On Friday, the value of the United States Dollar remained stable at a level that had not been seen in 20 years, despite a widespread wave of risk aversion that swept through global markets. Traders were toying with the possibility that the Federal Reserve might raise interest rates by 100 basis points later this month.
A deluge of negative news over the previous day and a half impacted the mood, which led to the decline in the value of risky currencies such as the Australian Dollar and the British pound.
As the earnings season for U.S. banks started on a weak note, China’s growth in the second quarter tanked more than was expected. Italy faced a new political crisis; the Dollar rose to its highest levels since September 2002, above 109, against a basket of its competitors. This occurred at the same time that the Dollar reached its highest level since September 2002. “A stabilization in the dollar around present levels is probable today,” analysts from ING wrote in a note. “However, we continue to highlight: a) limited headroom for a correction; b) a balance of risks remaining slanted to the upside in the short term.”
After data released on Wednesday showed that consumer price inflation in the United States was racing at the fastest pace in four decades, traders ramped up their bets that the Federal Reserve would go for a super-sized tightening at their meeting on July 26-27. As a result, the greenback was on track for its third week in a row of gains.
These wagers were reduced when the Federal Reserve Governor Christopher Waller and the President of the Federal Reserve Bank of St. Louis, James Bullard, both said that they favored another rate increase of 75 basis points for this month, despite the inflation data.
After falling below parity for a second day on Thursday, the Euro clawed its way back and traded at $1.0026 on Friday.
After the president of Italy rejected Mario Draghi’s offer to resign as prime minister, the single currency’s value fell as low as $0.9952 per unit. Draghi’s offer to resign was the catalyst for the drop.
The Chinese yuan remained at its lowest level versus the Dollar in two months. They seemed to be on track for its worst weekly slide since May as dismal data fueled questions about China’s ability to achieve its economic growth objective for this year.
In this article, we have covered the highlights of global market news about the Silver Price, USD/JPY, Copper Price and S&P 500 Index.
Silver Price Analysis: XAG/USD will continue to fall towards the $17.92 support level.
Already having established a new high, silver is moving closer and closer to the critical support level of $18.65. The economists at Credit Suisse anticipate that there will be additional declines in the coming weeks and months.
“Silver has already finished a massive top and is getting closer and closer to the vital 61.8 percent retracement support of the whole 2020/21 up move, which is around $18.65. We anticipate this will serve at the very least as a temporary floor. On the other hand, if the momentum continues to deteriorate, it is conceivable that more deterioration towards the $17.92 support may occur within the next one to two months.
“From a purely technical point of view, Silver will not significantly stabilize until it rises over the 55-day moving average, presently sitting at $21.33.”
Since ancient times, silver prices have been tracked. Among its many uses, silver (XAG) is a valuable metal found in jewelry, cutlery, electronics, and money. In financial markets throughout the globe, silver prices are closely monitored. Silver has been exchanged for thousands of years and originally served as the underpinning for money.
USD/JPY: Attention moves now to 140.00
The 24-hour view: “While we did anticipate that the USD would appreciate yesterday, we believed that a sustained increase over 138.00 is doubtful.’” When the USD climbed to a new high of 139.39, we were caught off guard by the sudden acceleration to the upside. Despite being at an all-time high level of buying, the quick surge has not yet shown any indication of slowing down. In other words, the USD might keep climbing higher until it reaches 139.50. It is doubtful that the enormous resistance located around 140.00 will come into play for the time being. Support may be found at 138.60, and then at 138.30.”
Within the next one to three weeks: “We went bullish USD three days ago (12 July, spot at 137.20), and we predicted that USD might climb further to 138.00, as high as 138.50. Although we were correct in predicting that the USD would rise, we were not quite prepared for the lightning-fast pace at which it blew right through 138.00 and 138.50 yesterday on its way to a new all-time high of 139.39.
The acceleration of the price increase provides evidence that the USD will continue to gain strength. The next important level to pay attention to is at 139.50, and then at 140.00, which is a significant round-number level. On the other hand, a breach of 137.50 (the level of strong support was at 136.30 the day before) would signal that the upward solid pressure present recently has weakened.
Copper Price Analysis: A 61.8% retracement of around $6,844 is needed to level the market.
