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What Will A Geopolitical Compromise Means For Markets?Henry Clay was a US Senator from Kentucky, the Speaker of the House of Representatives, the US Secretary of State, and a Presidential candidate in the 1800s. His legacy and nickname were “The Great Compromiser” for his involvement with the Missouri Compromise, the Compromise Tariff of 1833, and the Compromise of 1850. As Henry Clay understood, any great compromise means that both sides at the negotiating table must come to an agreement that makes them uncomfortable or incomplete. The price of an asset is always the correct price A messy geopolitical landscape Option one- A Great Compromise- High Odds Option two- A prolonged conflict Option three- The unthinkable In 2022, the geopolitical temperature has risen to the highest level since WW II. On February 4, Chinese President Xi and Russian President Putin met at the opening ceremony of the Beijing Winter Olympics. The leaders signed a $117 billion trade agreement, but the watershed event was the “no-limits” cooperation understanding. Twenty days later, after the end of the Olympics, Russia invaded Ukraine, launching the first major war on European soil in over three-quarters of a century. Many analysts believe the Russian invasion sets the stage for Chinese reunification with Taiwan. Markets reflect the economic and geopolitical landscapes. Volatility in markets across all asset classes has increased, and uncertainty is the market’s worst enemy. The war, sanctions, retaliation, and a Chinese-Russian alliance threatens the status quo over the previous decades. The price of an asset is always the correct price As we learned in early 2020 in nearly all asset classes, bear markets can take prices to levels that defy logic and rational and logical analysis. The same holds on the upside as price spikes can reach unthinkable heights. The moves to the upside or downside compel many market participants to sell what they believe are tops or buy when they think the market cannot go any lower. Picking tops or bottoms is more about ego than making money, as the effort contradicts to prevailing trends. Picking a top or a bottom is a statement that the current price is too high or too low, which is always a mistake. Market participants can be wrong, but markets are never wrong. The price of any asset is always the right price because it is the level where buyers and sellers agree on a value in a transparent marketplace. Declaring a market top or bottom is a contrarian statement as it goes against the prevailing trend. A messy geopolitical landscape Two years ago, the world faced a common enemy as COVID-19 ignored borders, race, religion, political ideology, and all of the other factors that separate countries and people. In February and March 2022, the world faces new and daunting challenges: The Chinese and Russian leaders shook hands on a “no-limits” alliance. Russia invaded Ukraine, starting the first major war in Europe since World War II. Ukraine continues to put up fierce resistance. The US, NATO allies in Europe and allies worldwide slapped sanctions on Russia. Russia retaliated with export bans and other measures. North Korea test-fired ICBM missiles. Iran fired missiles near the US embassy in Iraq. Russian missiles came within miles of the Polish border. An attack on Poland triggers article five of NATO’s charter- An attack on one member is an attack on all. China and Russia stand on opposite sides of the conflict from the US and Europe. China plans to reunify with Taiwan against their will. On the US domestic scene, the US remains divided along political lines with mid-term elections in November. The central bank liquidity and government stimulus that stabilized the economy during the pandemic ignited an inflationary fuse before the geopolitical landscape deteriorated. The war in Ukraine only exacerbates price increases as Russia is a leading world producer of raw materials. Europe’s breadbasket in Ukraine and Russia is now a mine and battlefield at the start of the 2022 crop year. Russia and Ukraine typically supply one-third of the world’s wheat and other crops. They are also leading fertilizer exporters, causing problems in other worldwide growing regions. In 2022, the war will lead to rising prices, falling supplies, and the potential for famine and civil uprisings. Historically, food shortages have caused many revolutions. The 2010 Arab Spring that began as food riots in Tunisia and Egypt caused the sweeping political change in North Africa and the Middle East. Meanwhile, the Biden administration pledged to address climate change by supporting alternative and renewable fuels and inhibiting the production and consumption of fossil fuels. US production declined in 2021. After decades of working to achieve energy independence from the Middle East, US policy handed the pricing power to the international oil cartel. Since 2016, Russia has had an increasing role in OPEC’s production policy. In 2022, the cartel does not move unless Moscow agrees to cooperate. Oil prices were already rising when Russia invaded Ukraine, and they moved over $100 per barrel after the attack. Meanwhile, other fossil fuels have moved higher. Coal traded to a new all-time peak. US natural gas rose to a multi-year high, and European and Asia gas prices rose to record levels. Rising energy prices fueled inflation, and