerated depreciation treatment for tax purposes.
The way this works is that the government gives Hibiscus a favorable tax treatment on capital expenditures incurred via an accelerated depreciation schedule, so that the taxable income is less than usual. However, this leads to the taxable depreciation being utilized quicker than accounting depreciation, hence the tax payable merely deferred to a later period – when the tax depreciation runs out but accounting depreciation remains. Given the capital intensive nature of the business, it is understandable why Deferred tax liabilities are so large.
We’ve discussed Provision for decommissioning costs under the Finance Costs section earlier. They are also quite significant at RM 266m.
Notably, the Other Payables and Accruals are a hefty RM 431m. What do they relate to? Basically, they are contractual obligations to the sellers of the oil fields which are only payable upon oil prices reaching certain thresholds. Hence, while they are current in nature, they will only become payable when oil prices recover to previous highs, and are hence not an immediate cash outflow concern given today’s low oil prices.
Cash Flow Statement
There is nothing in the cash flow statement which warrants concern.
Notably, the company generated OCF of approximately RM 500m in FY20 and RM 116m in 2Q21. It further incurred RM 330m and RM 234m of CAPEX in FY20 and 2Q21 respectively, largely owing to production enhancement projects to increase the production rate of the Anasuria and North Sabah fields, which according to management estimates are accretive to ROI.
Tax paid was RM 97m in FY20 and RM 61m in 2Q21 (tax expense: RM 161m and RM 62m respectively).

Risks

There are a few obvious and not-so-obvious risks that one should be aware of before investing in Hibiscus. We shall not consider operational risks (e.g. uptime, OPEX) as they are outside the jurisdiction of the equity analyst. Instead, we shall focus on the financial and strategic risks largely outside the control of management. The main ones are:
· Oil prices remaining subdued for long periods of time
· Fluctuation of exchange rates
· Customer concentration risk
· 2P Reserves being less than estimated
· Significant current and non-current liabilities
· Potential issuance of equity
Oil prices remaining subdued
Of topmost concern in the minds of most analysts is whether Hibiscus has the wherewithal to sustain itself through this period of low oil prices (sub-$30). A quick and dirty estimate of annual cash outflow (i.e. burn rate) assuming a $20 oil world and historical production rates is between RM 50m-70m per year, which considering the RM 200m cash balance implies about 3-4 years of sustainability before the company runs out of cash and has to rely on external assistance for financing.
Table 1: Hibiscus EBITDA at different oil price and exchange rates
https://preview.redd.it/gxnekd6h9br41.png?width=670&format=png&auto=webp&s=edbfb9621a43480d11e3b49de79f61a6337b3d51
The above table shows different EBITDA scenarios (RM ‘m) given different oil prices (left column) and USD:MYR exchange rates (top row). Currently, oil prices are $27 and USD:MYR is 1:4.36.
Given conservative assumptions of average OPEX/bbl of $20 (current: $15), we can safely say that the company will be loss-making as long as oil remains at $20 or below (red). However, we can see that once oil prices hit $25, the company can tank the lower-end estimate of the annual burn rate of RM 50m (orange), while at RM $27 it can sufficiently muddle through the higher-end estimate of the annual burn rate of RM 70m (green).
Hence, we can assume that as long as the average oil price over the next 3-4 years remains above $25, Hibiscus should come out of this fine without the need for any external financing.
Customer Concentration Risk
With regards to customer concentration risk, there is not much the analyst or investor can do except to accept the risk. Fortunately, 80% of revenues can be attributed to two oil supermajors (Petronas and BP), hence the risk of default on contractual obligations and trade receivables seems to be quite diminished.
2P Reserves being less than estimated
2P Reserves being less than estimated is another risk that one should keep in mind. Fortunately, the current market cap is merely RM 714m – at half of estimated recoverable amounts of RM 1.468 billion – so there’s a decent margin of safety. In addition, there are other mitigating factors which shall be discussed in the next section (‘Opportunities’).
Significant non-current and current liabilities
The significant non-current and current liabilities have been addressed in the previous section. It has been determined that they pose no threat to immediate cash flow due to them being long-term in nature (e.g. decommissioning costs, deferred tax, etc). Hence, for the purpose of assessing going concern, their amounts should not be a cause for concern.
Potential issuance of equity
Finally, we come to the possibility of external financing being required in this low oil price environment. While the company should last 3-4 years on existing cash reserves, there is always the risk of other black swan events materializing (e.g. coronavirus) or simply oil prices remaining muted for longer than 4 years.
Furthermore, management has hinted that they wish to acquire new oil assets at presently depressed prices to increase daily production rate to a targeted 20,000 bbl by end-2021. They have room to acquire debt, but they may also wish to issue equity for this purpose. Hence, the possibility of dilution to existing shareholders cannot be entirely ruled out.
However, given management’s historical track record of prioritizing ROI and optimal capital allocation, and in consideration of the fact that the MD owns 10% of outstanding shares, there is some assurance that any potential acquisitions will be accretive to EPS and therefore valuations.

Opportunities

As with the existence of risk, the presence of material opportunities also looms over the company. Some of them are discussed below:
· Increased Daily Oil Production Rate
· Inclusion of 2C Resources
· Future oil prices exceeding $50 and effects from coronavirus dissipating
Increased Daily Oil Production Rate
The first and most obvious opportunity is the potential for increased production rate. We’ve seen in the last quarter (2Q21) that the North Sabah field increased its daily production rate by approximately 20% as a result of production enhancement projects (infill drilling), lowering OPEX/bbl as a result. To vastly oversimplify, infill drilling is the process of maximizing well density by drilling in the spaces between existing wells to improve oil production.
The same improvements are being undertaken at the Anasuria field via infill drilling, subsea debottlenecking, water injection and sidetracking of existing wells. Without boring you with industry jargon, this basically means future production rate is likely to improve going forward.
By how much can the oil production rate be improved by? Management estimates in their analyst presentation that enhancements in the Anasuria field will be able to yield 5,000 bbl/day by 2021 (current: 2,500 bbl/day).
Similarly, improvements in the North Sabah field is expected to yield 7,000 bbl/day by 2021 (current: 5,300 bbl/day).
This implies a total 2021 expected daily production rate from the two fields alone of 12,000 bbl/day (current: 8,000 bbl/day). That’s a 50% increase in yields which we haven’t factored into our valuation yet.
Furthermore, we haven’t considered any production from existing 2C resources (e.g. Marigold/Sunflower) or any potential acquisitions which may occur in the future. By management estimates, this can potentially increase production by another 8,000 bbl/day, bringing total production to 20,000 bbl/day.
While this seems like a stretch of the imagination, it pays to keep them in mind when forecasting future revenues and valuations.
Just to play around with the numbers, I’ve come up with a sensitivity analysis of possible annual EBITDA at different oil prices and daily oil production rates:
Table 2: Hibiscus EBITDA at different oil price and daily oil production rates
https://preview.redd.it/jnpfhr5n9br41.png?width=814&format=png&auto=webp&s=bbe4b512bc17f576d87529651140cc74cde3d159
The left column represents different oil prices while the top row represents different daily oil production rates.
The green column represents EBITDA at current daily production rate of 8,000 bbl/day; the orange column represents EBITDA at targeted daily production rate of 12,000 bbl/day; while the purple column represents EBITDA at maximum daily production rate of 20,000 bbl/day.
Even conservatively assuming increased estimated annual ITDA of RM 500m (FY20: RM 318m), and long-term average oil prices of $50 (FY20: $60), the estimated Net Profit and P/E ratio is potentially lucrative at daily oil production rates of 12,000 bbl/day and above.
2C Resources
Since we’re on the topic of improved daily oil production rate, it bears to pay in mind the relatively enormous potential from Hibiscus’s 2C Resources. North Sabah’s 2C Resources alone exceed 30 mmbbl; while those from the yet undiagnosed Marigold/Sunflower fields also reach 30 mmbbl. Altogether, 2C Resources exceed 70 mmbbl, which dwarfs the 44 mmbbl of 2P Reserves we have considered up to this point in our valuation estimates.
To refresh your memory, 2C Resources represents oil volumes which have been discovered but are not yet classified as “commercial”. This means that there is reasonable certainty of the oil being recoverable, as opposed to simply being in the very early stages of exploration. So, to be conservative, we will imagine that only 50% of 2C Resources are eligible for reclassification to 2P reserves, i.e. 35 mmbbl of oil.
https://preview.redd.it/mto11iz7abr41.png?width=375&format=png&auto=webp&s=e9028ab0816b3d3e25067447f2c70acd3ebfc41a
This additional 35 mmbbl of oil represents an 80% increase to existing 2P reserves. Assuming the daily oil production rate increases similarly by 80%, we will arrive at 14,400 bbl/day of oil production. According to Table 2 above, this would yield an EBITDA of roughly RM 630m assuming $50 oil.
Comparing that estimated EBITDA to FY20’s actual EBITDA:
FY20 FY21 (incl. 2C) Difference
Daily oil production (bbl/day) 8,626 14,400 +66%
Average oil price (USD/bbl) $68.57 $50 -27%
Average OPEX/bbl (USD) $16.64 $20 +20%
EBITDA (RM ‘m) 632 630 -
Hence, even conservatively assuming lower oil prices and higher OPEX/bbl (which should decrease in the presence of higher oil volumes) than last year, we get approximately the same EBITDA as FY20.
For the sake of completeness, let’s assume that Hibiscus issues twice the no. of existing shares over the next 10 years, effectively diluting shareholders by 50%. Even without accounting for the possibility of the acquisition of new oil fields, at the current market capitalization of RM 714m, the prospective P/E would be about 10x. Not too shabby.
Future oil prices exceeding $50 and effects from coronavirus dissipating
Hibiscus shares have recently been hit by a one-two punch from oil prices cratering from $60 to $30, as a result of both the Saudi-Russian dispute and depressed demand for oil due to coronavirus. This has massively increased supply and at the same time hugely depressed demand for oil (due to the globally coordinated lockdowns being implemented).
Given a long enough timeframe, I fully expect OPEC+ to come to an agreement and the economic effects from the coronavirus to dissipate, allowing oil prices to rebound. As we equity investors are aware, oil prices are cyclical and are bound to recover over the next 10 years.
When it does, valuations of O&G stocks (including Hibiscus’s) are likely to improve as investors overshoot expectations and begin to forecast higher oil prices into perpetuity, as they always tend to do in good times. When that time arrives, Hibiscus’s valuations are likely to become overoptimistic as all O&G stocks tend to do during oil upcycles, resulting in valuations far exceeding reasonable estimates of future earnings. If you can hold the shares up until then, it’s likely you will make much more on your investment than what we’ve been estimating.

