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Dow Whipsaws amid Pandemic Fear

  • DAR Wong
  • 9 March 2020

MARKET OBSERVATIONS – 9 Mar 2020

 

Dow Whipsaws amid Pandemic Fear

Fundamental Outlook   The U.S. ISM manufacturing index grew 50.1 in February and lower than forecast. Last Tuesday, Joe Biden won primary victories in North Carolina, Texas and Arkansas and media called it as Super Tuesday.

On Wednesday, the U.S. Federal Reserve cut interest rate by 50 basis point and surprised the market, in wake of fighting the impact of coronavirus. The pandemic attack is hitting badly at U.S. and European regions with rising confirmed cases.

American non-farm payroll gained 273,000 jobs in February and higher than estimate. Unemployment rate fell to 3.5 percent and lowest in 50 years. The U.S. 10Y Treasury Bonds yield falls below 0.8 percent amid spreading fear of pandemic virus into the country.

International Monetary Fund announces USD50 billion program to fight the coronavirus outbreak and hope to assist infecting countries immediately. European countries are turning hysterical as the pandemic cases rise rapidly in Italy and France.

Crude prices fall to low of 2017 after Russia could not agree with OPEC for the steep production cut for lifting oil prices. Dollar Index (USDX) has been plummeting for past 2 weeks from 99.80 tops to 96.00 bottoms on Friday’s close.

 

Technical Forecast   USD/JPY has fallen sharply recently. Market closed 105.00 on Friday’s close and probably will go for rebound this week. Technically, we expect the trend to be supported at 104.50 area but limited to 106.50 resistance in case of recovery. Sideways consolidation is likely to occur for 1-2 weeks.

 

EUR/USD traded in sharp recovery last week as Dollar plunged. Market has broken above our predicted resistance at 1.1100 level and turn this area into strong support now. This week, we forecast the trend will slowdown and probably trade from 1.1200 – 1.1400 range. Secondary support will emerge at 1.1100 level.

 

GBP/USD pierced above 1.2900 level last week and closed at 1.3050 on Friday’s close. This week, we presume the range will be contained from 1.2900 – 1.3200 region with initial bullish sentiment. However, beware of breakout from this target range and risk control needs to be installed in order.

 

Gold prices made a very rapid recovery last week from below USD1600 /oz and settled at USD1674 /oz on Friday. The market has formed a double-top formation on day-chart and become hesitant in further advancement. This week, we reckon a possible drawdown while contain inside USD1630 – USD1690 /oz. Breakout beyond this range needs to exercise caution.

                                                                  

WTI Crude prices had a sharp fall on Friday after Russia disagreed to the production cut with OPEC leaders. Market plunged from USD46 /barrel to below USD42 /barrel in weak demand. This week, we foresee the trend will test USD40 /barrel support before some bargain-hunting arises. Resistance will emerge at USD44 /barrel.

 

Silver prices rose at slower pace than yellow metal last week. Market has stabilized at USD17.50 /oz region in mixed trading. This week, we expect the trend will consolidate in sideways inside USD17.00 – USD18.00 /oz. From the Gold /Silver ratio, we foresee the Silver prices will have limited base prices in case of falling and market is prone to move sideways more often. 

 

Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded lower on Friday after traders booked profits from past 4 days rise. May20 Futures contract settled at RM2450 /MT on Friday. This week, the market is prone to consolidate around RM2500 /MT area in mixed trading activity. Range is expected from RM2400 – RM2550 /MT but breaking beyond this target region needs to exercise caution.

 

 

DAR Wong has 30 years of trading and hedging experiences in global financial markets. The opinion is solely at his own.  He can be reached at dar@pwforex.com


About the Author
DAR Wong (Singapore)
An international speaker with 27 years of trading experience in the global financial markets, DAR is a Market Master and author of “Living Daylight in Stock Market: Monetizing Your Profits in 8 Days”.

DAR Wong is an active market trader, registered fund manager, educator and author.He began his career in 1989 as an institutional Futures trader with Bank of America. DAR Wong specializes in trading global derivatives and financial markets. He has 26 years of experience accumulated through tenure with Bankers Trust, Barclays Bank, Citigroup (Smith Barney Shearson Inc) and as an independent trader.

