Apple shares fell more than 2 percent Monday, falling for a second-straight day due to mounting concerns about unsustainably high stock prices. The iPhone maker’s stock has lost nearly 6.2 percent of its value in just two days. Technology stocks have been hit particularly hard, as some investment firms fear that stocks like Facebook, Amazon, Netflix, and Alphabet in particular rose too quickly.
The financial markets have become, to use David Stockman`s phrase, one huge gambling casino. The size of the derivative market, which is now an impressive $639 trillion, dwarfs the trivial Forex daily turnover of only $5 trillion. What is disturbing is that volatility has recently hovered at 10 or even below except for a slight blip a few weeks ago.
David Stockman’s prophecy over Wall Street seems to announce an Annus Horribilis : "This is one of the most dangerous market environments we’ve ever been in. It’s the calm before a gigantic, horrendous storm that I don’t think is too far down the road," he recently said on "Futures Now."
Wall street is experiencing a bullish cycle that is more than seven months old. How long will it last? Doubts regarding the sustainability of this trend continue to rise; they are more than justified if we consider that this season of the year is the less favourable from a statistical point of view. One month ago, the S&P 500 had given an early warning signal through a pullback of more than 1% within a single session. It didn’t happen since months but the market had more or less ignored such signal since the uptrend had quickly resumed. It happens often this way: a first pullback occurs, then the stock hunters intervene at the earliest opportunity to jump into the market at prices just a bit lower than the highs, a typical behaviour reflecting the ripeness of the uptrending cycle and, by consequence, its vulnerability.
Swiss bank J. Safra Sarasin must pay German drug store entrepreneur Erwin Mueller around €45 million ($50.7 million) in compensation for incorrect investment advice, a court in the German city of Ulm has ruled.
The Brazilian-owned bank had put Mueller’s money into a fund specialising in so-called cum-ex trades. The 84-year-old businessman had said the bank did not properly advise him about the risks involved. Meuller had demanded restitution from the bank for being poorly advised on high-risk funds. The bank, which had rejected the accusations, has a month to appeal the verdict. It noted the case dated back to when it was majority owned by another business.
The massive cyberattack that targeted 300’000 devices in 150 countries around the world one week ago, including important social infrastructures, businesses and private users, raises serious question about growing internet vulnerabilities and computer safety. It is still unclear who is the responsible for the ransomware attack, government agencies around the world are investigating, but one thing is certain: the growing menace of cyber-attacks is escalating, governments and companies are expected to increase spending on IT security after being caught out by the attack and the firms providing IT security services are poised to expand.
After a situation was illuminated in part 1 of the series (TRADERS’ 09/2016), in which the price was outside the Bollinger bands *, the second part (TRADERS’ 11/2016, in the shop under www.traders-media .de), focus on strong price movements without interim corrections. The third part now follows the previous one. You comb through your trading-universe in order to find chart-constellations, which show strong price-declines – this time in combination with price gaps, which increase further the sell-pressure.
The political risk is now behind us in France, it is time to go back to fundamentals. While underlying conditions in the global economy are strengthening, some data may disappoint and trigger a countertrend setback in markets. The economic surprise index has recently weakened (mostly in the US and the UK), the Chinese economy could slowdown later this year and Trump’s promises are being pushed back or diluted. As the equity market is now up 10%, is it time to take profit? The slack in the global inflation figures could persist over the next few weeks, but this should be a temporary move. Indeed, the cyclical macro backdrop remains supportive for equity prices and negative for bonds. Eurozone inflation accelerated to 1.9% YoY in April from 1.5% in March.