the war has poured fuel on an already burning inflationary fire. The war in Ukraine is less than one month old, and the human toll is rising. Tensions are at the highest level in decades. Markets are nervous, and the developments on the geopolitical over the coming days and weeks will dictate the direction of markets across all asset classes. I see three potential outcomes. Option one- A Great Compromise- High Odds In the current standoff, neither side wants to give an inch. The Russian leader faces disgrace or worse if he loses to an inferior military but impassioned Ukrainian population, many of who would choose death over capitulation. The US and Europe do not want to appease Russia like the UK’s Nevil Chamberlain appeased Hitler in the 1930s. China may support Russia, but the world’s second-leading economy has close economic ties with the US and Europe. A Henry Clay-inspired great compromiser could emerge and come up with a solution where Russia, China, the US, Europe, and the rest of the world walk away from the negotiating table unhappy but with a workable solution. I believe, and it is more than a bit of wishful thinking, that this is the high odds result of the current geopolitical mess, and the result will go down in history as the great compromise of 2022. A great compromise would likely lead to a significant stock market rally and a commodity correction. Option two- A prolonged conflict A prolonged conflict where Russians fight a long and bloody war against Ukrainian forces will devastate the world economy and peace. Russia may capture territory, but it is clear President Putin will never capture the souls of the Ukrainian masses. The Russian brutality over the past weeks will never be forgotten. President Putin did not count on the passionate resistance Russian troops encountered across Ukraine. The longer the battle and the more brutal the weapons, the greater the price for Russians controlling the territory over the coming years. Millions of refugees have left the country, but that leaves over 40 million Ukrainians; most now consider Russians their mortal enemy. A long battle will weaken the Russian military and the Russian leader abroad. A prolonged conflict will cause sanctions to collapse Russia’s economy, causing domestic problems for President Putin and his government. Moreover, skirmishes are likely to break out worldwide. In the early days of the war in Ukraine, North Korea and Iran flexed their military muscles. With Europe and the US focused on Ukraine, China could use the opportunity to seize Taiwan. A prolonged conflict would weigh on US stocks and likely lift commodity prices to higher highs. Option three- The unthinkable The final option is the nuclear one, which is low odds, but a highly frightening scenario. If Russian aggression spreads across the Ukraine border into Poland or any NATO member country, it will trigger Article five that states an attack on one is an attack on all. The US and Russia have the most nuclear weapons, which increases the potential of MAD or mutually assured destruction. In this scenario, it does not matter how markets react as the world would face a disastrous situation. I believe that a great compromise is on the horizon, which would cause markets to stabilize. However, the extent of the compromise is critical as it must address the current situation in Ukraine and Taiwan and threats from North Korea and Iran. Anything short of a comprehensive understanding between the world’s powers will cause years of rising tension and threats to the nearly eight billion people that inhabit our planet. Where is Henry Clay when the world needs him? Expect the volatility in markets to continue. -- Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility , inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
SP:SPX
by Andy_Hecht
2
History doesn’t repeat itself…But it Does Rhyme…. -Mark TwainI was looking at the patterns in larger time frame, and have made an augmented clone of the bottoms we have seen in previous sequences. The golden question is what if this cycle is different? We had Pandemic, Unemployment, now we face geopolitical factors, but this has all happened before hasn’t it? Maybe we just overthink things instead of being grateful for the back to back massive bull runs in previous years…. On that note, we have hope to enter the whale zone and possibly below for some volume accumulation and momentum. Lots of obstacles and resistance ahead. But these swings are pretty nice to trade on. Any feedback would be appreciated! Thanks!
Short
by Fabreezio
Gold Retraces to the low $1900'sGold rallied tremendously off the Ukraine conflict, hitting yearly highs at the top of the $1900 handle. It looked like we might make a run for $2K, but we topped out at 1977 or so, before a red triangle on the KRI confirmed resistance. After that, we retraced the entire move, spanning $100, where we finally found support at $1876. We were able to find support here, and have since recovered to $1917, where we are currently finding support between $1905 and $1917. It could go either way from here, but after such intense volatility, it is reasonable for the markets to try to find footing and establish value at current levels, between $1905 and $1917. If we retrace further, $1876 is likely to provide support. If we break out again, it is doubtful we will reclaim $1977, but $1925 or $1936 are reasonable targets.