Copper is still seeing selling pressure and is now trading only a hair’s breadth above the previous yearly low. The market analysts at Credit Suisse anticipate that the metal will locate a stable support level at the $6,844 price point.
“We expect the 61.8 percent retracement at $6,844 to floor the market temporarily,” with the industrial metal holding just barely above the $7,291 last set YTD low. “We would expect the 61.8 percent retracement at $6,844 to floor the market.”
Key resistances may still be observed at the latest breakdown point, near $8,570/8,740.
S&P 500 Index: Around danger of more short-term weakening to long-term supports at 3522/05.
S&P 500 continues under pressure. According to the analysts at Credit Suisse, the near-term risk over the next two to four weeks is projected to be lower than it is now. However, crucial support is still anticipated around 3522/05.
The market has to break above the resistance level of 3946 to conduct a deeper rebound.
“A break below 3637 would likely set off additional weakening over the following two to four weeks, with the following support being around 3522/05, which is the location of the 50 percent retracement and the 200-week average. We would be inclined to seek at least a floor here if it were hit, especially in light of the waning momentum over the medium term.
Please click here for the News Updates from July 14, 2022.
Reddit has become a hotspot for social-media-driven traders and investors who have proved their capacity to affect markets, infusing equities such as GameStop and AMC with extreme volatility. But which stocks are garnering the most interest on Reddit today?
Top stocks to track on Reddit
According to statistics from Quiver Quantitative, the following is a list of the ten most frequently discussed U.S. equities in the WallStreetBets thread on Reddit during the last 24 hours, as of July 14, 2022. Exchange-Traded Funds (ETFs) were omitted.
Tesla
GameStop
JPMorgan
Apple
Integrated Micro Devices
TSMC
Twitter
C3.ai
Versus Systems
Visa
Ahead of the opening bell, JPMorgan shares are down 2.7% after missing forecasts and temporarily stopping share repurchases from improving its capital buffers in response to the most recent stress tests. Wall Street had forecast $2.90 per share, but earnings per share fell by 27 percent to $2.76, a considerably worse decline than the $2.90 realized. The decline in earnings was primarily attributable to difficult comparisons from the previous year when the release of reserves enhanced profits. Still, the bank saw earnings driven down as reserves began to rise again in light of the uncertain economic outlook.
The company has paused buybacks while it grows capital, and the dividend is expected to stay unchanged in the third quarter. According to the firm’s CEO, Jamie Dimon, the bank is prepared for everything. Although the U.S. economy seems robust, the IMF has cautioned that geopolitical tensions, rising inflation, higher interest rates, tighter monetary policy, and the cost-of-living problem will have long-term effects on the global economy.
Meanwhile, Morgan Stanley is down 1.5% in premarket trading after a disappointing second quarter. The net sales decreased by 11% to $13.1 billion, while earnings per share decreased by 25% to $1.39. Wall Street had anticipated $13.3 billion in sales and $1.58 per share in earnings. The poor performance was partially attributable to challenging comparisons with the prior year but was also influenced by a decline in dealmaking, as M&A transactions and IPOs have dried up this year due to an uncertain outlook.
Both corporations have kicked off the earnings season for U.S. banks and set a negative tone in advance of their competitors’ announcements. Wells Fargo and Citigroup, which will report tomorrow, are down 2.2% this morning, while Bank of America and Goldman Sachs, which will report on Monday, are down 1.8% and 2.5%, respectively.
TSMC stock is up 1.6% before the market opens on a better-than-expected quarterly performance. Wall Street had predicted an EPS of NT$8.41 for the quarter, but the actual earnings per share of NT$9.14 crushed that estimate. The biggest chipmaker in the world said that demand for semiconductors used in high-performance computers, Internet of Things devices, and automotive applications drove growth and anticipated this trend to continue in the third quarter. It projected that sales for the third quarter would range between $19.8 billion to $20.6 billion, which was more optimistic than the previous estimate of $18.4 billion. Its margin projections were likewise more optimistic than expected.
When asked how demand would perform in 2023, management said it was too early to predict if clients would reduce or postpone purchases, but they remain optimistic that it will continue to increase. We anticipate that our clients will begin to reduce their inventory levels. CEO C.C. Wei warned investors that inventory corrections would continue for many quarters until the first half of 2023. This has caused the company to postpone its capital expenditure objectives; however, longer lead times for equipment are also contributing to a reduced Capex budget.