DAR is the author of “8 Ways to Invest in China’s Emerging Market” and contributes frequently to regional media, including financial TV/Radio programmes, newspapers and magazines for professional traders and active investors.

He is a popular and sought after international speaker who has presented to financial professionals and investors throughout the region including Singapore, Malaysia, Indonesia, Thailand, Hong Kong, China, Cambodia, Myanmar, Philippines, Sri Lanka, India, South Korea, Laos, Vietnam, United Kingdom and Middle East (UAE).

DAR is registered with NASD (now known as FINRA) series 3 and 5 as approved by National Futures Association (NFA) of USA and holds a current portfolio as Fund Strategist and Advisor with Dektos Investment registered with Monetary Authority of Singapore.

DAR is profiled as “One of the most successful traders – Market Masters” in Brent Penfold’s bestselling book “The Universal Principles of Successful Trading “. In January 2015, DAR was honored with Outstanding Award for International Financial Market Analysis granted by ASEAN Commerce (Thailand).

DAR is the author of "8 Waysto Invest in China's Emerging Market" and contributes frequently to regional media, including financial TV/Radio programmes, newspapers and magazines for professional tradersand active investors.1

He is a popular and sought after international speaker who has presented to financialprofessionals and inverstors throughout the region including Singapore, Malaysia, Indonesia, Thailand, Hong Kong, China,Cambodia, Myanmar, Philippines, Sri Lanka, India, South Korea, Laos, Vietnam, United Kingdom and Middle East(UAE).2


Year
2003 - Set up ASPRI to provide hedging advisory for corporate clients and training for financial professionals
2009 - Released first book “8 Ways to Invest in China’s Emerging Market”
2010 - Profiled as “one of the most successful traders – Market Masters” in Brent Penfold’s bestselling book “The Universal Principles of Successful Trading” along with Larry Williams, Andrea Unger, Michael Cook, and Daryl Guppy etc
2011 - Received “Spirit of Enterprise”awarded by Singapore Management University in Singapore
2012 - Honored with Individual Diamond Career (Thailand) awardedby Royal Privy Council of Kingdom of Thailand
2013 - Appointed Vice Chairman of ASEAN-China Commerce Association and led a delegationtothe annual China-Asean Expo in Guangxi Province, China
2014 - Fund Manager cum Director in Dektos Investment Corporation registered with Monetary Authority of Singapore
2015 - Released new book “Living Daylight in Stock Market - Monetizing Your Profits in 8 Days” in January
2015 - Honored with Outstanding Award in International Financial Market Analysis awarded by ASEAN Commerce (Thailand)
2016 - Honored with Medal of Integrity by Royal Councilin Palace of Palembng, Indonesia

References

1.TV programs on ChannelNewsAsia (Singapore);Radio on 95.8 Capital (Singapore); Newspapers such as The Borneo Post (Malaysia), 资汇报 (Malaysia); Regional financial magazines such as The Analyst (India), 东盟商界(ASEAN, China), 资本杂志 (Malaysia).

2.Spoke at events for CME Group, Euronext LIFFE, Tokyo Commodity Exchange, Singapore Exchange, Korea Exchange, Bursa Malaysia, Thailand Futures Exchange, Jakarta Futures Exchange, Indonesia Commodity and Derivatives Exchange, Tokyo Commodity Exchange, Interactive Brokers, Xinhu Futures, Hangzhou Money Fair, China (Shenzhen) International Finance Expo, China (Guangzhou) International Finance Expo, Euromoney, CIMB, Maybank, RHB, UOB Bank, Asia Trader & Investor Convention, Global Rubber Conference, International Rubber Conference, Malaysia Rubber Board, International Rubber Research and Development Board,Malaysia Ministry of Agriculture, Rubber Industry Smallholders Development Authority, Vietnam Rubber Association, Cambodian Rubber Association, Bureau of Agriculture Research Philippines, Myanmar Rubber Planters & Producers Association etc.