COMEX:GC1!
by quantguy
Why Cardano is Sinking TodayWhy would Russia's move have such a big impact on cryptocurrencies? It boils down to risk. When investors believe that their money is at greater risk, they're more likely to shift funds into safer assets. Such "risk-off" scenarios have hurt growth stocks in the past. Now it's happening again, with cryptocurrencies also being pulled down. The only cryptocurrencies that are largely immune to risk-off downswings are stablecoins pegged to fiat currencies. However, Cardano, Chainlink, Cronos, and Polkadot are not stablecoins. Any geopolitical crisis could cause a risk-off market. The current situation is arguably worse because cryptocurrency prices were already slumping. It's important to note, though, that the long-term prospects for Cardano, Chainlink, Cronos, and Polkadot shouldn't change as a result of the Russian invasion of Ukraine. Each of the four cryptocurrencies offers advantages that won't be diminished whatsoever. Cardano launched smart contracts on its network last year, a move that makes it more competitive with Ethereum. Chainlink allows real-world data to be brought into any blockchain. Cronos is the native token of the popular Crypto.com exchange (and until recently was known as Crypto.com Coin). Polkadot provides a great foundation for Web3 apps.
KRAKEN:ADAUSDLong
by pugrathisa
Digital turbine / APPS ANALYSISDigital Turbine is a company I've been swinging for months. I believe the Stock is under some pressure and it has a crucial resistance level at 44.80. Today it APPS sits around 43.60 and it is green. If APPS gets to breaks the resistance level of 44.80 the stock is going to hit around another resistance level at 47.70 and if it keeps showing strength the stock will break through and hit the mid digit 50's giving you a 10 dollar gain per share again. But if the stock under performs under pressure the stock and breaks support at 39.50 the stock will go to the redder ends of the market and could hit the prices around 37-35 taking a 10 dollar loss per share. Digital turbine values it's company at around 96 and it is expanding quickly. Do your own research and let me know if you want me to do any other analysis.
NASDAQ:APPS
by Alfiojparisi
Weekly Trend Perspective S&P 500 using GoNoGo ChartsFrom the weekly perspective, the S&P 500's rally this week was not lost in the late Friday afternoon selloff. GoNoGo Trend shifted into the stronger "Go" trend conditions - shown in the final blue bar representing this week's trading session ending 2/11/2022. And yet, the weight of the evidence shows several key threats: 1. BEARISH DIVERGENCE between Price and GoNoGo Oscillator in Nov-Dec 2021. A higher high in price was met with a lower high in the momentum oscillator of the lower panel. 2. BREAK OF THE ZERO-LINE in the lower panel shows that momentum fell from neutral to oversold four weeks ago 3. POLARITY - the zero-line of GoNoGo Oscillator acted as SUPPORT throughout the "Go" trend of $SPY off the covid lows in 2020 but became RESISTANCE for momentum this week as the oscillator was rejected at zero and returned to negative territory 3. HIGH RELATIVE VOLUME - GoNoGo Oscillator changes from aqua to dark blue when markets experience higher relative volume. What was lighter volume at the swing highs in late November became heavier volume through this correction in 2022 GoNoGo Charts provide a blended view of many technical indicators all in an elegant, color-coded, easy to read chart. Avoid analysis paralysis, but retain a complete technical perspective of trend, momentum, volume & volatility. Better Charts. Better Decisions. GoNoGo Charts.
