Weekly Updates 29/5/23 – 2/6/23 May 29, 2023
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 (22 May 2023 – 26 May 2023)
*These prices are taken based on the previous Monday’s opening price and the preceding Friday’s closing price.
Last week’s action revolved around new optimism that the US debt ceiling talk is coming to a resolution, Nvidia’s Q2 guidance sparked a major rally in tech heavy Nasdaq 100 and AI stocks. Furthermore, Hang Seng index and Hang Seng Tech index fell due to mixed forward guidance and mixed macro data coming out of China on the reopening and growth.
Updates for the week (29 May 2023 – 2 June 2023)
The data below showing the economic releases read as “Analyst’s estimate/ Consensus | Previous data”.
This week’s upcoming macro news releases, on 3rd & 4th June (Saturday and Sunday) OPEC will be having their JMMC Meeting where countries in the OPEC will discuss and determine output quantities and provide forward guidance on Oil prices. The US will be releasing employment data from ADP employment change to change in nonfarm payroll, both essential in showing the strength and resilience in the labor market. As the Fed takes into account labor data during rate discussions. China is releasing manufacturing PMI data, showing market participants further confirmation on the strength of the reopening.
This upcoming week of corporate earnings releases are mainly from tech stocks like Salesforce, CrowdStrike, Chewy, Okya and BroadCom. With BroadCom increasing 19% in stock price within the last week, the earnings release and forward guidance on BroadCom will be essential to keep up investor’s expectations or disappoint. SATS from Singapore stock market is releasing earnings, SATS have been enjoying a ~11% gain in stock price from the past 1 month, market participants are more bullish going in to earning release.
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.
CNOOC Limited (0883.HK): Trading Opportunity
Trade Set-up:
- Looking at the daily chart of CNOOC Limited, we can see that price is in a upwards channel and is approaching the resistance of the channel
Trade Execution:
- We can look for shorts once the price rejects the resistance of the channel in confluence with the horizontal resistance line at HK$14.00.
- However, a break above the resistance of the upwards channel may signal an overall shift to the upside and we may look for longs upon retracement.
Gold turns volatile after facing bottom-channel support amid hawkish Fed
Trade Set-up:
- Gold price (GLD.CM.CFD) is displaying topsy-turvy moves after facing selling pressure around the $1950 technical level but with stiff “support” at $1935, the bottom of the channel that we identified previously. The precious metal is expected to remain on the edge as the Federal Reserve moved to a hawkish stance (interest rate hikes) from a neutral mood in their last monetary policy meeting.
- From a fundamental viewpoint, US dollar is expected to appreciate (against Gold) with better economic numbers (better household spending and inflation) and Fed’s need to hike rates further. Investors should note that the US markets will remain closed on Monday on account of Memorial Day.
Trade Execution:
- Technically, Gold appears to be consolidating at the bottom of the trend channel, while waiting for the RSI indicator to rebound closer to the mid-level. This will be necessary for a renewed push downwards past the $1930 for a clear indication of a downward breakout. The downtrend is further reconfirmed with the faster SMA20 crossing below the SMA50.
- Traders looking to get into the market should hold for better indications and a clear push past the $1930 levels.
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.