Apple, whose most significant supplier is TSMC, is down 1 percent this morning. Strong results from TSMC should alleviate worries about the market for electrical products like smartphones. However, demand was cooling, fueling the expected inventory reduction in the following quarters. Apple will announce quarterly results the following week, and Wall Street expects the company to disclose its first quarterly earnings decline in almost two years due to severe competition. The company’s revenue is anticipated to increase, but growth will be driven by its services segment, not its hardware sector. The demand prognosis will be at the forefront.
Following the release of TSMC’s findings, U.S. chipmaker AMD is up 0.7%. AMD plans to disclose quarterly results on August 2, with sales and adjusted EPS expected to increase by over 65 percent compared to the same period last year. This morning, BMO Capital Markets upgraded the stock to Outperform from Market Perform and put the price objective at $115.
Tesla shares are down 1.6% in premarket trading today. The chief of its Autopilot system, Andrej Karpathy, departed the firm yesterday, just after the company laid off 200 staff working on the project last week. Panasonic, one of Tesla’s key suppliers, wants to establish a new battery facility in Kansas to increase supply when the electric vehicle manufacturer is struggling to create enough batteries to fulfill demand.
Twitter shares remain volatile and are up 0.8% to $37.05 this morning as markets continue to speculate on the victor as the social media company prepares for a battle with Elon Musk after the withdrawal of his $44 billion acquisition attempt. In September, the two will present their reasons at a four-day trial unless they can settle out of court beforehand.
Twitter contends Musk does not have valid reasons to back out of the agreement and wants him to pay the initial fee of $54.20, but Musk claims he may withdraw since Twitter violated the agreement by neglecting to provide information. As far as Twitter is concerned, the agreement is still active and relies solely on regulatory approval. Yesterday, Twitter said there are no plans for company-wide layoffs.
Visa shares are down 1.4% before the opening bell, trading at $201.40 as investors are concerned about the future of consumer spending in light of this week’s scorching inflation data. Last month, consumer prices increased quicker than expected, and the markets are concerned that a decrease in spending might harm card payments. Meanwhile, M.P.s in the United Kingdom have submitted letters to Visa and Mastercard inquiring why they have almost sixfold raised costs when British consumers purchase with European firms.
The Treasury Select Committee has said that costs have increased from 0.2% to 1.15 percent when purchasing from Europe without justification. Wells Fargo reaffirmed its Overweight rating on the payments behemoth and lowered its price target from $280 to $255.
Versus Systems, which helps businesses improve digital interaction, is down 9.8 percent before the opening bell, trading at $0.49. The business announced its intention to raise $2.2 million by selling 4.1 million shares at $0.52 apiece to an institutional investor this morning. The transaction is expected to conclude on July 18. The investor will also get warrants allowing it to purchase an additional 6,2 million shares at the same price. The funds will be utilized for corporate and general objectives.
GameStop, which garnered headlines this week after launching its NFT platform, is down 1.3% in premarket trading. Investors are prepared for the corporation to complete its 4-for-1 stock split later this month, with stockholders on the register at the end of play on July 18, receiving three more shares for each one they already own when the stock resumes trading on July 22 with split-adjusted prices.
Other movers to observe
To avoid a fine, Amazon has filed ideas to European authorities, resulting in a 1 percent decline in Amazon’s share price today. After being accused of favoring its items above those of third parties, the corporation said it would not exploit sellers’ data for its retail operation.
Alphabet shares were down 0.5% before the market opened after the release of preliminary conclusions by South African authorities that Google’s sponsored search results distort competition and make it a de facto monopolist in online search. It has been recommended that sponsored advertisements be clearly labeled as advertisements and that organic search results be prioritized on websites.
Intel shares are down 0.3% this morning after a report from Nikkei that the firm has begun informing customers that it intends to hike pricing for several of its products in response to growing expenses. According to the article, prices might be increased by 10 to 20 percent, with Intel having intimated in its most recent earnings release that it may seek to increase pricing.
Upgrades
JPMorgan has upgraded Amphenol to Overweight from Neutral and increased its price objective to $115 from $100. Today, the electrical connection manufacturer’s stock price is up 0.8% to $64.71.