Conclusion

Wrapping up what we’ve discussed so far, we can conclude that Hibiscus’s market capitalization of RM 714m far undershoots reasonable estimates of fair value even under conservative assumptions of recoverable oil volumes and long-term average oil prices. As a value investor, I hesitate to assign a target share price, but it’s safe to say that this stock is worth at least RM 1.00 (current: RM 0.45). Risk is relatively contained and the upside far exceeds the downside. While I have no opinion on the short-term trajectory of oil prices, I can safely recommend this stock as a long-term Buy based on fundamental research.
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2020 Foresight: What to do to Protect and Profit in Bear Market.

2020 Foresight: What to do to Protect and Profit in Bear Market.
Not many people like to talk about bear markets, especially not when the more emotive terms such as "Stock market crash" are used. It's often looked upon as fear mongering, and sensationalism. Preparation is practical, though.

This post is not intended to be fear mongering. In fact I want to discuss ways we can look at the market and plan for different scenarios that can mean we have no reason to be afraid.
Even if the S&P500 was to trade at 1,000 (big drop from current price (Today is the 31st August 2019, price is 2,946), we can plan and act in such ways this is a non harmful event for us. Particularly those who have net worth's to protect that has heavy stocks exposure.
This is not going to be one of these, "It's the top RIGHT NOW ... everyone panic!" sort of posts. Regardless of my views on this, I know this is a message that would not be well received. You do not know me, and too often people have cried wolf on this and been laughably incorrect. Instead what I will do is describe price moves in the indices that most people will have every reason to believe at this point can't happen.
Hopefully, they do not happen. I am not gleefully fangirling for a market crash. I just think there is prudence in preparation. These events will not happen in the hours after I post this, so I'd ask you kindly suspend prejudices. There is nothing to be gained by bickering over opinions of whether this will happen or not. I just want to give my perspective on how a person should protect themselves after it happens, if it does.
I'll cover some of the things I'd forecast will be points people will want to raise or questions likely to be asked. If you'd like to skip to the forecast and subsequent trade plan you can scroll down to the line break (unless you're going to make a common comment, then please read the following section first).

Why Do I think My Opinion Matters?

Many of you may be smarter than I in many ways, but few of you will have spent as much time assessing charting patterns as I have. Indeed, many people will scoff at the very idea of "lines on a chart" being worth anything. I'm not here to have this debate, I fully agree your view point is rational and logical. If I'd not spent years watching price charts every day, I'd think the same.
I focus mostly on Forex markets. I know these well. There are many ways currencies look like they may move that are ways they should not move unless there is big problems in stocks. These are nagging warnings. The attitude to risk in the Forex markets is negative, and stock markets show dangerous patterns. I watch these topping sorts of patterns every day. I see them in intra-day crashes, intra-week crashes and intra-month crashes.
Most major moves fit into these patterns, and when the same patterns are applied to previous stock markets in the months before they crashed, the way the patterns form and then complete (in a crash) is the same. From my perspective, these are just intra-decade crashes. There is little technical difference on the charts - although it's very different in the real world it affects.
This is why I am doing this in a "IF we see this ... then this is likely". I know at this point in the pattern, my methods predict something that will be highly unusual. If that thing happens, if we do not crash after that, we'd be breaking the trend of all market crashes in history (this is not likely, it does not seem the smart way to bet your net worth).

Technical Analysis is Tea Leaves!


You're welcome to your opinion on this, and I do understand your point of view. I will not post examples to try and prove my perspective on it, since it will always be called "curve-fitting". All I will say is nothing I have done in my years of trading has involved me persuading others what I do works. I do not sell training or anything of the like. I've spent many years using the things I've learned to bet my own money, and I've done well.
I will not debate on this subject, because it's always a deadlock. You can not convince me I've not seen what I've seen, and I can not show you what I've seen, and do not expect you to believe it without proof.

Stop Fear Mongering!


I really would like to re-iterate, I do not want you to be afraid. I am going to describe something that might happen that will be scary if it does happen. If it does not, there is no problem. I do not wish you to be fearful before, during or after.

This is like "Stop, Drop and Roll". None of us ever expect to be ablaze. If we are, this is good information. It will be better than running about waving arms and feeding the flames to engulf us. All I want to do here is to give you the "stop, drop and roll" of a market crash. To prevent you panicking and making bad decisions at bad areas. To allow you instead to go, "Fuck! Okay ... well that's not good. Now I have to ..." if scary things do happen.

No One Can Time the Market!

People have predicted and traded every stock market crash in history. The fact that many people try this and get it wrong does not take away from the fact people get this right, then place the right trades and make millions. Not many people make understanding the ways a market moves their life's work. If you do, you get a good feel for it's mood at any given time.

[Fundamental Analysis ] Says That Won't Happen!

I am not here to debate analysis viewpoints. Doing so has little use, it's better to forecast, assess and then take the best actions. I'll confess I am too ignorant on many of these topic to engage in debate. I wake up every day 5 days a week and decide where to bet my money. In doing this, I've found charts forecast and news reports. I can find no way of making money by being told what happened already, so I use the charts.
What I will say is for the warning move I will discuss to happen, something news related will have to change. Some catalyst event will have to happen. In 2008, it was Lehman. Make no mistake, the warnings were on the chart long before the bankruptcy was in the news.

Time in the Markets is Better than Timing the Markets


I am perfectly fine with this perspective, and not here to argue against it. If the market could drop 50% or more and you'd not be concerned because you think it will be back up in 10 years, this is none of my business.
I'm a day trader, so for me personally timing the markets is everything. Spending a lot of time in the market day trading often means you've made a mistake. I'm looking for ways to get foresight into what market moves may develop and understanding of what times and conditions I can enter into these moves to profit from the.
I want to stress I am not necessarily advocating the average person tries to time the markets. In the same way an electrician would not suggest you re-wire your own home. You also could not say to the electrician it's better to leave the lights off than risk getting a shock. Different preparations and skills sets give different possibilities. I spent a lot of years and lost money through a lot of them starting out learning how to do this.
The things I will explain here will not allow a person to consistently time the market. If I may be excused a cheesy pun, this "crash course" will be dealing with only single event, and one single set of scenarios. What I want to put forward for you in this is price moves to watch for and then (really quite specific) levels of price that are likely to offer us the best prices to protect long stock portfolios, or take speculative short trades. Very thin area of assessment.


Forecast and Plan.

What if the S&P500 Went to 2,200 ... Quickly?


It's the weekend, and the last day of August in 2019. The S&P500 has closed 2922 after rallying through the week after some sharp drops from all time highs. We may see record highs again if this keeps up ... but what if next week it opens and starts to fall? Or maybe rallies higher but can not make a new high and starts to fall.
What if it falls faster than it did in the last drop, and what if this time it does not stop? What if it gets to the lows of 2790, and goes from there quickly to 2700. These big levels act as resistance and the market can not trade higher than them. Instead it hits them, reverses and goes down more.

I think people would be nervous, but there'd be still the feeling of this being a normal, albeit tough, corrective move. There's weekly lows of 2,333. Above here the market is still technically up-trending. What if we got there, and the market went through it like it was nothing? What if the coming weeks or months we seen candles bigger than any we've seen recently? What if we were hearing news reports of record falls, rather than record highs?
What if over the development of only weeks and some horrific trading days we went from today's 2922 to break under the 2015 lows of 1,886?
I think people would be afraid!
Nothing I am saying is for the purposes of fear mongering, but I think this is possible. I'd like to say I think it's "highly unlikely", but I am thinking a lot about how to structure real bets on it and I like my odds. If this happens, it's likely the market will go lower still. What you do during the following weeks and months may have a huge affect on your financial health by the start of 2021.

How Does This Scenario Look on a S&P500 Chart?



https://preview.redd.it/ggqyvs2f6xj31.png?width=658&format=png&auto=webp&s=a9d00d758caf655341bd4780a8277b7556546a50

That looks like it's not going to happen, right? I think that this looks like it's not going to happen. We learn through our life experience, and my life experience has taught me when I ignore what I think about things like this and build well structured trade plans that would assume it will happen, money comes. For me, this makes sense to bet on at the moment, as unlikely as it looks. That's getting a bit into "Calling the high", though. \Which this is not about.

This is about what do you do if this happens? What if there is a day when they say on the news that the market just made it's lowest point in the last five years ... and economists and experts say it can go down more!

1 - Filter and assess your sources.
Before you act or even think about the information these sources have (pertaining to what trades to make or expect), check what they were saying now. If they're not saying this could happen - don't worry too much about what they say happens next. They have as much chance of being wrong.

2 - Do not panic.
This is a time to remain calm. Bad things have happened, and there will have been multiple days the market has dropped precipitously. Different economic factors explaining these moves may be threatening to get worse and the market may take more dangerous swings spiking under recent lows. This is the point at which most people will panic and make bad choices with their portfolio.

3 - Buy Around 1,800
This obviously sounds like something anyone would do right now, with price at 2,922; but with the conditions that'd have to be occurring for this of move to happen will make this highly counter intuitive at the time.

4 - Understand Something Changed, New Highs are Not Coming
From peak pessimism around 1,800 I expect the market to start to rally. Rallying strong. Making markets great again.
At this point, you should understand something has changed. The market is not meant to trade at that level in an up-trend. Frequently when these levels 'break', there is a strong counter move that is fierce. It's also brief. We can buy here and offset some of the losses in the mini bounce (but be very cautious).
2,129 area is where the danger of a bear move comes back in. It might rally a bit above here into 2,333.

This is where the second mistake many people will make will be. Not buying the lows, but then starting to buy into this rally thinking it's going to new highs.

Very Important: If price makes moves consistent with what I've described 2,220 - 2,300 are hedge areas.
If you take appropriate actions in these areas you can protect yourself from the chance of excessive loss if the market is to crash in 2020. You can also do this without taking on much risk. Granted if you hedge long portfolios there is some risk of losing a little, but your area of risk on these hedges is less than the area of risk on a long portfolio after this has happened.
When this has happened, historically it's always led to a crash in the coming months/year. We'll have done something the markets do not usually do. Big corrections may look similar, but when you deal with this all the time, you come to know there are specifics that should be noted. If the levels I've mentioned for a buy fill, the market is crashing. It's no longer a question of if.

5 - Hold Hedges Until 1,100

If we crash, the low will probably be only a bit below this level. Anything more than this in a fall would be truly horrific (I know many people think this is horrific, but from a technical point of view this is really to be expected, and not unusual. It only happens after long periods of time, so it's unexpected and uncommon. It not unusual in trend formation).

https://preview.redd.it/puc4slkk6xj31.png?width=662&format=png&auto=webp&s=69e219ba15beddd6bbc944898efa8bce74cd3c85
I am not a financial adviser, and can not tell you any trades you should be making to hedge portfolios or to take speculative positions. I've given these levels on the S&P500, and there are many things correlated to this you could use to protect portfolios. If this happens, I will be very much 'In the trenches'. I'll be trading in various markets every day and sharing some of my insights and trade plans, but I can't tell you specifically what to do.


I am only sharing this with you to let you know there are strategies people have used in the past to predict crashes, and I've used these strategies a lot and become good with them. They now predict a market crash starting in 2019, developing through 2020, and the things I've explained in this post would be the next steps if the prediction is accurate.
If the next steps happen, the strategy would then forecast the S&P500 to go from 2,200 - 2,400 sort of range to 1,000.
I am asking no one to take this seriously at the moment, but I would suggest if the market makes moves similar to what I've described - you then consider there may be a lot of merit to what it further forecasts. Things could look very different from how they do this weekend in a few weekends time.
submitted by whatthefx to wallstreetbets [link] [comments]

2020 Foresight: What to do to Protect and Profit in Bear Market.

Not many people like to talk about bear markets, especially not when the more emotive terms such as "Stock market crash" are used. It's often looked upon as fear mongering, and sensationalism. Preparation is practical, though.

This post is not intended to be fear mongering. In fact I want to discuss ways we can look at the market and plan for different scenarios that can mean we have no reason to be afraid.
Even if the S&P500 was to trade at 1,000 (big drop from current price (Today is the 31st August 2019, price is 2,946), we can plan and act in such ways this is a non harmful event for us. Particularly those who have net worth's to protect that has heavy stocks exposure.
This is not going to be one of these, "It's the top RIGHT NOW ... everyone panic!" sort of posts. Regardless of my views on this, I know this is a message that would not be well received. You do not know me, and too often people have cried wolf on this and been laughably incorrect. Instead what I will do is describe price moves in the indices that most people will have every reason to believe at this point can't happen.
Hopefully, they do not happen. I am not gleefully fangirling for a market crash. I just think there is prudence in preparation. These events will not happen in the hours after I post this, so I'd ask you kindly suspend prejudices. There is nothing to be gained by bickering over opinions of whether this will happen or not. I just want to give my perspective on how a person should protect themselves after it happens, if it does.
I'll cover some of the things I'd forecast will be points people will want to raise or questions likely to be asked. If you'd like to skip to the forecast and subsequent trade plan you can scroll down to the line break (unless you're going to make a common comment, then please read the following section first).

