Oil and gold are rising, and SPY hits a new high

MOTIVATION
QUOTE OF THE WEEK

"In the midst of chaos, there is also opportunity."
— Sun Tzu
The markets may be volatile, but each twist brings new chances for those who are prepared.

WEEK 07/10/2024 to 11/10/2024
🚨What you need to know this week🚨

• Traders bullish on Chinese stocks but pull back after the strong rally: Sentiment surrounding Chinese equities has been increasingly optimistic, driving strong interest in the sector despite global uncertainties. After their significant September run-up, Chinese equities are seeing some correction as traders take profits

• Chances of a 50 basis point rate cut diminish: Markets have largely priced out the possibility of a 50bp cut, with odds falling to just 5%.

• Chinese stocks outpace S&P 500 in September: The impressive rally in Chinese equities has left them outperforming the S&P 500, creating more interest in this emerging market.

• Markets recover after a weak start: Monday began with significant losses, but tech futures rebounded by Tuesday, leading a recovery largely fueled by big tech stocks.

• Bank earnings report: Investors are paying close attention to the financial sector this week, with bank earnings coming under the microscope amidst concerns about rising interest rates.

• US budget deficit hits $1.8 trillion in FY 2024: The federal deficit has ballooned to $1.8T, reflecting the growing gap between government spending and revenue.

• Odds of no rate cut in November increase: Market expectations of a rate cut in November have decreased, with only a 24% chance of a cut now predicted.

• CPI rises by 0.2% in September: Inflation ticked up by 0.2% in September, pushing the annual rate to 2.4%, slightly above expectations of 2.3%.

• Jobless claims spike to 258K: Weekly jobless claims rose by 33K, marking the highest level since August 2023. This could be a concerning sign for the labor market moving forward.

• Investors anticipate a new stimulus in China: Market participants are awaiting additional stimulus measures from the Chinese government, which could further boost their equity markets.

• Half of traditional investors plan to invest in crypto ETFs: As cryptocurrency continues to gain legitimacy, nearly 50% of traditional investors are planning to add crypto ETFs to their portfolios.

11/10/2024
🔎 Insights on the market 🔎

We had a peculiar week, where Monday hinted at a possible drop, but Tuesday and the rest of the week showed strong recovery. Chinese stocks experienced a pullback after an impressive rally the previous week. Corrections of up to 20% in some stocks like NIO, but of course, after rising 53% in a week or less. Some are looking quite interesting after this correction, as they meet several interesting pullback patterns with clear exit points to set a clear stop-loss in case things go unfavorable. (See NIO chart below). But of course… this is for those with strong nerves, because while they look good, they are moving A LOT, and you have to be able to handle that volatility.

On another note, oil touched the 200 EMA and corrected slightly before resuming its upward trend on Thursday. If it breaks through the 200 EMA, we could see an interesting rally, and some stocks like OXY could mimic an interesting movement—I’ll be keeping a close watch on it.

By the way, remember that these emails are weekly, and on top of that, I provide daily analysis of what I discuss here on my X profile, where you can follow me and see how I post asset analyses. In fact, we anticipated the oil pullback and its rebound with impressive precision (see post below).

📜 Historical Perspective 📜

• Chinese market corrections: Historically, when stocks undergo strong rallies, it is common to see corrections follow. This provides an opportunity for long-term investors to capitalize on pullbacks while the market digests gains.

• U.S. budget deficit: The U.S. deficit reaching $1.8 trillion is reminiscent of the fiscal challenges seen in previous years of economic downturn, potentially signaling future shifts in fiscal policy.

11/10/2024
✍️Market Lessons ✍️

This week shows that even in a bullish environment for Chinese stocks, volatility remains. The market’s reaction to rate cut expectations and inflation reports provides a stark reminder of how quickly sentiment can shift.

In September, Chinese stocks outpaced the S&P 500, highlighting the region's potential for significant gains in short periods when market conditions align.

💸 Common Mistakes 💸

Some traders may have over-leveraged themselves in Chinese equities following the September rally, not accounting for near-term corrections can lead to unnecessary losses.

📅Next Week’s Economic Calendar (14/10 to 18/10):📅

Monday, October 14, 2024

Tuesday, October 15, 2024

Wednesday, October 16, 2024

Thursday, October 17, 2024

Friday, October 18, 2024

📅EARNINGS CALENDAR (14/10-18/10/2024)📅

Tuesday, October 15, 2024

Wednesday, October 16, 2024

Thursday, October 17, 2024

Friday, October 18, 2024