Weekly Updates 12/2/24 –16/2/24 February 13, 2024
This weekly update is designed to help you stay informed and relate economic and company earnings to potentially value-add your CFD (Contract For Difference) trading via hedging (risk reducing). This article should be used for educational purposes only and not as financial advice. We urge all traders to carry out your own due diligence before submitting trades.
Recap for last week (05 Feb 2024 – 09 Feb 2024)
*These prices are taken based on the previous Monday’s opening price and the preceding Friday’s closing price.
Last week’s market movement revolving around the gains on both the US major indices and Hang Seng Index. With US major tech rallying on a combination of earnings beats and gains in AI related stocks. Hang Seng and China indexes rallied as analysts are expecting the China government to finally step in to put a floor on equity prices. Given that Hong Kong and China equities have reached a multi-year low due to weakening fundamentals in the China economy and property market.
Updates for the week (12 Feb 2024 – 16 Feb 2024)
The data below showing the economic releases read as “Analyst’s estimate/ Consensus | Previous data”.
This week’s macro news mainly focuses on CPI data, manufacturing and housing data coming out of the US. With CPI taking center stage in major news as both the Federal Reserve and market participants are looking closely at inflation data to forecast when and how many times the Fed will cut rates in 2024. With CPI expected to come in at 0.2% MoM, a decrease from 0.3% in the prior month and CPI YoY expected to come in at 2.9%. With inflation expected to decrease, the Fed will have more justification to lower rates as soon as they can reasonably forecast upcoming rates to be ~2%. Singapore is expected to release GDP YoY data of a growth of 2.5%. A minor drop from previous year of 2.8%.
This week’s corporate earnings focuses on both internet growth stocks like Airbnb, Robinhood, Shopify, GoDaddy, Coinbase and DoorDash, and value stocks like Coca-Cola, Cisco, Deere & Company and Kraft Heinz just to name a few. Given that majority of the S&P500 companies has already released earnings, investors and traders have already adjusted their expectations on the upcoming earning releases. With most internet growth stocks enjoying a nice rally in the recent week, high expectations and forward guidance are required to maintain such rallies. Investors and traders should exercise caution and risk management going in to such earning releases.
If you hold equity positions in these stocks, you can hedge your positions using CFDs to mitigate the risk of disappointing earnings releases.
For those looking to speculate or capitalize on the increased volatility, CFDs provide leverage and ease of going long and short across a broad range of products available.
Unyielding Momentum: U.S. Dollar’s Steady Strength Against the Euro – by Tan Peng Chien
Key Entry Price Pivot(s)
- 1.08726
Recommended Trade
- Short at 1.08176
- Stop Loss at 1.09048
- Take Profit at 1.05827
Alternative Case
- Long at 1.08726
- Stop Loss at 1.08218
- Take Profit at 1.09991
Remarks
- As Asia celebrates the Lunar New Year, U.S. inflation looms as we saw the Dollar’s persistent surge against the Euro over the past month.
- Looking back at the recommended trade in January, the previous short at the level of 1.1050 closed out with full Take Profit achieved at 1.0733 before the price rebounded shortly after to close the trading week.
- Expectations are for the U.S. Dollar to strengthen further due to increased liquidity and existing price imbalances below current levels. A prudent trade strategy could involve a short on the pair at its present price to the range of 1.08176, with the goal of filling the price gap at 1.05827.
- Alternatively, any weakness displayed by the greenback could also send the pair towards the level of 1.1000 with the pivotal point at 1.08726. Traders may consider initiating a long position with a target around the 1.1000 range to complete the final shoulder, potentially forming a Head and Shoulders candlestick pattern.
If you have any feedback or questions, feel free to email us at samht@phillip.com.sg or onishathyeyn@phillip.com.sg or cfd@phillip.com.sg.
Disclaimer
This material is provided to you for general information only and does not constitute a recommendation, an offer or solicitation to buy or sell the investment product mentioned. It does not have any regard to your specific investment objectives, financial situation or any of your particular needs.
Accordingly, no warranty whatsoever is given and not liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of your acting based on this information. Investments are subject to investment risks.
The risk of loss in leveraged trading can be substantial. You may sustain losses in excess of your initial funds and may be called upon to deposit additional margin funds at short notice. If the required funds are not provided within the prescribed time, your positions may be liquidated.
The resulting deficits in your account are subject to penalty charges. The value of investments denominated in foreign currencies may diminish or increase due to changes in the rates of exchange.
You should also be aware of the commissions and finance costs involved in trading leveraged products. This product may not be suitable for clients whose investment objective is preservation of capital and/or whose risk tolerance is low.
Clients are advised to understand the nature and risks involved in margin trading. You may wish to obtain advice from a qualified financial adviser, pursuant to a separate engagement, before making a commitment to purchase any of the investment products mentioned herein. In the event that you choose not to obtain advice from a qualifies financial adviser, you should assess and consider whether the investment product is suitable for you before proceeding to invest and we do not offer any advice in this regard unless mandated to do so by way of a separate engagement.
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About the author
Sam Hei Tung (Dealing) and Onisha Thye (Dealing)
Sam graduated from National University of Singapore with a Master of Science in Finance. He personally manages his own investment portfolio and does equity and economic research in his free time. Sam believes that education and information is essential to making good financial decisions.
Onisha is a dealer at the CFD Dealing Desk. She graduated from Monash University with a double major in finance and econometrics. Her natural curiosity for finance is what drove her to be in this field as she is fascinated by all the possibilities and opportunities that are available to grow one’s wealth, either through trading or investment.
