Gold is on track to outperform stocks

Gold is on track to outperform stocks for the first time since 2011, highlighting the uncertainty that has accompanied this year’s stock market gains.
While a season of strong corporate earnings has powered stocks to record highs, investors are increasingly focusing on a cluster of issues that threaten to derail those rallies.
Many are worried about coming negotiations to raise the U.S. debt ceiling, an event that has roiled markets in previous years. A failure to raise the U.S. debt limit in a “timely manner” would prompt areview of the country’s credit rating, which now stands at the highest possible level, Fitch Ratings said Wednesday.
Others are nervous over a monthslong run of uneven U.S. economic data, which some are concerned could eventually drag down corporate earnings. Recent reports have shown some metrics, such as employment, holding strong while manufacturing falters and auto demand posts steep declines.
A stock market rally that hasn’t had a significant pullback in 19 months has amplified concerns that any correction could be swift and sharp, especially with valuations for many sectors near historic highs.
The worries have boosted prices for gold, a favorite destination for nervous investors who believe the metal will hold its value better than other assets when markets turn rocky.
Gold for August delivery is up 12.1% this year to $1,288.90 a troy ounce, while the S&P has risen 9.2%. Other indicators of investor anxiety, such as the Japanese yen, Swiss franc and CBOE Volatility Index have also risen in recent weeks.

Gold prices edged higher Wednesday

Gold prices edged higher Wednesday, lifted by a weaker dollar.
Gold for December delivery was recently up 0.2% at $1,293.60 a troy ounce on the Comex division of the New York Mercantile Exchange.
The WSJ Dollar Index, which tracks the U.S. currency against 16 others, was recently down 0.2% to 86.07. A falling dollar tends to buoy gold, which is denominated in the U.S. currency and becomes less expensive to foreign investors when the dollar declines.
At the same time, many investors are waiting for Federal Reserve Chairwoman Janet Yellen's speech at the central bank's annual economic symposium at Jackson Hole, Wyo. on Friday, analysts at Kitco Metals said.
Signs that the central bank may be rethinking its plans for a third rate increase this year would likely lift gold, which struggles to compete with yield-bearing investments when borrowing costs rise.
In base metals, copper for September delivery was recently down 0.5% at $2.9730 a pound.

EUR/USD has edged higher in the Monday session

EUR/USD has edged higher in the Monday session. Currently the pair is trading at 1.1815, up 0.45% on the day. On the release front, it’s a very quiet start to week, so we’re unlikely to see any significant movement from the pair on Monday. There are no US releases, and the sole euro zone event is the Deutsche Bundesbank monthly bulletin. On Tuesday, Germany releases ZEW Economic Sentiment, which is expected to slow to 15.3 points.
The euro took a dip on Thursday, following a terrorist attack in Barcelona, which killed 13 and wounded dozens. EUR/USD dropped below the 1.17 line and touched 3-week lows. However, the euro has quickly recovered, and is trading at 1.18. Barring any geopolitical crises, such as another terrorist attack, we can expect a few slow days until the Jackson Hole summit on Wednesday. Both the ECB and Federal Reserve find themselves pursuing a less accommodative monetary policy, and the markets will be listening closely to Janet Yellen and Mario Draghi. Will Yellen hint at a December rate hike? Will Draghi provide clues regarding the windup of the ECB’s asset-purchases program? Any comments in this vein could be seized upon by the markets and trigger strong movement by the euro. This was the case in June, when Draghi spoke at a central bankers meeting in Portugal, and his upbeat comments about the euro zone economy sent the euro soaring.

Gold prices fall

Gold prices fall into negative territory on reports that President Donald Trump's chief strategist Steve Bannon has left the White House. Gold for December delivery was recently down 0.1% at 1,291.40 after earlier hitting its highest level since November at $1,306.90. The Barcelona terror attack and uncertainty about the Trump administration's fiscal agenda had been supporting prices. Some say the long-term backdrop for gold is still positive even after the Bannon news. "I wouldn't read too much into that," said Bill O'Neill, co-founder of LOGIC Advisors. "There's still a myriad of potential events that can happen down the line that should prove bullish for gold,"

Trading traps in the stock markets Supply and Demand

The next and most important point is that often times right above or below these new highs and lows are supply and demand levels which act as repellants to those new buyers or sellers.  If you look closely inside those larger time frame candles you will discover those pockets of buy and sell orders just waiting to get filled. This saying references the notion that when the market looks very good, this is usually when it blows up.  This is not limited to going long; shorts also find huge reversals to the upside just when the market looks as though it’s ready to fall off  and head down. You will see this time and again as the markets are full of traps that the unsuspecting new trader is prone to falling prey to. The cycles will be more stable on longer term charts, but knowing the cycle can assist you in your trading.  If you see price approaching a supply or demand level but the cycle is not indicating a top or bottom, the level may have a higher probability of breaking.  But if the cycle top or bottom is near, the levels are more likely to hold.

