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Stocks Tumble As Yields Surged

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STATE OF THE MARKETS

Stocks tumble as yields surged. US stocks slid into the red on Thursday after comments from Fed Chair Powell triggered a sell-off in bonds, sending yields surging higher. Dow (-1.05%), S&P (-1.48%) and Nasdaq (-2.07%), including Russell (-2.29%) tumbled as the 10Y benchmark hit 2.95%, the highest in 3 years. The news of a more aggressive rate hike plan, sent the Dollar index to reclaim the 100.50 minor handle.

In the commodities market, Dollar strength failed to push crude lower, instead the black gold climbed higher to close above $103.80/bl while gold was sold off to as low as $1,936.60s/oz before bidders emerged to settle the metal higher around $1,951.20s. Elsewhere, iron ore stalled around $154.40/tn while investors waited for the next catalysts.

In the FX space, short term traders were quick to take profits in the rise of the comdolls trio and sent the commodity currencies back to offers, while bidding Euro, Dollar and Sterling. King Dollar returned to the helm of demand in the medium term, alongside Loonie and Euro as the long term accounts demand more Dollar than Kiwi. Overall sentiments remain bearish.

On Friday, the Russia-Ukraine war seemed like an old news and markets look forward to seeing earning reports from American Express (AXP), Kimberly-Clark (KMB), Newmont (NEM), SAP SE (SAP), Schlumberger (SLB), Verizon (VZ) and HCA Healthcare (HCA) as well as the latest PMI composite figures.


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G8 CURRENCIES SENTIMENTS

ST EUR USD GBP JPY CHF CAD AUD NZD ST
MT USD CAD EUR GBP AUD NZD CHF JPY MT
LT AUD CAD USD GBP NZD EUR CHF JPY LT
** ST refers to Short-Term daily turnover, MT is Medium Term weekly 
and LT refers to Long-Term monthly turnover.


WALL ST MOST ACTIVE

TICKER LAST PRICE

% CHANGE

VOLUME 90 DAYS AVG
CYN 2.12 + 96.30 220,923.6K 322.2K
TQQQ 45.09 – 5.87 134,056.3K 111,930.8K
MULN 1.40 – 0.71 122,800.8K 90,141.9K
SQQQ 41.80 + 5.98 115,449.9K 75,374.6K
UVXY 13.02 + 11.28 100,559.0K 75,273.1K
CRXT 2.31 + 11.06 87,808.4K 4,914.0K
AAPL 166.42 – 0.48 87,128.3K 94,201.4K
SPY 438.06 – 1.50 85,322.4K 104,557.3K
AAL 20.22 + 3.80 83,918.0K 41,885.1K
T 20.21 + 4.01 81,240.2K 71,645.6K
** % Change here refer to price


WALL ST TOP FLOWS

TICKER LAST PRICE

VOLUME

% CHANGE FUNDS FLOW $
TSLA 1,008.78 35,078.7K + 53.33 35,386.7M
AAPL 166.42 87,128.3K + 7.66 14,499.9M
NVDA 201.83 65,501.9K + 19.29 13,220.2M
NFLX 218.22 53,419.1K + 277.47 11,657.1M
AMZN 2,965.92 3,193.0K + 12.11 9,470.2M
FB 188.07 49,867.8K + 87.27 9,378.6M
MSFT 280.81 29,425.9K + 6.97 8,263.1M
AMD 89.85 76,584.0K – 17.45 6,881.1M
GOOGL 2,496.29 1,818.3K + 25.63 4,539.0M
GOOG 2,498.75 1,505.8K + 35.45 3,762.6M
** % change here refers to volume


TOP 5 BLOCK ORDERS

SYMBOL PRICE TYPE R/VOL FUNDS FLOW $
BHP 71.46 equities/options 177.30 535.6M
AAL 20.22 equities/options 71.53 1,696.7M
CPNG 14.43 equities/options 29.16 167.0M
ZS 1,719.40 soybean futures 94,504 162.5M
ZC 795.20 corn futures 118,813 94.5M


OUR PICK – No New Pick

No new pick going into the weekend. The Fed’s announcement alone to taper the balance sheets has caused bonds to be sold off and commodities to pull back in favor of the higher yielding Dollar. Given 8.5% annual inflation and 2.95% 10Y coupon, real yields remained in negative territories. That is why investors continue to be vested in equities, especially dividend paying and value companies. The US may have to follow the Swiss and Japanese in solving their ever expanding debt. Negative rates policy might be near if the Feds failed to raise rates to match inflation.

Trades updates:  

Equities: AUY (19% undervalued, 1.98% yields) remained well bid and we expect to meet the final target in the coming weeks. We remain bullish CTRA (COG) (20% undervalued, 1.94% yields) and revised target to $35.30, T (23% undervalued, 5.71% yields) fell after Wells Fargo revised target lower to $21, MO (21% undervalued, 6.50% yields) has reach first target and we update stop to $54, VIPS (47% undervalued with 4.79 z-score) remained well bid after UBS maintain neutral rating but reduced target by 10 cents, CRON (22% undervalued with 27.69 z-score) and WBA (31% undervalued, 4.08% yields) had pulled back and now back around $47 – the level after news of potential bids from India’s Reliance.

FX & Commodities: We may re-enter silver, AUD/CAD and AUD/USD have reached their first target.

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HORIZON STRATEGY SL TP1 TP2
Short-Term
Medium-Term
Long-Term

 

Risk Disclaimer:

This article is for general information purpose only. It is not an investment advice or a solicitation to buy or sell any securities/oz. Opinions expressed are of the authors and not necessarily of MFM Securities Limited or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.