JPMorgan has upgraded CDW to Overweight from Neutral and increased its price objective to $205 from $200. The technology stock is up 0.6% before market opening, trading at $159.26.
Jefferies has raised Centene to Buy from Hold and boosted its price objective to $115 from $82. At $85.76, the care firm is up 0.7% today.
Deutsche Bank has upgraded Costco to Buy from Hold and increased its price objective to $529 from $525. The wholesaler is up 0.8% before the opening bell, trading at $495.99.
Barclays has raised H.P. from Equal-weight to Overweight and set its price target at $52. The company’s stock price is down 1.7% in premarket trading to $30.53.
Downgrades
Baird has downgraded A O Smith to Neutral from Outperform and reduced its price objective to $60 from $72. At $53.86, the stock is 3.3 percent down today.
Jefferies has downgraded Cigna from Buy to Hold and decreased its price target from $330 to $271. The healthcare and insurance company remains unchanged at $273.75 before the opening bell.
JPMorgan has reduced Cisco from Overweight to Neutral and lowered its price target from $61 to $51. The stock is down 2.3% in premarket trading, trading at $41.71.
Citigroup has reduced Dollar General from Buy to Neutral and put its price target at $258. At $241, the bargain retailer is down 2.3% today.
Baird has downgraded Fastenal to Neutral from Outperform and reduced its price objective to $48 from $68. The company’s stock price is down 1.7% to $46 this morning.
Wells Fargo has reduced Fiserv to Equal-weight from Overweight and decreased its price objective to $97 from $123. The company’s premarket price is $89.51, a decrease of 2.6%.
A bear market is characterized by an asset price decrease of at least 20 percent from recent highs. Clearly, these are hardly favorable circumstances, but fighting back might be risky.
Here, we will discuss eight essential investing methods and mentalities that can help you remain cool and “play dead” while the stock market eats into your gains.
Bear Market Strategies
Keep Your Fears Under Control
Wall Street has an ancient saying: “The Dow climbs a wall of fear.” In other words, the Dow has continued to increase throughout time despite economic problems, terrorism, and numerous other catastrophes. Always attempt to separate your emotions from your investing decision-making process. A few years from now, what appears like a great global calamity now may be regarded as little more than a blip on the radar screen. Remember that fear is an emotion that may impair logical decision-making. Keep your cool and continue!
Invest Using Dollar Cost Averaging
The most essential thing to remember during an economic slowdown is that negative years on the stock market are common; they are a natural component of the business cycle. If you are a long-term investor (with a time horizon of 10 years or more), dollar-cost averaging is one of your options (DCA). By acquiring shares regardless of price, you get shares at a discount while the market is down. Your cost will “average down” over time, resulting in a better total entry price for your shares.
Act Dead
During a bear market, bears dominate and bulls have no chance. According to an ancient proverb, the best course of action during a bear market is to pretend dead, just as you would if you saw a genuine grizzly bear in the woods. Fighting back would be very risky. By remaining cool and avoiding unexpected movements, you will avoid becoming a bear’s meal. Playing dead in financial terms refers to allocating a greater proportion of your portfolio to money market products, such as certificates of deposit (CDs), U.S. Treasury bills, and other assets with high liquidity and short maturities.
Diversify
Diversification is allocating a portion of your portfolio to stocks, bonds, cash, and other assets. The manner in which you divide your portfolio depends on your risk tolerance, time horizon, objectives, etc. Every investor’s circumstances are unique. A smart asset allocation plan will enable you to avoid the potentially harmful consequences of putting all of your eggs in one basket.
Never invest more money than you can afford to lose.
Investing is vital, but so are eating and staying warm. It is undesirable to invest short-term cash (such as money for the mortgage or groceries) in the stock market. As a general rule, investors should not invest in stocks unless they have a five-year or longer investment horizon, and they should never invest money that they cannot afford to lose. Bear markets and even slight market dips may be exceedingly devastating.