Why Do I think My Opinion Matters?

Many of you may be smarter than I in many ways, but few of you will have spent as much time assessing charting patterns as I have. Indeed, many people will scoff at the very idea of "lines on a chart" being worth anything. I'm not here to have this debate, I fully agree your view point is rational and logical. If I'd not spent years watching price charts every day, I'd think the same.
I focus mostly on Forex markets. I know these well. There are many ways currencies look like they may move that are ways they should not move unless there is big problems in stocks. These are nagging warnings. The attitude to risk in the Forex markets is negative, and stock markets show dangerous patterns. I watch these topping sorts of patterns every day. I see them in intra-day crashes, intra-week crashes and intra-month crashes.
Most major moves fit into these patterns, and when the same patterns are applied to previous stock markets in the months before they crashed, the way the patterns form and then complete (in a crash) is the same. From my perspective, these are just intra-decade crashes. There is little technical difference on the charts - although it's very different in the real world it affects.
This is why I am doing this in a "IF we see this ... then this is likely". I know at this point in the pattern, my methods predict something that will be highly unusual. If that thing happens, if we do not crash after that, we'd be breaking the trend of all market crashes in history (this is not likely, it does not seem the smart way to bet your net worth).

Technical Analysis is Tea Leaves!


You're welcome to your opinion on this, and I do understand your point of view. I will not post examples to try and prove my perspective on it, since it will always be called "curve-fitting". All I will say is nothing I have done in my years of trading has involved me persuading others what I do works. I do not sell training or anything of the like. I've spent many years using the things I've learned to bet my own money, and I've done well.
I will not debate on this subject, because it's always a deadlock. You can not convince me I've not seen what I've seen, and I can not show you what I've seen, and do not expect you to believe it without proof.

Stop Fear Mongering!


I really would like to re-iterate, I do not want you to be afraid. I am going to describe something that might happen that will be scary if it does happen. If it does not, there is no problem. I do not wish you to be fearful before, during or after.

This is like "Stop, Drop and Roll". None of us ever expect to be ablaze. If we are, this is good information. It will be better than running about waving arms and feeding the flames to engulf us. All I want to do here is to give you the "stop, drop and roll" of a market crash. To prevent you panicking and making bad decisions at bad areas. To allow you instead to go, "Fuck! Okay ... well that's not good. Now I have to ..." if scary things do happen.

No One Can Time the Market!

People have predicted and traded every stock market crash in history. The fact that many people try this and get it wrong does not take away from the fact people get this right, then place the right trades and make millions. Not many people make understanding the ways a market moves their life's work. If you do, you get a good feel for it's mood at any given time.

[Fundamental Analysis ] Says That Won't Happen!

I am not here to debate analysis viewpoints. Doing so has little use, it's better to forecast, assess and then take the best actions. I'll confess I am too ignorant on many of these topic to engage in debate. I wake up every day 5 days a week and decide where to bet my money. In doing this, I've found charts forecast and news reports. I can find no way of making money by being told what happened already, so I use the charts.
What I will say is for the warning move I will discuss to happen, something news related will have to change. Some catalyst event will have to happen. In 2008, it was Lehman. Make no mistake, the warnings were on the chart long before the bankruptcy was in the news.

Time in the Markets is Better than Timing the Markets


I am perfectly fine with this perspective, and not here to argue against it. If the market could drop 50% or more and you'd not be concerned because you think it will be back up in 10 years, this is none of my business.
I'm a day trader, so for me personally timing the markets is everything. Spending a lot of time in the market day trading often means you've made a mistake. I'm looking for ways to get foresight into what market moves may develop and understanding of what times and conditions I can enter into these moves to profit from the.
I want to stress I am not necessarily advocating the average person tries to time the markets. In the same way an electrician would not suggest you re-wire your own home. You also could not say to the electrician it's better to leave the lights off than risk getting a shock. Different preparations and skills sets give different possibilities. I spent a lot of years and lost money through a lot of them starting out learning how to do this.
The things I will explain here will not allow a person to consistently time the market. If I may be excused a cheesy pun, this "crash course" will be dealing with only single event, and one single set of scenarios. What I want to put forward for you in this is price moves to watch for and then (really quite specific) levels of price that are likely to offer us the best prices to protect long stock portfolios, or take speculative short trades. Very thin area of assessment.


Forecast and Plan.

What if the S&P500 Went to 2,200 ... Quickly?


It's the weekend, and the last day of August in 2019. The S&P500 has closed 2922 after rallying through the week after some sharp drops from all time highs. We may see record highs again if this keeps up ... but what if next week it opens and starts to fall? Or maybe rallies higher but can not make a new high and starts to fall.
What if it falls faster than it did in the last drop, and what if this time it does not stop? What if it gets to the lows of 2790, and goes from there quickly to 2700. These big levels act as resistance and the market can not trade higher than them. Instead it hits them, reverses and goes down more.

I think people would be nervous, but there'd be still the feeling of this being a normal, albeit tough, corrective move. There's weekly lows of 2,333. Above here the market is still technically up-trending. What if we got there, and the market went through it like it was nothing? What if the coming weeks or months we seen candles bigger than any we've seen recently? What if we were hearing news reports of record falls, rather than record highs?
What if over the development of only weeks and some horrific trading days we went from today's 2922 to break under the 2015 lows of 1,886?
I think people would be afraid!
Nothing I am saying is for the purposes of fear mongering, but I think this is possible. I'd like to say I think it's "highly unlikely", but I am thinking a lot about how to structure real bets on it and I like my odds. If this happens, it's likely the market will go lower still. What you do during the following weeks and months may have a huge affect on your financial health by the start of 2021.

How Does This Scenario Look on a S&P500 Chart?





That looks like it's not going to happen, right? I think that this looks like it's not going to happen. We learn through our life experience, and my life experience has taught me when I ignore what I think about things like this and build well structured trade plans that would assume it will happen, money comes. For me, this makes sense to bet on at the moment, as unlikely as it looks. That's getting a bit into "Calling the high", though. \Which this is not about.
Edit: Hmm, it sounds like it's not going to happen. I can not post pictures here apparently.

This is about what do you do if this happens? What if there is a day when they say on the news that the market just made it's lowest point in the last five years ... and economists and experts say it can go down more!

1 - Filter and assess your sources.
Before you act or even think about the information these sources have (pertaining to what trades to make or expect), check what they were saying now. If they're not saying this could happen - don't worry too much about what they say happens next. They have as much chance of being wrong.

2 - Do not panic.
This is a time to remain calm. Bad things have happened, and there will have been multiple days the market has dropped precipitously. Different economic factors explaining these moves may be threatening to get worse and the market may take more dangerous swings spiking under recent lows. This is the point at which most people will panic and make bad choices with their portfolio.

3 - Buy Around 1,800
This obviously sounds like something anyone would do right now, with price at 2,922; but with the conditions that'd have to be occurring for this of move to happen will make this highly counter intuitive at the time.

4 - Understand Something Changed, New Highs are Not Coming
From peak pessimism around 1,800 I expect the market to start to rally. Rallying strong. Making markets great again.
At this point, you should understand something has changed. The market is not meant to trade at that level in an up-trend. Frequently when these levels 'break', there is a strong counter move that is fierce. It's also brief. We can buy here and offset some of the losses in the mini bounce (but be very cautious).
2,129 area is where the danger of a bear move comes back in. It might rally a bit above here into 2,333.

This is where the second mistake many people will make will be. Not buying the lows, but then starting to buy into this rally thinking it's going to new highs.

Very Important: If price makes moves consistent with what I've described 2,220 - 2,300 are hedge areas.
If you take appropriate actions in these areas you can protect yourself from the chance of excessive loss if the market is to crash in 2020. You can also do this without taking on much risk. Granted if you hedge long portfolios there is some risk of losing a little, but your area of risk on these hedges is less than the area of risk on a long portfolio after this has happened.
When this has happened, historically it's always led to a crash in the coming months/year. We'll have done something the markets do not usually do. Big corrections may look similar, but when you deal with this all the time, you come to know there are specifics that should be noted. If the levels I've mentioned for a buy fill, the market is crashing. It's no longer a question of if.

