From the desk of Joe Rios
The three major benchmarks for the US including the S&P 500, 10 year treasury notes and the US dollar sold off significantly at the beginning of the week only to recover the losses by the end of the week. The correlations were not typical of what we have been seeing for the past several months. Rotation flows suggests the initial positioning was a selloff of US assets and a shift to foreign currencies. The most common market sentiment that we have been seeing has been risk on or risk off involving the bond, stock and currency markets. However last week’s price action may have a deeper meaning, but the market’s message is still not clear. The recent steep sudden selloff in German bunds, Japanese government bonds, US Treasuries and other global fixed income instruments suggest a potential liquidity problem may be surfacing. In the week ahead I will pay close attention to the intermarket relationship and I will focus on the correlations to help identify rotation flows. Even though last week’s market activity was challenging, we did managed to have a very rewarding and profitable week. Paying attention to the technicals along with correlation analysis helped us identify trading opportunities that offered low risk to high reward opportunities.
Today China cut interest rates for the third time in six months with a 25 basis point in the key one-year lending rate to 5.1% and the deposit rate to 2.25%. I will also pay attention to more data from China this week. The move in rates may help other stock markets, especially the emerging markets.
– Joe Rios
Live Trading Rooms and Educational Events
The Trading Room TradeLAB – Global Trading with Quantitative Technologies
Monday through Friday
RQ trade coaches include Agustin Criado and Joe Rios. Live demonstration of our pre-market quantitative analysis, real-time trading signals with RQ algorithmic technology, strategy performance review and Q&A session.
ATTENTION MEMBERS – To access The Trading Room® TradeLAB please log-in on the riosquant.com site and click on the link under The Trading Room. If you are already logged in, then click on the “My Account” found on the upper right hand corner of the first page.
EDU Workshop – Trading With Rotation-Flows: Uncover the Big Moves in Advance
Intermarket analysis is one of the most misunderstood approaches to technical analysis. Rotation-flows is the study of two or more related asset classes within the financial markets to determine where the strengths and weaknesses are in the markets. Instead of focusing on one specific market, it looks at several strongly correlated markets, including stocks, bonds, commodities and currencies.
Monday
All Day EUR Euro Group Meetings
7:00 AM GBP Official Bank Rate
Tuesday
4:30 AM GBP Manufacturing Production
5:30 AM AUD Annual Budget Release
10:00 AMUSD JOLTS Job Openings
5:00 PM NZD Financial Stability Report
Wednesday
1:30 AM CNY Industrial Production
2:00 AM EUR German Preliminary GDP
4:30 AM GBP Average Earnings Index
5:30 AM GBP Inflation Report And Gov. Carney Speaks
8:30 AM USD Retail Sales
10:30 AMCL Crude Oil Inventories
6:45 PM NZD Retail Sales
Thursday
8:30 AM USD PPI And Unemployment Claims
10:30 AMNG Natural Gas Storage
Friday
8:30 AM CAD Manufacturing Sales
10:00 AMUSD Preliminary Uom Consumer Sentiment
THERE IS A SUBSTANTIAL RISK OF LOSS IN TRADING COMMODITY FUTURES, OPTIONS, AND FOREIGN EXCHANGE PRODUCTS. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS
