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Issue Number 3 June 10, 2015
Macroeconomic Scope: As the month of May reaches its conclusion,
the economic outlook remains as it was. With the Dow Jones reaching
new highs, investors, traders, and those who follow financial
markets became weary of such promising numbers. Many great economic
formations, in conjunction with previous analysis implications are
starting to become seasoned to fruition. Our previous articles
measured the importance of inter-market analysis, the inverse
correlation of the Dollar to the Euro, and the relevance of
existing commodity prices.
All while providing an inferred implication to market direction,
I will touch base on the United States continued economic direction
within this article. However, I also want to touch base on the
importance of the business cycle accompanied by the implications
and reactions in which businesses face within these macroeconomic
conditions.
The United States itself is distinguished/designed as a business
(on a large scale). So who is to say that the same business cycle
reactions don't cohort within the United States? This is a true
notion and will be demonstrated utilizing Figure 1.1b.
The business landscape includes many parallels with Darwin's
ideology 'survival of the fittest'. Companies with lean utilization
skills, and insight into the future allow for opportunities to be
continually identified, new technology to be incorporated, and
alternative ways of doing business, thus perpetuating success.
However, just because businesses are competitive via pricing does
not necessarily constitute as effective and competitive. All
businesses experience the following aspects:
-Inception -Growth -Expansion -Stagnation -Recession
-Deflation
L.B. Trader Insight WWW.LBGLOBALADVISORS.COM 1
About the Author With a deep understanding of Financial Markets,
Technical Analysis, and Macroeconomic policy, Anthony shares a
passion to demonstrate specific market opportunities that minimize
risk for readers, allowing them to visualize, analyze, and
interpret potential trade opportunities. He believes in the
continual education, measurement, and metrics of technical analysis
on derivative based markets.
The reasoning behind this risk analysis technique is that it
allows for a Macroeconomic scope on the market, providing an
insight on microeconomic portfolio strategy. Thus, identifying
proficiency, isolating portfolio risk, and creating deeper analysis
on specific investment strategies and portfolio objectives.
L.B. INSIGHT May Monthly Trade Commentary
Figure 1.1a
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Issue Number 3 June 10, 2015
The overall goal is to avoid stagnation, however there are
periods in which such instances are inevitable.
So the main question to think about is the following: How does
Figure 1.1b add value to my knowledge base?
Valuation of intangible assets are becoming more prominent
within businesses, technology, and integration. My outlook is as
follows: knowledge is power and the amount in understanding these
frameworks allow for complex formulations to be simplified. Thus
increasing exposure to better analysis for increased portfolio
returns (don't worry, there is a method to the madness).
So lets integrate this framework with our market to paint the
macroeconomic conditional picture.
We notice the various business stages that cohort with our
current market in expansionitory periods and contractionatory
periods.
As we infer from Figure 1.1b we notice much of this cycle
attributes to past and present conditions. The visualization
indicates during recessionatory periods, there are various market
segments that precede, and lag behind one another. An example would
include the bottoming of stocks within the business cycle.
The framework is as follows: Within Stage 2, as Stocks reach a
bottoming point, bonds begin to rebound. As bonds begin to pivot,
so does our stock market in tandem. These events may occur as the
result of an economic recovery. Which brings us to Stage 3. As
commodities begin to increase in value due to the continued growth,
they are accompanied with a shaky economic state (sound familiar?).
We then reach that 'euphoria' market stage within Stage 4.
The primary objective in providing readers with Figure 1.1b is
to illustrate that analysis is indeed just as much an art, as it is
a science. It takes a high degree of variability, accompanied with
inter-market analysis to fully understand only a fragment of the
macroeconomic picture. However, Figure 1.1b is a great tool for the
every day investor to measure where our market currently resides,
along with where it may be headed. As I conclude this segment of
L.B. Insight, I always enjoy leaving readers to ponder the
question: What stage do you think our current economy is
facing?
L.B. Trader Insight WWW.LBGLOBALADVISORS.COM 2
Figure 1.1b
Figure 1.1b denotes the business cycle within our economic
system, accompanied with the various stages within the cycle.
Figure 1.1a $DJI (courtesy of Thinkorswim platform via. TD
Ameritrade.
Figure 1.2
We notice within Figure 1.2 the U.S. Dollar Strength coming off
high over sold parameters, indicating further downward momentum,
however dependent on market sentiment.
/DX(M5)- U.S. Dollar index (Courtesy of Thinkorswim platform via
TD Ameritrade)
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Issue Number 3 June 10, 2015
United States Market Direction: As our market continues to
receive the mixed notions of fed rate hikes, we are beginning to
notice the relative strength revisions coming into fruition. From
our charts (DJI), we notice relative strength continuing to project
downward in conjunction with falling momentum, volume, and squeeze
levels.
What this means: Despite our economy continuing to demonstrate
strong growth, the revisions in which are looming are only minor.
While I do believe valuations are somewhat overvalued, I also
believe that investors are continuing to be patient in determining
the proper direction of the market. I believe it is safe to assume
volatility will begin to pick up and our current market will
exemplify further range bound consistency.
What about Greece?: There have been many assumptions, scare
tactics, fopa's whatever you call them regarding the macroeconomic
conditions of Greece. Speculation of currency exits, non negotiable
austerity measures and complete economic reform are all subjects
brought to the table. While these ideas were certainly
entertaining, one idea which occurred to me did not seem to be
visible to many consumers. My idea was as follows, "If Greece did
decide to exit the Euro, what would the macroeconomic ramifications
associated be? - Yes austerity, yes devaluation, yes currency
manipulation, but what about the overall Euro and its association
with speculators? To investors the Euro as a whole would look weak
in the allowance of regulations to be disoriented and not
upheld.
Dollar and Euro: Overall I would look for continual range bound
consistencies within the EUR/USD. As investors seek the
confirmation of governmental market direction, they are becoming
more keen on such analysis and know where great opportunities lie.
As the U.S. Dollar continues to appreciate in value, insight
becomes revealed as our market continues to suggest increased
volatility.
So whats the EUR/USD trade? In conjunction with the projections
of the Grexit, the investors are starting to realize the absurdity
in addition to the negative ramifications in the occurrence if such
event were to take place. As negotiations with Greece and its
repayment plan come to a conclusion, I believe the Euro will
continue to see a consolidation range bound pattern. Inflation is
certainly a great aspect in which Europe is facing, and I would
agree parity is still in question, now it just may be a matter of
when such can occur.
L.B. Trader Insight WWW.LBGLOBALADVISORS.COM 3
Figure 1.3
EUR/USD (Euro/Dollar) - Monthly charts. Courtesy of Thinkorswim
platform via TD Ameritrade).
Want to trade, but don't know how?
So you have read this article, and have a multitude of
questions, no worries.! I would be more than happy to provide
commentary, mentorship, and/or a conversation with those who seek a
further continued understanding on wealth management. Its
completely understandable in instances where both young and senior
investors have their lives to worry about (I have been/am in that
boat as well). However, the importance and understanding of basic
techniques cannot be overshadowed to generate wealth in both a long
term and short term scope. Feel free to email me at:
[email protected]
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Issue Number 3 June 10, 2015
As commodities continue to devalue, overall weaker commodity
prices reflect indication of strong currency markets, I believe as
both U.S and Euro markets. As the continued succession of the
Greece Scare, promising bailout plans begin to reach that
conclusions, opportunities will be exposed thus signaling a
stronger EUR/USD.
Oil: As economic conditions indicate the continual release of
oversupply levels (Figure 1.4), I believe we are starting to see
Oil normalize and pull back during the driving season. As consumers
continue to purchase vehicles for driving weather, gas begins to
normalize to a price in which consumers beliefs of affordability,
in conjunction with the prospects of an increasing global economy
in conjunction with our own. Dont get me wrong, I am still a huge
fan of E.Vs, and the influence in its' adjacent industries, however
I believe we are continuing to enter a new driving age where
technology will begin to become more prevalent within our vehicles,
and we will start to experience the grave importance of seamless
interconnectivity. This can result in various outcomes. As Oil
continues to experience over sold levels, we will see normalization
of oil becoming more prevalent within the following months.
Gold: Noted within our previous analysis, the Gold market
denoted in figure 1.5 (along with the rest of the commodities
markets) is continuing the range bound paths. This one in
particular seems to be normalizing in the 1180-1200. As foreign
policies are beginning to stabilize alternate investment vehicles,
foreign markets, and front line currencies beginning to react to
market assumptions, the Gold trade is one that should be monitored
continuously. I believe this month Gold will continue to touch key
levels at the 1175-1180 mark. Thus posing a great opportunity for a
short rally buy. Overall, tread lightly and if you do decide to
tread the Gold path dont get too comfortable.
U.S Dollar: In addition to the Macroeconomic conditions of
European markets, the United States is experiencing an increased
currency consolidation that may impact and influence future
direction. Figure 1.2 denotes the explosive bull run the dollar has
been experiencing.