5 - Hold Hedges Until 1,100

If we crash, the low will probably be only a bit below this level. Anything more than this in a fall would be truly horrific (I know many people think this is horrific, but from a technical point of view this is really to be expected, and not unusual. It only happens after long periods of time, so it's unexpected and uncommon. It not unusual in trend formation).
I am not a financial adviser, and can not tell you any trades you should be making to hedge portfolios or to take speculative positions. I've given these levels on the S&P500, and there are many things correlated to this you could use to protect portfolios. If this happens, I will be very much 'In the trenches'. I'll be trading in various markets every day and sharing some of my insights and trade plans, but I can't tell you specifically what to do.

I am only sharing this with you to let you know there are strategies people have used in the past to predict crashes, and I've used these strategies a lot and become good with them. They now predict a market crash starting in 2019, developing through 2020, and the things I've explained in this post would be the next steps if the prediction is accurate.
If the next steps happen, the strategy would then forecast the S&P500 to go from 2,200 - 2,400 sort of range to 1,000.
I am asking no one to take this seriously at the moment, but I would suggest if the market makes moves similar to what I've described - you then consider there may be a lot of merit to what it further forecasts.
submitted by whatthefx to investing [link] [comments]

Wall Street Week Ahead for the trading week beginning July 22nd, 2019

Good morning and happy Saturday to all of you here on wallstreetbets. I hope everyone on this subreddit made out pretty nicely in the market this past week, and is ready for the new trading week ahead.
Here is everything you need to know to get you ready for the trading week beginning July 22nd, 2019.

Week ahead: Earnings, GDP expected to show sluggish growth as investors await rate cut - (Source)

Sluggish economic and earnings growth will be a theme in markets in the week ahead, as investors await a Fed interest rate cut at the end of the month.
More than a quarter of the S&P 500 companies report earnings in the coming week, the second big week of the second quarter reporting season. FAANG names, like Alphabet and Amazon, and blue chips from McDonald’s to Boeingand United Technologies are among the more than 130 companies reporting.
There is also some key economic data, including Friday’s second quarter GDP, which should show a slowing to 1.8% from the first quarter’s 3.1% pace, according to Refinitiv. On Thursday, durable goods are reported and will include an update on businesses investment. There are also existing home sales Tuesday, new home sales Wednesday and advance economic indicators Thursday.
But there will be no Fed speakers, after a parade of central bank officials in the past week, including Fed Chair Jerome Powell. The most impactful comments, however, came Thursday from New York Fed President John Williams, who set off a debate about how much the Fed could cut rates at its July 30-31 meeting — 25 or 50 basis points.
Even as the New York Fed later said Williams comments were not about current policy, market pros took heed of his words about how central bankers should “act quickly.”
Fed dominates Fed officials do not speak publicly in the days ahead of policy meetings, but market pros will find plenty to debate. Fed funds futures were predicting a 43% chance of a 50 basis point cut in July, after shooting as high as 70% Thursday afternoon.
“For sure, the Fed is going to dominate for next week. I think we’ll get at least a 25 basis point cut. I’m thinking we’re not going to get 50 basis point cut...The Fed has been burned when it’s been bold,” said Tony Roth, chief investment officer at Wilmington Trust.
Roth said he believes the market is already pricing in a quarter-point cut, and he does not see the Fed’s rate cut as much of a longer-term catalyst for stocks. If it trims by a half percentage point, he expects just a short-term pop.
Economists believe the Fed will cut interest rates even though recent data has improved. That’s in part because Powell has stressed the Fed is focused on the global economic slowdown, trade wars and low inflation, and that it will do what it takes to keep the economy expanding.
“The only real catalyst that would really help the market would be if there was a trade deal with China,” Roth said. “I think the likelihood of that is less than > 10%. We’re very pessimistic on the possibility of a real deal with China prior to the [2020 presidential] election.”
So, in the void ahead of the Fed’s meeting, the market will be watching earnings. As earnings rolled out this past week, stocks took a rest from their record-setting streak, as some companies lowered forecasts and most beat earnings and revenue estimates.
As of Friday morning, 77% of the roughly 80 companies reporting had beaten earnings estimates, and 65% topped revenue forecasts, according to Refinitiv. Based on actual reports and forecasts, earnings per share for the S&P companies are expected to be up 1% in the second quarter. That is up from expectations that the profit growth would be slightly negative this quarter.
“If you look at the numbers, we’re above the averages for top and bottom line beats, but at the same time when you look at revisions, every day we’re getting revisions for third and fourth quarter, and they’re coming down.There’s a real worry of an earnings recession, when you get out into the third and fourth quarter and out to next year,” Roth said.
Roth said he’s currently neutral on risk assets, and he sees a slowdown brewing in the smallest U.S. companies that could spread up the food chain.
“We do see those fundamental cracks in the economy in small business and the small business labor market, and on top of that you have these big macro risks out there,” such as trade and the upcoming election, Roth said.
Slower economy As earnings growth was muted in the second quarter, so was the pace of economic gains. If growth comes in as expected, it would be the first quarter where growth was under 2% since the first quarter of 2017. Economists are watching to see how consumer spending fared in the quarter, after a recent pickup and also whether business inventories are declining.
“The data we need is not Q2. What’s at risk is the growth and magnitude of the Fed rate cut. I don’t think Q2 is going to have much impact on the Fed’s thinking,” said Marc Chandler, chief market strategist at Bannockburn Global Forex. “It’s really how Q3 is progressing. It seems to me the economy softened in April and May and picked up in June with jobs data, retail sales and manufacturing sector.”
Chandler said investors will also be focused on the European Central Bank, which some economists believe could cut its overnight deposit rate to negative 0.5% from negative 0.4% currently when it meets Thursday. Chandler said odds are about 50% for the rate cut, which many also expect in September.
“While we’re waiting for the Fed to figure out whether it’s 25 or 50 basis points, and we’re waiting for the ECB to get all its forms sorted out ... the emerging markets are pushing ahead,” said Chandler, noting Russia and Turkey could cut rates in the next several days, after similar moves in the past week by South Africa, South Korea and Indonesia.
“It just makes the story more global. You’re seeing the trade numbers from China, Japan, Singapore and South Korea weaken. You’re seeing exports form China suffer. Exports from all of Asia are suffering,” he said. “The big surprise for China and Japan has also been on the import side. The declines in their imports is really someone else’s [drop in] exports.”
Rate cuts and currency wars Dollar strength has been a consequence of the trade war, and Fed action could help turn it around.
“If the Fed fails to move, you’re going to end up with an increasingly stronger dollar,” which impacts corporate earnings, Roth said.
“The dollar is quite strong and is increasingly going to be a headwind for U.S. companies. It hasn’t appreciated that much in 12 months, but if we see a divergence in monetary policy between the U.S. and the rest of the world, you would see a carry trade develop where people would want to buy assets in the U.S.,” he said.
The dollar index was slightly higher on the week, but Wall Street has been focused on President Donald Trump’s negative comments on the currency’s strength. As Trump has criticized the Fed, he also complains that other central banks manipulate their currencies to give them an edge in trade. Trump has said the Fed should already be cutting rates, something it hasn’t done since December 2008.
A number of Wall Street strategists have said they now believe it is possible that the U.S. government could intervene to weaken the dollar, but that would be unlikely.

This past week saw the following moves in the S&P:

(CLICK HERE FOR THE FULL S&P TREE MAP FOR THE PAST WEEK!)

Major Indices for this past week:

(CLICK HERE FOR THE MAJOR INDICES FOR THE PAST WEEK!)

Major Futures Markets as of Friday's close:

(CLICK HERE FOR THE MAJOR FUTURES INDICES AS OF FRIDAY!)