Consider Excellent Values
Bear markets may provide excellent investment opportunities. The secret is knowing what you’re searching for. A bear market is characterised by equities that are beaten up, battered, and priced too low. Value investors such as Warren Buffett often consider bear markets as purchasing opportunities due to the fact that the prices of excellent firms fall in tandem with the valuations of inferior companies, resulting in very favourable valuations. Buffett often increases his holdings in some of his favourite firms during market downturns because he understands the market’s propensity to unfairly penalise even outstanding businesses.
Take Stock in Defensive Industries
In general, defensive or non-cyclical equities do better than the market as a whole during bear markets. These sorts of stocks provide a constant dividend and dependable profits regardless of the market’s condition. Companies that manufacture non-durable home goods, such as toothpaste, shampoo, and shaving cream, are examples of defensive sectors, since consumers will continue to use these products throughout difficult times.
Prefer Short
There are opportunities to benefit from price declines. One method is short selling, which involves borrowing shares of a business or ETF and selling them in the hope of buying them back at a cheaper price. Short trading involves margin balances and might result in damaging losses if markets rise and short positions are covered, resulting in further price compression. Put options are another alternative, which increase in value when prices decline and guarantee a minimum price at which to sell an asset, thereby setting a floor for your losses if you are hedging. To purchase puts, you must be able to trade options in your brokerage account.
Inverse exchange-traded funds (ETFs) provide investors with the opportunity to benefit from the decrease of significant indexes or benchmarks, such as the Nasdaq 100. When the main market indexes decline, these funds increase, enabling you to benefit while the rest of the market declines. These options may be acquired simply from your brokerage account, unlike short selling or puts.
Why Is It a Smart Move to Continue Investing During Bear Markets?
The stock market and the economy tend to rise over the long term. Bear markets may disrupt this generally upward tendency, but these declines always finish and reverse, resulting in new highs. By investing during bad markets, you may develop stronger holdings by purchasing equities at cheaper prices (“on sale”).
What is the frequency of bear markets?
Historically, bear markets in the United States occur every 4.5 to 5 years on average.
Why Is This Known as a Bear Market?
There are many conflicting hypotheses about the origin of the names bull and bear markets. Bulls often attack by thrusting their horns forward, while bears typically strike by bringing their claws downward. According to a second explanation, the name “bear” derives from the early fur trade, in which bearskins were seen as especially dangerous goods in terms of price and durability.
Which bear market was the most severe to date?
The 1929-1932 decline, which coincided with the Great Depression, was the most severe and longest bear market ever.
In this article, we have covered the highlights of global market news about the Euro, Dollar, Japan’s Yen and Natural Gas.
The Euro has reached parity; its destiny now rests on energy markets.
The Euro is headed for one of its worst years ever after falling below $1 for the first time in 20 years, particularly if the EU enters a protracted economic crisis as a result of the oil price shock brought on by the war in Ukraine.
For days, the Euro and the dollar were on the verge of parity; on Wednesday, it finally crossed that line. Its year-to-date decline of 11.8 percent is roughly equal to the losses seen in 2015, the year the European Central Bank enacted a significant stimulus.
Analysts believe that Wednesday’s action may pave the way for a slide towards $0.96, with some anticipating a drop to $0.90 if the gas supply is much more interrupted.
The actions placed the ECB in a tough position. To battle inflation, which is now running at a record high of 8.6 percent, it is anticipated to hike interest rates next week for the first time since 2011.
Currency weakness makes the inflation issue worse. However, the ECB is unable to undertake forceful policy tightening out of concern that it may halt economic growth.
Olivier Konzeoue, director of the currency team at asset management UBP, noted the implications of the oil crisis for Europe’s economy and stated, “We see an opportunity for a raise to $0.97 and maybe even $0.95. “We know it’s all about Russia,” he said.
Dollar Up on Interest Rate Increase Bets
The dollar increased on Thursday morning in Asia as anticipation of more monetary tightening from the U.S. Federal Reserve was fueled by the country’s scorching inflation figures.
Fueled by a combination of flows into haven assets amid rising recessionary worries and prospects for a quicker Federal Reserve policy tightening.
By 1:34 AM ET, the U.S. Dollar Index, which measures the value of the dollar against a basket of six other currencies, was up 0.43 percent at 108.42. (5:34 AM GMT).
A 0.69 percent increase brought the USD/JPY pair to 138.37. The AUD/USD pair increased 0.6% to 0.6764, while the NZD/USD pair decreased 0.9% to 0.6126.