L.B. Trader Insight WWW.LBGLOBALADVISORS.COM 4
Figure 1.4
/CL-(Oil Futures) - Monthly charts. Courtesy of Thinkorswim
platform via TD Ameritrade). We can clearly see the consolidation
of oil on the monthly charts, its possible this consolidation can
further continue as commodities continue to develop a base. The
importance in relevancy between commodities, the dollar, bonds, and
foreign exchange is crucial in determining market direction.
Figure 1.5
/GC - (Gold Futures) Monthly Charts. Courtesy of Thinkorswim
platform via TD Ameritrade. We notice Gold at a pivotal
intersection here, our squeeze indicator depicts further price
consolidation - a risky trade that should be tread lightly.
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Issue Number 3 June 10, 2015
Much like our cousins across the pond, I believe we will begin
to experience continued normalization range bound consistency in
the following months. This is because as the United States
maintains its focus globally, while its focus internally results as
a by-product.
As the United States continues to experience growth in its
Telecom and Technology sectors (which are essential to
macroeconomic analysis), the learning curve for businesses, back
end development, and utilization continue to develop in rapid
successions. This is why I believe our Dollar may begin to
normalize; its normalcy will continue to influence business, and
overseas investors realize this technological revolution occurring
within our United States. With that notion in mind, we will
continue to push the limits of technology increasing our market
intelligence.
Summary: As the IMF urges the United States to wait until 2016
in imposing monetary policy, we will begin to see increased
volatility, in addition to our current market experiencing tandem
effects of stagnation. While there does lie opportunities in
overseas currency markets and U.S. Currency Markets. Investors,
traders, and hedge funds are keeping one eye open at both Bond
(foreign and domestic) markets as well as commodity markets.
When considering to take investments in to your own hands, the
importance of sustaining discipline is crucial. Remember, money is
made by being patient; sure you can day trade (quite a few day
traders make a great living) however it is imperative to realize
the distinct difference in both day trading strategies and swing
trading strategies. While this analysis is intended for educational
purposes, the type of investment/trading strategy is up to the
individual.
I believe our generation is part of a great
data/tech/integration renaissance. As learning curves are
continuously steepened, the transit and abundance of information
allows for any individual to learn anything, anywhere. As a country
we will continue to push the boundaries of technology, innovation,
and business. However as I have stated before, the universe is a
mystery and markets do what they want. As markets are continually
observed, only time will tell.
L.B. Trader Insight WWW.LBGLOBALADVISORS.COM 5
One Word. Diversification.
As the continuation of our market conditions continue to propel
us into the future, accompanied by the technological advances
within our economy, the streamline of information in today's age is
so integral, and financially inter-related the importance of
diversification cannot be overshadowed. For the young investors
stating, "Really, how important is diversification? I will see you
a question and raise you one in asking - "How important is
understanding which teams have the best players and worst players."
The ability to not only diversify, but pivot is becoming more
integral within our market place. As the emergence of Robo
Advisors, intelligent portfolios, and adjustments, the ability to
be versatile is crucial along with the ability to pivot with proper
diversification adds supplementary value.
Analysis in the 21st Century
The evolution of analysis is finally starting to come to
fruition within the 21st century. As seasoned data aggregation is
finally starting to become manipulated, the conjunction of the
science behind "data aggregation" and the art of Manipulating data
to depict a story.
I believe this is the new direction our society is beginning to
grasp the realization. It's interesting the parallels of such in
stating the following. Data analysis is as much an art as it is a
science. However the characteristics that create this data parallel
history and depict not only numerical representations, but
historical ones as well.
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Issue Number 3 June 10, 2015
Disclaimer:
Please read the following disclosures as it provides important
information reviewing context. Additional information can be
provided upon request except upon instances of proprietary
information.
This document is intended for informational purposes only, and
should not be relied upon as a prediction of future market
activity, performance, nor the performance metrics measured by L.B.
Global Advisors, LLC.
It is not an offer to sell or the solicitation of an offer to
buy the securities or other instruments mentioned. Portfolio
allocations, commentaries, and technical analysis are for
illustrative purposes only and may not reflect the actual or
current implementation of our strategy. The performance provided is
net of management fees and includes the reinvestment of all
interest, gains, and losses. No representation is being made that
any account will or is likely to achieve returns similar to those
shown. Past performance is not necessarily indicative of future
results. Performance as of the current month is estimated and
subject to change. Return and risk expectations shown here are
based on L.B. Global Advisors, LLC. analysis and reasonable people
may disagree with the assumptions used and expectations developed
there from and there is no guarantee the expectations shown can be
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subject inherent limitations.
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net of fees returns are estimates and are not finalized until the
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particular investment objectives, financial situations, or needs of
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L.B. Trader Insight WWW.LBGLOBALADVISORS.COM 6