Economic Calendar for the Week Ahead:

(CLICK HERE FOR THE FULL ECONOMIC CALENDAR FOR THE WEEK AHEAD!)

Sector Performance WTD, MTD, YTD:

(CLICK HERE FOR FRIDAY'S PERFORMANCE!)
(CLICK HERE FOR THE WEEK-TO-DATE PERFORMANCE!)
(CLICK HERE FOR THE MONTH-TO-DATE PERFORMANCE!)
(CLICK HERE FOR THE 3-MONTH PERFORMANCE!)
(CLICK HERE FOR THE YEAR-TO-DATE PERFORMANCE!)
(CLICK HERE FOR THE 52-WEEK PERFORMANCE!)

Percentage Changes for the Major Indices, WTD, MTD, QTD, YTD as of Friday's close:

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S&P Sectors for the Past Week:

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Major Indices Pullback/Correction Levels as of Friday's close:

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Major Indices Rally Levels as of Friday's close:

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Most Anticipated Earnings Releases for next month:

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Here are the upcoming IPO's for this week:

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Friday's Stock Analyst Upgrades & Downgrades:

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(CLICK HERE FOR THE CHART LINK #2!)
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Lagging Small-caps: Seasonal and Economic Factors Weigh

Small-caps measured by the performance of the Russell 2000 have been lagging since mid-March with the gap in performance widening in June and continuing into July. At yesterday’s close the Russell 2000 was up 15.35% year-to-date compared to a gain of 19.87% for the Russell 1000. Based upon historical trends this is not unusual for this time of the year nor during times when U.S. economic data is mixed.
In the following chart the one-year seasonal pattern of the Russell 2000/Russell 1000 has been plotted (solid black line with grey fill) along with 2019 year-to-date (blue line). This chart is similar to the chart found on page 110 of the 2019 Stock Trader’s Almanac. When the lines are rising small-caps are outperforming, when the lines are falling small-caps are lagging. Small-caps exhibited typical seasonal strength during the first quarter but have been fading ever since. In some years, small-cap strength can last until mid-June however, that is not the case this year. Going forward, small-cap underperformance is likely to persist until early in the fourth quarter with possible a hint of strength at the end of August.
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Robust Summer Rallies Trim Fall Pullbacks

It’s usually about this time of the year, when trading volumes begin to slump and markets meander that we begin to hear talk of the infamous “Summer Rally” featured on page 74 of the Stock Trader’s Almanac 2019. The “Summer Rally” is usually the weakest seasonal rally of them all.
We looked at the current Summer Rally and found it to be above average already, up 10.2% from the Spring low on May 31, and that does portend well for the Summer and Fall Corrections. We lined up the Summer Rallies ranked from weakest to strongest since 1964. Over the past 55 years prior to this year DJIA has rallied and average of 9.1% from its May/June low until its Q3 high. The Fall Rally averages 10.9% and the Summer and Fall Corrections average a loss of just under 9% for a net average gain of a few percentage points over the summer and fall.
As shown in the table below, when the Summer Rally is greater than or equal to the 55-year 9.1% average, the summer and fall correction tend to be bit milder, -6.2% and -8.2%, respectively. Summer Rally gains beyond 12.5% historically had the smallest summer and fall corrections. One prominent exception being 1987.
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Earnings (and Guidance) Likely to Make or Break the Rally

Once again today, DJIA, S&P 500 and NASDAQ closed at new all-time highs. With today’s modest gains, DJIA is up 17.3% year-to-date. S&P 500 is even better at 20.2% while NASDAQ is still best at 24.5%. Compared to historical average performance in pre-election years at this time of the year, DJIA and S&P 500 are comfortably above average. NASDAQ’s impressive 24.5% gain is just average (since 1971). NASDAQ’s Midyear Rally delivered again, but officially ended last Friday. The seasonal pattern charts, above and below, along with July’s typical performance over the last 21 years suggest further gains during the balance of July and the third quarter could be limited. For the market to make meaningful gains in the near-term earnings will need to decent and forward guidance will also need to be firm.
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"We Don't Need Your Stinking Data"

Yesterday was another one of those days that makes you scratch your head. In a relatively busy day for economic data, Initial Jobless Claims came in within 25K of a 50-year low, and the Philly Fed Manufacturing report saw its largest m/m increase in a decade. That follows other data last week where Retail Sales were very strong and CPI and PPI both came in ahead of consensus forecasts. The trend of better than expected data since the June employment report on July 5th is reflected in recent moves of the Citi Economic Surprise Index which has rallied from -68.3 up to -41.5. Granted, it’s still negative, but what was looking like a real dismal backdrop for the economy just three weeks ago seems to be showing signs of improvement.
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On top of the economic data, two notable interviews from FOMC officials Williams from New York and Vice Chair Clarida moved markets. Given the strong tone of economic data, one would expect both officials to try and tone down rising market expectations regarding any aggressive policy moves at the July meeting. Well, markets don’t always make sense.
In their respective interviews, both Williams and Clarida not only didn’t tone down expectations, but they added fuel to the fire. Williams noted that “it pays to act quickly to lower rates" and "vaccinate” the economy "against further ills." Clarida was even more direct when he said that “Research shows you act preemptively when you can.” In other words, the data-dependent Fed is casting the data aside and ready to move anyway. In his interview on Fox Business, Clarida almost got a chuckle when asked whether there was any chance the Fed wouldn’t cut rates in July.
The dovish turn from the Fed was immediately reflected in market expectations for rate policy at the July meeting. Back in June, market expectations for a 50 basis points (bps) cut at the next meeting peaked out at under 50%. Then, in the days following the June employment report, expectations dropped all the way down to 3%. In the last ten days, though, the trend has completely reversed, and as of yesterday’s close topped out at 71% versus just a 29% chance for a 25 bps cut. Probabilities for a 50 bps cut came in a bit overnight but are still at about 50/50. Yesterday alone, though, expectations for a 25 bps cut and a 50 bps cut more than completely reversed from the prior day, and remember, that’s after what was a good day of economic data! Can you imagine what expectations would be like if the data was actually bad?
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US Beats World When It Comes to Stocks

The Bloomberg World index is a cap-weighted index made up of nearly 5,000 stocks from around the world (including US stocks). While the S&P 500 has been hitting new all-time highs over the last week, the Bloomberg World index remains 7% below highs that it last made back in January 2018.
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Below is a chart showing the ratio of the S&P 500 to the Bloomberg World index since the World index's inception back in August 2003. While the World index outperformed the US for five years in the mid-2000s, the US has been outperforming since the end of 2007, which includes both the Financial Crisis and the bull market that has been in place since the 2009 lows.
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Along with the relative strength chart between the two indices above, below we show the price change of the S&P 500 versus the Bloomberg World index since August 2003. Through today, the S&P was up 203% versus a gain of 142% for the Bloomberg World index.
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Since the November 2016 election, the S&P 500 is up 40% versus a gain of 26% for the Bloomberg World index. Notably, the World index kept up with the S&P through early 2018, but weakness for the World index in mid-2018 and a failure to bounce back as much as the US this year has left the World index well behind.
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Best Performing Stocks Over the Last 12 Months

The S&P 500 is up over 20% YTD, but over the last 12 months, it is up just under 10% on a total return basis. And within the S&P 1500, there are only 44 stocks that are up more than 50% on a total return basis over the last 12 months. These 44 stocks are listed below.
Innovative Industrials (IIPR) -- a cannabis REIT -- has been the best performing stock in the S&P 1500 over the last year with a total return of 302%. In second place is eHealth (EHTH) with a gain of 269%, followed by Avon Products (AVP) at +174.8% and Coca-Cola Bottling (COKE) at +128.58%. Coca-Cola Bottling is probably one of the last names you would have guessed as a top five performer over the last year! Other notables on the list of biggest winners include Advanced Micro (AMD), LendingTree (TREE), Starbucks (SBUX), AutoZone (AZO), Chipotle (CMG), Hershey (HSY), and Procter & Gamble (PG).
Some names that aren't on the list that you may have expected to see? AMZN, NFLX, MSFT? Nope. None of the mega-cap Tech companies are on the list of biggest winners due to serious weakness from this group in Q4 2018.
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2% Days Few and Far Between