The GBP/USD pair dropped 0.26 percent to 1.1859 while the USD/CNY pair moved up 0.15 percent to 6.7287.
The Consumer Price Index (CPI) for the United States increased to a four-decade high of 9.1 percent in June. Investing.com forecast a value of 8.8% but 8.6% was seen in May. Investors debated whether the figure of 9.1 percent represents the high.
The basic conclusion is that U.S. inflation momentum is increasing, according to Kristina Clifton, an economist at Commonwealth Bank of Australia (OTC: CMWAY), in a note.
The government of Japan is constantly monitoring FX with BOJ after seeing strong Yen declines.
According to Chief Cabinet Secretary Hirokazu Matsuno on Thursday, the Japanese government is worried about the recent steep drops in the value of the yen and will closely coordinate with the Bank of Japan to monitor the currency market with even greater urgency.
The senior government spokesman for Japan, Matsuno, reiterated remarks made previously by several influential officials when he stated, “We are worried about the yen’s fast falls observed in the foreign currency market recently.”
Regarding currency interventions, he made no remarks. In addition, Matsuno said that Japan will continue to watch the effects of US monetary policy adjustments and inflation trends on the Japanese and global economies during a routine press conference.
Matsuno was responding to a reporter’s query regarding the yen’s drop on Thursday morning to 138 yen per U.S. dollar levels for the first time since September 1998, following the U.S. annual consumer prices posting the largest increase in more than four decades, which sparked concerns the Federal Reserve may hike interest rates even more aggressively than previously anticipated.
At its next meeting on July 20-21, the Bank of Japan is anticipated to retain its ultra-low interest rates, reflecting a widening divergence with a worldwide wave of rate-hiking central banks that has spurred the decline of the yen.
Natural Gas Futures: The first point of resistance appears at around $7.00
On Wednesday, natural gas prices showed respectable increases despite increased open interest, which seems to favor the continuation of the rally. The little increase in volume may, however, delay the bounce’s momentum or encourage some consolidation shortly. A recent high at the $7.00 per MMBtu level seems to have temporarily stopped the upswing from continuing.
Please click herefor the News Updates from July 13, 2022.
Those who wish to profit from a bull market should invest early to gain from growing prices and sell their holdings at the market’s top. A financial market is said to be in a bull market when prices are increasing or are anticipated to increase. The word “Bull Market” may apply to anything that is traded, including bonds, real estate, currencies, and commodities, however it is most often used to describe the stock market.
The term “Bull Market” is normally reserved for prolonged periods in which a significant share of asset prices are increasing. This is because prices of securities increase and fall practically constantly throughout trading. Bull markets often last for many months or even years.
Learning about Bull Markets
Bull markets are characterized by optimism, investor confidence, and the belief that good performance would likely continue for a long time. Consistently predicting when market trends could shift is challenging. The fact that psychological factors and speculative activity may sometimes have a significant impact on the markets is one of the challenges.
There isn’t a single, accepted indicator that can be used to identify a Bull Market. But probably the most typical definition of a bull market is when stock prices increase by 20%, often after a 20% dip and before another 20% collapse. Bull markets are hard to forecast, therefore experts often only notice this occurrence after it has already occurred. Recent history’s most noteworthy bull market occurred from 2003 and 2007. The S&P 500 saw a big rise during this period after a prior loss; when the 2008 financial crisis took hold, significant declines resumed following the bull market run.
Bull Market Characteristics
Bull markets often occur when either the economy is growing or is already strong. They often occur in tandem with rising business profits, a robust gross domestic product (GDP), and a decrease in unemployment. In a bull market, investor confidence will also generally increase. Both the general mood of the market and the demand for equities will be favourable. Additionally, during bull markets, there will be a general surge in IPO activity.
Notably, some of the aforementioned criteria are easier to quantify than others. Although business earnings and unemployment may be measured, it can often be difficult to determine the overall tenor of market comments, for example. Securities will be in short supply while demand will be high, creating a seesaw effect. Few investors will be ready to sell stocks, but investors will be eager to purchase them. Investors are more eager to participate in the (stock) market during a bull market in order to make money.