AMEX:SPY
by TylerWood2020
Is Trading “Gambling” or “Risky” ? Explained in business terms.Hi everyone: The question that most people will ask is whether trading is the same as “gambling”. Throughout the 9 years of my trading journey, this has always been brought up and asked about many times. Of course anyone is entitled to think based on their perspective and view, so I am not here to argue or convince them otherwise. Rather, I am here to share some key aspects of what I learned in trading for the last 9 years, as well as years in the business world to discuss the difference between “Gambling” and “Risky” in trading and in business. Most people who have never traded in their lives, but have heard about trading, usually assume trading is some sort of get rich quick scheme. They often assume it's a type of “gamble”. Since most people around them probably lost money in trading. It's not surprising as the statistics don't lie, 90-95% retail traders lose money in trading and quit eventually. But what most people don't know is “why” and “how” they lose money in trading. It's usually a combination of poor mindset and emotion. No systematic plan, no risk management, get rich quick thinking, revenge/over trading, fear of missing out, and alot more psychological issues. They did not put in the time and effort to succeed. Which then resulted in traders losing money and quitting. Eventually making up excuses of why they fail in trading, and blame the market, the broker, the strategy. All these no doubt also resulted in what normal people will say trading is a “gamble.” On the other hand, is trading “risky” ? Trading is just like any other businesses out there, that will be risky due to unforeseen circumstances. Businesses face external factors that they can not control, just like in trading. Businesses have internal expenses, overhead costs, labour, loans, C.O.G.S…etc as well as many competitions within their respected industry. It requires hard work and determination to succeed. Even for larger businesses that are where they are today, they were all risky when they started. Was Amazon Risky ? Was Tesla Risky ? Was Facebook Risky ? Absolutely. But that did not stop their owners from putting in maximum effort and time to make it work. Trading is no different, you are the owner, director and the CEO of your trading account. So, don't confuse and get “gamble” and “risk” mixed up. It's up to us individually to acknowledge and understand the difference between the two. The truth is, successful traders understand the difference between “gamble” and “risk”. To remove the “gambling” aspect from trading, is to have a well written trading plan, proper risk management, right trading psychology, positive mindset and control emotion. Whatever strategy you decide to implement is not really the cause of your success or failure, but rather those I mentioned above. This way, you remove almost all the “gambling” aspect away from trading, and it is now “risky” but bearable for you to handle. Will trading always be “risky” ? Sure, it is a business and anything can happen unexpectedly and out of nowhere. But successful traders understand the importance of treating trading like a business, so contingency plan, back up plan, trading plan, management plan, and much more should be carefully thought out so you will know what to do when you are hit with sudden surprises like in a business operation. The worst thing we can do is to not be part of any “risk”. If we are so relaxed, laid back, and have no stress to motivate us to move forward, then we stay within our “comfort” zone. We become so glued to our 9-5 job which we then think it's safe. But, we will forever be in a rat race against many others who are better than us in credentials that will land that higher position/salary that we want. “So to me, without taking a “risk” in life is the biggest “gamble” that you can do in life.” Welcome to let me know and share with everyone what you think about this topic :) Thank you Jojo
BITSTAMP:BTCUSDEducation
by jojofang0901
41
Bull Wedge in Gold??Gold has pressed down past our support level at 1795, plummeting through the entire vacuum zone between 1815 and 1795. As predicted, we have found support in the 1780's, with two levels acting as a buffer between our ultimate floor of 1777. We are seeing a bull wedge forming at current levels, suggesting that gold may attempt a rebound to higher levels, but will face resistance at 1795. If we are able to break this, then the next level is 1815. If we dump further, we anticipate support at 1777. The Kovach OBV is pretty flat, suggesting we need momentum to come through either way.
COMEX:GC1!Long
by quantguy
2
Whats the difference between Risk Management & Money Management?TLDR: Risk management generally is determining what portion of your capital you are willing to risk in a trade and staying true to that. Money management is how you would spend the money earned (in this case through trading) . Eg : Rather that withdrawing all the profits from your account you can let it be there and compound it, or rather than spending it on unnecessary luxuries you can save it for a rainy day . _________________ Full: This is something I usually get asked many times by new starters in trading as they are both common terms that you will hear as you learn about trading and investing. They are both vital concepts but it's important that you know the difference between them. Money management refers to the processes of budgeting, saving, investing, spending, or otherwise overseeing the capital usage of an individual or group. The term can also refer more narrowly to investment management and portfolio management. Money management broadly refers to the processes utilised to record and administer an individual's, household's, or organisation's finances. Financial advisors and personal finance platforms such as mobile apps are increasingly common in helping individuals manage their money better. Poor money management can lead to cycles of debt and financial strain. In the financial world, risk management is the process of identification, analysis, and acceptance or mitigation of uncertainty in investment decisions. Essentially, risk management occurs when an investor or fund manager analyses and attempts to quantify the potential for losses in an investment, such as a moral hazard, and then takes the appropriate action (or inaction) given the fund's investment objectives and risk tolerance. Risk is inseparable from return. Every investment involves some degree of risk, which is considered close to zero in the case of a U.S. T-bill or very high for something such as emerging-market equities or real estate in highly inflationary markets. Risk is quantifiable both in absolute and in relative terms. A solid understanding of risk in its different forms can help investors to better understand the opportunities, trade-offs, and costs involved with different investment approaches.
Education
by JoelWarby