Although the last two trading days have seen exceptionally narrow daily ranges, today we wanted to take a quick look at the S&P 500's frequency of 2% daily moves (either up or down) in the post-WWII period. The chart below breaks out the frequency of 2% days by year, and years with more than 25 one-day moves of 2% are notated accordingly.
Overall, there have been an average of 11 daily 2% moves in a given year. After five straight years from 2007 to 2011 where we saw an above-average number of 2% days, the last seven years have only seen one year with an above-average number of occurrences (2018, 21). Remember, in 2017 there wasn't one single trading day that saw the S&P move up or down 2%!
So far this year, there have only been four 2% days, but with the most volatile part of the year on tap, we are likely to see that number increase in the months ahead. Don't expect the relative calm that we have seen in the last few trading days to last forever. Volatility is unpredictable and usually comes up and surprises you when you least expect it!
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STOCK MARKET VIDEO: Stock Market Analysis Video for Week Ending July 19th, 2019

([CLICK HERE FOR THE YOUTUBE VIDEO!]())
(VIDEO NOT YET UP!)

STOCK MARKET VIDEO: ShadowTrader Video Weekly 07.21.19

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Here are the most notable companies (tickers) reporting earnings in this upcoming trading week ahead-
  • $FB
  • $AMZN
  • $TSLA
  • $BA
  • $T
  • $SNAP
  • $PIXY
  • $HAL
  • $TWTR
  • $KO
  • $F
  • $V
  • $LMT
  • $GOOGL
  • $INTC
  • $CAT
  • $PYPL
  • $BIIB
  • $UTX
  • $IRBT
  • $XLNX
  • $UPS
  • $ABBV
  • $CNC
  • $NOK
  • $CMG
  • $MMM
  • $RPM
  • $SBUX
  • $JBLU
  • $BMY
  • $GNC
  • $MCD
  • $CDNS
  • $CADE
  • $NOW
  • $AMTD
  • $HAS
  • $HOG
  • $ANTM
  • $WM
  • $CMCSA
  • $FCX
(CLICK HERE FOR NEXT WEEK'S MOST NOTABLE EARNINGS RELEASES!)
(CLICK HERE FOR NEXT WEEK'S HIGHEST VOLATILITY EARNINGS RELEASES!)
(CLICK HERE FOR MOST ANTICIPATED EARNINGS RELEASES FOR THE NEXT 5 WEEKS!)
Below are some of the notable companies coming out with earnings releases this upcoming trading week ahead which includes the date/time of release & consensus estimates courtesy of Earnings Whispers:

Monday 7.22.19 Before Market Open:

(CLICK HERE FOR MONDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!)

Monday 7.22.19 After Market Close:

(CLICK HERE FOR MONDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!)

Tuesday 7.23.19 Before Market Open:

(CLICK HERE FOR TUESDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!)

Tuesday 7.23.19 After Market Close:

(CLICK HERE FOR TUESDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!)

Wednesday 7.24.19 Before Market Open:

(CLICK HERE FOR WEDNESDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES LINK #1!)
(CLICK HERE FOR WEDNESDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES LINK #2!)

Wednesday 7.24.19 After Market Close:

(CLICK HERE FOR WEDNESDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES LINK #1!)
(CLICK HERE FOR WEDNESDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES LINK #2!)

Thursday 7.25.19 Before Market Open:

(CLICK HERE FOR THURSDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES LINK #1!)
(CLICK HERE FOR THURSDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES LINK #2!)

Thursday 7.25.19 After Market Close:

(CLICK HERE FOR THURSDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES LINK #1!)
(CLICK HERE FOR THURSDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES LINK #2!)

Friday 7.26.19 Before Market Open:

(CLICK HERE FOR FRIDAY'S PRE-MARKET EARNINGS TIME & ESTIMATES!)

Friday 7.26.19 After Market Close:

([CLICK HERE FOR FRIDAY'S AFTER-MARKET EARNINGS TIME & ESTIMATES!]())
NONE.

Amazon.com, Inc. $1,964.52

Amazon.com, Inc. (AMZN) is confirmed to report earnings at approximately 4:00 PM ET on Thursday, July 25, 2019. The consensus earnings estimate is $5.29 per share on revenue of $62.51 billion and the Earnings Whisper ® number is $5.70 per share. Investor sentiment going into the company's earnings release has 78% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 4.34% with revenue increasing by 18.20%. Short interest has increased by 14.0% since the company's last earnings release while the stock has drifted higher by 1.8% from its open following the earnings release to be 13.0% above its 200 day moving average of $1,737.93. Overall earnings estimates have been revised lower since the company's last earnings release. On Thursday, July 11, 2019 there was some notable buying of 3,494 contracts of the $2,000.00 call expiring on Friday, August 16, 2019. Option traders are pricing in a 4.4% move on earnings and the stock has averaged a 4.0% move in recent quarters.

(CLICK HERE FOR THE CHART!)

Facebook Inc. $198.36

Facebook Inc. (FB) is confirmed to report earnings at approximately 4:05 PM ET on Wednesday, July 24, 2019. The consensus earnings estimate is $1.90 per share on revenue of $16.45 billion and the Earnings Whisper ® number is $2.01 per share. Investor sentiment going into the company's earnings release has 82% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 9.20% with revenue increasing by 24.33%. Short interest has increased by 21.7% since the company's last earnings release while the stock has drifted higher by 0.7% from its open following the earnings release to be 20.8% above its 200 day moving average of $164.17. Overall earnings estimates have been revised higher since the company's last earnings release. On Wednesday, July 17, 2019 there was some notable buying of 16,697 contracts of the $290.00 call expiring on Friday, September 20, 2019. Option traders are pricing in a 6.5% move on earnings and the stock has averaged a 8.6% move in recent quarters.

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Tesla, Inc. $258.18

Tesla, Inc. (TSLA) is confirmed to report earnings at approximately 5:15 PM ET on Wednesday, July 24, 2019. The consensus estimate is for a loss of $0.52 per share on revenue of $6.38 billion and the Earnings Whisper ® number is ($0.44) per share. Investor sentiment going into the company's earnings release has 33% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 84.80% with revenue increasing by 59.41%. Short interest has increased by 26.5% since the company's last earnings release while the stock has drifted higher by 1.2% from its open following the earnings release to be 8.1% below its 200 day moving average of $280.96. Overall earnings estimates have been revised higher since the company's last earnings release. On Tuesday, July 16, 2019 there was some notable buying of 30,445 contracts of the $50.00 put expiring on Friday, August 16, 2019. Option traders are pricing in a 7.8% move on earnings and the stock has averaged a 7.4% move in recent quarters.

(CLICK HERE FOR THE CHART!)

Boeing Co. $377.36

Boeing Co. (BA) is confirmed to report earnings at approximately 7:30 AM ET on Wednesday, July 24, 2019. The consensus earnings estimate is $1.89 per share on revenue of $20.27 billion and the Earnings Whisper ® number is $1.91 per share. Investor sentiment going into the company's earnings release has 17% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 43.24% with revenue decreasing by 16.44%. Short interest has increased by 11.2% since the company's last earnings release while the stock has drifted lower by 0.1% from its open following the earnings release to be 4.0% above its 200 day moving average of $362.82. Overall earnings estimates have been revised lower since the company's last earnings release. On Monday, July 8, 2019 there was some notable buying of 6,176 contracts of the $325.00 put expiring on Friday, August 16, 2019. Option traders are pricing in a 3.8% move on earnings and the stock has averaged a 3.0% move in recent quarters.

(CLICK HERE FOR THE CHART!)