Markets: Bull and Bear
A bear market, which is the antithesis of a bull market and is often characterized by declining prices, is the opposite of a bull market. According to the widely accepted theory on the origin of these phrases, the terms “Bull” and “Bear” are used to characterize markets because of how the animals battle their rivals. A bear swipes its paws down as a bull raises its horns towards the air. These behaviors serve as analogies for market activity. An upward trend indicates a bull market. A bear market is one where the tendency is down.
The economic cycle, which includes four phases: growth, peak, contraction, and trough, typically coincides with bull and bear markets. A bull market’s beginning is often a leading sign of an expanding economy. Stock prices increase regularly even before wider economic indicators like GDP growth start to trend upwards because investor confidence about future economic circumstances drives stock prices. Similar to how bear markets often begin before an economic downturn takes root. When examining past U.S. recessions, it can be shown that the stock market often declines months before the GDP does.
How to Benefit from a Bull Market
Those who wish to profit from a bull market should invest early to gain from growing prices and sell their holdings at the market’s top. Even while it might be difficult to predict when the bottom and peak will occur, the majority of losses will be small and often transient. In the section below, we’ll look at a few popular tactics used by investors during bull market times. These techniques do, however, contain some risk since it is hard to predict how the market will develop going forward.
Invest and Hold
Purchasing a specific asset and hanging onto it with the option to sell it later is one of the most fundamental investment methods. Why keep onto an asset unless you anticipate a gain in its price? This technique inherently requires confidence on the side of the investor. For this reason, the purchase and hold strategy is fueled in part by the confidence that comes with bull markets.
Buy and Hold activity has increased.
A modification on the basic purchase and hold strategy called increased buy and hold entails more risk. The idea behind the increased purchase and hold strategy is that an investor would keep increasing their holdings in a certain asset as long as its price keeps rising. One frequent strategy for growing holdings is that an investor purchase more shares in a preset number for each 1% increase in the stock price.
Additional Retracements
A retracement is a short period of time during which the price of a securities deviates from its overall trend. Stock prices are unlikely to continue rising even in a bull market. Instead, despite the main rising tendency, there will probably be shorter time frames with minor declines as well. In a bull market, some investors keep an eye out for retracements and act to purchase at these times. This approach is based on the assumption that the bull market will continue and that the price of the asset in question will swiftly increase again, giving the investor a reduced purchase price in the past.
Full Swing Investing
The practise of full swing trading is perhaps the most aggressive technique to try to profit from a bull market. As movements take place within the framework of a bigger bull market, investors following this approach will play highly active roles, using short-selling and other strategies to try to extract the most rewards.
Examples of a Bull Market
The longest and most successful bull market in modern American history began in 1982 at the conclusion of the stagflation period and ended in 2000 amid the dotcom crash. The Dow Jones Industrial Average (DJIA), which refers to a bull market that lasts for several years, saw average annual gains of 15% during this secular bull market.
The value of the tech-heavy NASDAQ market surged fivefold, from $1,000 to nearly $5,000, between 1995 and 2000. The bull market of 1982 to 2000 was followed by a lengthy bear market. The market had trouble getting going from 2000 to 2009, with average yearly returns of -6.2 percent. However, a bull market run lasting more than 10 years began in 2009. According to analysts, the last bull market began on March 9, 2009, and was primarily driven by a rise in technology companies.
When prices rise, why is it called a “Bull” market?
It’s unclear where the word “bull” really came from. Some people believe that the words “bear” (for down markets) and “bull” (for rising markets) come from the ways in which each animal hunts its prey. In other words, a bear will swipe down while a bull will raise its horns into the air. The movement of a market was then used as a metaphor to describe these acts. A bull market was thought to exist when the trend was upward. A bear market was present if the trend was downward.
Others cite Shakespeare’s plays, in which fights between bulls and bears are mentioned. The tragic title character in “Macbeth” laments that his adversaries have tied him to a stake but that “bear-like, I must fight the course.” The bull is portrayed in “Much Ado About Nothing” as a vicious but honourable animal. There are several further reasons.
Are We Currently in a Bull Market?
Generally speaking, a bull market occurs when the market has increased by at least 20% from its recent lows. The stock market has shown a tenacious bull market since the major market sell-off during the 2008–2009 financial crisis, rebounding considerably and hitting new all-time highs (despite some sharp pullbacks along the way).