VIX Trading

The VIX is related to the S&P 500 if the 500 drops sharply the Vix futures tends to go up. Most of the time the same is true if the S&P 500 is going up the VIX futures tend to go down.  This is not always the case but more often then not this holds true. VIX futures have been offered on the CBOE Futures Exchange since 2004. Since the Chicago Board. Options Exchange (CBOE) introduced futures and, subsequently, options on its Volatility Index, or VIX. At a quoted price of $12.1, one VIX futures contract is worth $12,100. Settlement. CBOE VIX futures are cash-settled and so, unlike futures on commodities. The VIX futures are very different from other index futures in that there prices are determined by a cost of carry but rather the market anticipation of the thirty day overall implied volatility of the SPX options will be at the VIX futures expiration. Many time traders will see the VIX futures trading above the VIX index other times it will be below.
 
  This can be an indication of the market's fear or complacency about the overall market action in the months ahead. Traders need to be aware if they trade the VIX futures that it does not always move in the same direction as the VIX index. Yhe VIX fitures will move close to the S&P 500 futures cash index. VIX is traded on the CBOE futures exchange and one point is worth one thousand dollars and the mini tick is worth .05 or fifty dollars. Vix futures are related to the S&P 500 because of the vix index itself is based on the SPX option prices.

  They are also used to value options on the vix index even though those are cash settled. The VIX futures and VIX are settled on the same day. The Wednesday that is thirty days prior to the third Friday of the calendar month. One thing is for sure a trader needs to learn how to trade this type of index or he will quickly wipe out their trading account. At most brokerages you have to apply to trade this type of index. This type of futures trading is very speculative and is not for all investors. Traders need to learn how to do this type of trading

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USD/JPY has posted slight gains on Friday

USD/JPY has posted slight gains on Friday, as the pair trades at the 116 line. On the economic front, there are no Japanese releases to wrap up the week. In the US, the spotlight is on employment numbers, with three key events – Nonfarm Payrolls, Average Hourly Earnings and Unemployment Rate. Traders should be prepared for possible volatility in the currency markets in the North American session.•USD/JPY posted gains in the Asian session. In European trade, the pair posted gains but has retracted
•115.88 is a weak support
•116.88 is  the next resistance line
•Current range: 115.88 to 116.88
Further levels in both directions:
•Below: 115.88, 114.83 and 113.80
• Above: 116.88, 118.05, 118.85 and 119.83
USD/JPY ratio is unchanged in the Friday session. Currently, short positions have a majority (54%), indicative of slight trader bias towards USD/JPY continuing to move to lower ground.

Canadian dollar has paused on Thursday

The Canadian dollar has paused on Thursday, following sharp gains in the Wednesday session. Early in North American trade, USD/CAD is trading at the 1.33 line. It’s a busy day on the release front. Canadian RMPI, which measures inflation in the manufacturing sector, came in at -1.5%, better than the forecast of -2.0%. In the US, ADP Nonfarm Employment Change disappointed with a reading of 153 thousand, well off the forecast of 171 thousand. There was better news from unemployment claims, which dropped to a 7-week low at 235 thousand. Later in the day, the US releases ISM Non-Manufacturing PMI. Employment numbers will be in the spotlight on Friday, led by US Nonfarm Payrolls and Canadian Employment Change.
The US dollar retreated ahead of the Federal Reserve minutes on Wednesday and the Canadian currency took full advantage, gaining close to one percent. USD/CAD has dropped to a low of 1.3254 on Thursday, its lowest level since December 14. The Canadian dollar slumped in the last two weeks of 2016, but has rebounded. With Canada and the US releasing key employment numbers on Friday, we could see some volatility from USD/CAD.

Trading the professional way

Trading the professional way really involves common sense.  We should buy stock on sale and sell it when it becomes expensive, not the other way around
When you trade you must fire on all cylinders; you must access and activate your resources, strengths and mental weapons in the psychological warfare which is trading.  The trading trenches are not a place to vacillate and equivocate; you must be willing to demonstrate your ability to focus on what matters most in the trade.  You must be willing to plan your trade and trade your plan with complete follow-through of all of your rules.

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USD/JPY has recorded gains on Friday

USD/JPY has recorded gains on Friday, erasing the losses which marked the Thursday session. Currently, USD/JPY is trading at the 117 line. There are no Japanese releases on the schedule. In the US, the sole event is Chicago PMI, with the markets expecting the indicator to dip to 56.5 points.
The yen moved higher on Thursday, courtesy of an optimistic report from the Bank of Japan. The bank’s Summary of Opinion, which was modestly upbeat, comes on the heels of last week’s rate statement, where the BoJ held rates at -0.10%. The summary noted that the economy is showing “moderate recovery”, boosted by stronger exports and steady consumer consumption. The report gave a thumbs up to the economy, stating that growth was expected to remain strong. Despite the optimistic tone of the BoJ, this week’s key consumer indicators pointed to persistent weakness in inflation and spending. Household Spending declined 1.5%, marking a ninth straight decline. The markets had predicted a small gain of 0.2%. The Japanese economy continues to grapple with deflation, as underscored by Tokyo Core CPI. The key indicator came in at -0.6%, weaker than the estimate of -0.4%. The BoJ continues to cling to its inflation target of 2.0%, but this goal is unlikely to be realized anytime soon. At the same time, the Japanese yen is down sharply, losing 11% since November 1. If the US economy continues to heat up in 2017, we could see the Fed step in with further rate hikes, which would likely push the yen to lower levels.