AT&T Corp. $32.79

AT&T Corp. (T) is confirmed to report earnings at approximately 6:50 AM ET on Wednesday, July 24, 2019. The consensus earnings estimate is $0.89 per share on revenue of $45.02 billion and the Earnings Whisper ® number is $0.90 per share. Investor sentiment going into the company's earnings release has 66% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 2.20% with revenue increasing by 15.48%. Short interest has increased by 16.4% since the company's last earnings release while the stock has drifted higher by 5.5% from its open following the earnings release to be 4.5% above its 200 day moving average of $31.37. Overall earnings estimates have been revised lower since the company's last earnings release. On Monday, July 8, 2019 there was some notable buying of 144,398 contracts of the $28.00 call expiring on Friday, January 17, 2020. Option traders are pricing in a 4.1% move on earnings and the stock has averaged a 4.5% move in recent quarters.

(CLICK HERE FOR THE CHART!)

Snap Inc. $14.02

Snap Inc. (SNAP) is confirmed to report earnings at approximately 4:10 PM ET on Tuesday, July 23, 2019. The consensus estimate is for a loss of $0.10 per share on revenue of $358.48 million and the Earnings Whisper ® number is ($0.08) per share. Investor sentiment going into the company's earnings release has 61% expecting an earnings beat The company's guidance was for revenue of $335.00 million to $360.00 million. Consensus estimates are for year-over-year earnings growth of 9.09% with revenue increasing by 36.69%. Short interest has decreased by 3.8% since the company's last earnings release while the stock has drifted higher by 13.5% from its open following the earnings release to be 36.9% above its 200 day moving average of $10.24. Overall earnings estimates have been revised lower since the company's last earnings release. On Friday, July 5, 2019 there was some notable buying of 7,449 contracts of the $19.00 call expiring on Friday, July 26, 2019. Option traders are pricing in a 13.7% move on earnings and the stock has averaged a 19.1% move in recent quarters.

(CLICK HERE FOR THE CHART!)

ShiftPixy, Inc. $0.63

ShiftPixy, Inc. (PIXY) is confirmed to report earnings at approximately 8:00 AM ET on Monday, July 22, 2019. The consensus estimate is for a loss of $0.08 per share on revenue of $14.39 million. Investor sentiment going into the company's earnings release has 44% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 33.33% with revenue increasing by 53.48%. Short interest has decreased by 8.2% since the company's last earnings release while the stock has drifted lower by 50.9% from its open following the earnings release to be 63.8% below its 200 day moving average of $1.74. Overall earnings estimates have been revised higher since the company's last earnings release. The stock has averaged a 16.9% move on earnings in recent quarters.

(CLICK HERE FOR THE CHART!)

Halliburton Company $21.75

Halliburton Company (HAL) is confirmed to report earnings at approximately 6:45 AM ET on Monday, July 22, 2019. The consensus earnings estimate is $0.30 per share on revenue of $5.97 billion and the Earnings Whisper ® number is $0.29 per share. Investor sentiment going into the company's earnings release has 60% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 48.28% with revenue decreasing by 2.88%. Short interest has increased by 39.2% since the company's last earnings release while the stock has drifted lower by 31.6% from its open following the earnings release to be 25.7% below its 200 day moving average of $29.27. Overall earnings estimates have been revised lower since the company's last earnings release. On Tuesday, July 16, 2019 there was some notable buying of 9,264 contracts of the $20.00 put expiring on Friday, August 16, 2019. Option traders are pricing in a 5.3% move on earnings and the stock has averaged a 3.5% move in recent quarters.

(CLICK HERE FOR THE CHART!)

Twitter, Inc. $36.77

Twitter, Inc. (TWTR) is confirmed to report earnings at approximately 7:00 AM ET on Friday, July 26, 2019. The consensus earnings estimate is $0.19 per share on revenue of $828.49 million and the Earnings Whisper ® number is $0.24 per share. Investor sentiment going into the company's earnings release has 75% expecting an earnings beat The company's guidance was for revenue of $770.00 million to $830.00 million. Consensus estimates are for earnings to decline year-over-year by 0.00% with revenue increasing by 16.60%. Short interest has increased by 9.0% since the company's last earnings release while the stock has drifted lower by 0.4% from its open following the earnings release to be 10.1% above its 200 day moving average of $33.39. Overall earnings estimates have been revised higher since the company's last earnings release. On Monday, July 15, 2019 there was some notable buying of 7,151 contracts of the $60.00 call expiring on Friday, January 15, 2021. Option traders are pricing in a 10.4% move on earnings and the stock has averaged a 12.7% move in recent quarters.

(CLICK HERE FOR THE CHART!)

Visa Inc $179.24

Visa Inc (V) is confirmed to report earnings at approximately 4:05 PM ET on Tuesday, July 23, 2019. The consensus earnings estimate is $1.33 per share on revenue of $5.70 billion and the Earnings Whisper ® number is $1.37 per share. Investor sentiment going into the company's earnings release has 79% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 10.83% with revenue increasing by 8.78%. Short interest has decreased by 6.9% since the company's last earnings release while the stock has drifted higher by 11.7% from its open following the earnings release to be 19.5% above its 200 day moving average of $150.03. Overall earnings estimates have been revised higher since the company's last earnings release. On Tuesday, July 16, 2019 there was some notable buying of 4,839 contracts of the $165.00 put expiring on Friday, August 16, 2019. Option traders are pricing in a 3.1% move on earnings and the stock has averaged a 2.6% move in recent quarters.

(CLICK HERE FOR THE CHART!)

DISCUSS!

What are you all watching for in this upcoming trading week ahead?
I hope you all have a fantastic weekend and a great trading week ahead wallstreetbets!
submitted by bigbear0083 to wallstreetbets [link] [comments]

Weekly Forex Forecast 19th-23rd October - Technical ... FOREX Daily Analysis Forecast for Thursday July 9, 2020 by Nina Fx Weekly Forex Forecast 20th - 24th April 2020 - YouTube Daily Forex Market Analysis - June 18, 2020 Forex Iņtraday Analysis Forecast for Wednesday June 17, 2020 by Nina Fx FULL WEEK FOREX ANALYSIS APRIL 13th - 17th 2020 -TRIPLE ... EUR/USD Technical Analysis for April 13, 2020 by FXEmpire

Money › Forex Fundamental Analysis for Forex. Fundamental analysis is the study of economic factors that influence foreign exchange rates in the hope of trying to forecast future rates. Fundamental analysis in forex attempts to predict currency moves by studying interest rates, government policies, business cycles, and economic growth in the 2 countries where the currencies are being compared. Today's Forex Analysis Reports, Currency Forecast, Technical Analysis, Fundamental Analysis. US Dollar, Euro, Japanese Yen, British Pound, Swiss Franc, Canadian Dollar, Australian Dollar, New ... The most current Forex fundamental analysis brought to you by DailyForex. (Page 205 of 205) Read live fundemental analysis for today. Fundamental analysis accounts for global economic, financial and political news, their correlation and influence on live currency rates. In other words, it can forecast things that are not reflected on charts, but can appear tomorrow and become the object of the fundamental analysis. Fundamental forecast for euro for today Money controls the world. Everything seems to be against the euro: the second wave of COVID-19 in Europe, the S&P 500 ’s retracement, the worsening of the eurozone’s economy and the ECB’s hints at monetary policy softening. Our Forex fundamental analysis is written by experienced economists who can clearly extrapolate market lessons from daily news events. Eliminate the need to analyze the news independently by reading daily fundamental analysis from DailyForex. We’ve done the hard work for you, so that you can spend more time in the trading room and less time in the news room. EUR/USD Forecast Fundamental Analysis Euro / US Dollar × EUR/USD Forecast Fundamental Analysis Euro / US Dollar. Source: PaxForex Premium Analytics Portal, Fundamental Insight. The German Trade Balance for August was reported at a €15.7B. Economists predicted a figure of €18.2B. Forex traders can compare this to German Trade Balance for July, reported at €18.0B. Exports for August ...

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Weekly Forex Forecast 19th-23rd October - Technical ...

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