Why Do Stock Prices Increase During a Bull Market?
Bull markets often coexist with a powerful, healthy, and expanding economy. Future earnings projections and a company’s capacity for cash flow both influence stock values. Growing GDP, high employment, and a robust production economy all indicate earnings will increase going forward, which is reflected in rising stock prices. Corporation profitability benefits from both low interest rates and corporate tax rates.
Why Do Bull Markets Occasionally Fade and Turn Into Bear Markets?
It becomes difficult to maintain growing stock values when the economy has a bad patch, such as a recession or surge in unemployment. Additionally, a downturn in investor and consumer mood that emphasizes fear or risk mitigation over greed or taking risks is often associated with recessions.
In this article, we have covered the highlights of global market news about the EUR/GBP, CNY, Gold price in US Inflation, and US Dollar Index.
EUR/GBP breaks below 200-DMA support and falls to a two-month low at 0.8400.
During the first part of trading on Wednesday, the EUR/GBP cross saw some selling and fell under the crucial 200-day SMA support. The ensuing decline pushed spot prices to a low of over two months, in the range of 0.8410-0.8405 in the early European session.
Investors are still worried that Europe’s energy problem would cause the country’s economy to contract more quickly. Due to the recent steep increase in borrowing rates for more indebted nations brought on by the European Central Bank’s tightening strategy, the Eurozone is also a danger of further fragmenting. This put considerable downward pressure on the EUR/GBP cross since it was considered a major contributor to the shared currency’s relative underperformance.
China’s June trade balance: Surplus continues growing as exports rocket
In Yuan terms, China’s June trade balance came in at CNY650.11 billion compared to CNY455.04 predicted and CNY502.89 billion previous.
Last month, exports increased by 22% vs a projected 11.7% increase and a 15.3% increase the month before. In contrast to the previous quarter, imports increased by 4.8%.
As exports exceeded estimates, China’s trade surplus in USD increased more than anticipated.
Trade Balance came up at +97.94 vs +75.7 predicted and +78.76 before.
Exports (YoY): 17.9% vs. +12% expected and +16.9% before. Imports (YoY): 1% against +2.0% experience and 4.1% last.
Gold price holds at $1,725 as a sinking wedge, US inflation teases bulls at an annual low
As we approach Wednesday’s European session, the price of gold (XAUUSD) has decreased to $1,725. By doing this, the precious metal maintains its position inside of a weekly falling wedge bullish chart pattern and fades the early-day recovery from the annual low. However, a comeback in the US Dollar Index and the negative performance of the Eurostoxx 50 Futures might also be contributing factors to the depreciation of XAUUSD (DXY). However, ahead of the release of the US Consumer Price Index (CPI) for June, gold dealers are put to the test by conflicting worries about China’s covid circumstances and economic development as well as inflation fears.
Due to traders’ continued caution ahead of the crucial US inflation, particularly in light of the record-high one-year US inflation forecast and aggressive Fed bets, gold is still trendless. The IMF’s latest modification of economic estimates in a negative direction, which primarily factored in a 75 basis point increase from the Fed, also emphasizes the significance of the US CPI.
The US Dollar Index is back over 108.00 ahead of CPI.
The index has resumed its upward momentum after Tuesday’s unsuccessful session, refocusing on Tuesday’s cycle highs in the upper 108.00s amid fluctuating risk appetite patterns and in advance of the crucial publication of US inflation data as measured by the CPI.
Between now and the US CPI, market players are becoming more cautious, as seen by the little decline in US rates seen in the US money markets.
The dispute over the Fed’s intentions to tighten monetary policy, recession fears and inflation worries are all anticipated to continue to drive price movement in the international markets for the foreseeable future.
On Tuesday, the index increased and achieved fresh cycle highs over 108.00. But it’s important to keep in mind that the recent steep increase in the dollar is mostly a reaction to the rapid depreciation of the euro.
The Fed’s divergence from most of its G10 counterparts, particularly the ECB, together with episodes of geopolitical effervescence and the return of investor risk aversion are anticipated to provide further support for the dollar. On the other hand, market speculation over a probable US recession may momentarily impede the dollar’s upward momentum.
Please click herefor the News Updates from July 12, 2022.
