Market Update

US equities suffered a second day of large losses as Trump turns his focus onto the EU. The US manufacturing data has also weighed US stocks lower. This month could be the make or break on whether the global market turns to recession, or holds its head above water.

The S&P 500 has now taken a large drop from resistance.

S&P500

US 10y -3m Yield Curve

The US Bond yield curve remains inverted which has been the leading indicator of a recession. Generally speaking it can take between 8 months-24 months before the recession hits. October marks the 8th month since the yield curve inverted.

Fundamental Analysis

October – Major economic month

Manufacturing data is a major concern. Germanys manufacturing data is in recession, the EU is not far behind. Last night the US reported its manufacturing PMI which is now on the verge of recession. Across the globe manufacturing is dropping to recession territory suggesting a huge decreased in global demand. Secondly profit margins for companies is dropping fast. This means companies may stop hiring staff, which can result in larger unemployment. – (BEARISH)

October is a huge month for currencies across the board. The week beginning October the 7th, sees the start of the trade war negotiations between US and China. With the lead up to the announcements the markets may begin to price in a positive result. Recently news emerging from both parties has been more positive. There could be a potential deal on the cards, therefore going into the meeting there could be some upside on the AUD and US Indices.

Last night Trump turned his attention to the EU. It appears once Trump has finished with China the EU could find themselves in the spot light. Trump has placed tariffs on EU aircrafts, wine, cheese and whiskey. The EU is already under immense pressure due to Brexit.

Boris Johnson is has prepared a new deal to present to the EU with a compromise on the Irish boarder issue. This can now been seen as positive. The Irish Prime Minister is not fully sold on the idea, however he is willing to work towards a deal. The possibility of a no-deal on October 31st could push all parties together.

Key October Events

Trade War Deal

Brexit

Manufacturing Data

Unemployment/Labor market

Current Trade Set Up:

APPLE – Major Resistance

We are shorting Apple, there is a major double top and ascending wedge. We are expecting a break from the wedge in the near future.Our initial take profit is 200.

Crude Oil:

Oil prices took a huge jump when news emerged of attacks on a Saudi oil facility. Since then Crude oil has continued to decline and has dropped nearly $10 per barrel. The liquid gold is now approaching a major support zone.

Trade Set Up 1: BUY Crude Oil – Entry 52.10 – Take profit 57.00

Trade Set Up 2: BUT Crude Oil – Entry 49.50- Take Profit 57.00

Any stop losses will need to be set below 47.50.

Any questions please comment below,

Good luck!