TRACKRECORD DAILY
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TRACKRECORD DAILY

Fireworks in the Cryptocurrency market!

Markets suffered a flash crash with Bitcoin dropping almost 20% from above 52k to touch a low of 42k ish.

Just yesterday we said things were getting exciting, and so it has, but not in the way we thought. Markets suffered a flash crash with Bitcoin dropping almost 20% from above 52k to touch a low of 42k ish.

It may seem harrowing to the rest of the traditional finance crowd, but this was just another of the many margin longs capitulation that we see in the cryptocurrency market. For example, the low in the spot market for ETH on the largest crypto exchange in the world, Binance, was 3005 but the low for the perpetual futures (a derivative product traded mostly by highly leveraged speculators) was 2846!

With the weak leveraged hands cleared out, the market is now more balanced. The flash crash affected the sentiment on the stock markets for a bit before dip buyers came shopping for discounted tech stocks once again.

For now, the story in the real world remains very much the same. Keep to the same path that leads to rising prices for risk assets.

TRADING TIP

Surviving Event Risk

When trading, we find ourselves having to face major events or announcements such as the speech of a central banker or a certain data release. While there are hints or forecasts about such events, it is imperative that we prepare for them so that our positions are able to tide through them.

Being prepared ahead of time will give us a better idea of what the probable outcomes are and how we should adjust our positions if necessary. As such, always be aware of your risk going into such events, and if necessary, reduce risk, in order to survive the wing outcomes which are often beyond what we can anticipate.

DAY AHEAD

BOC policy meeting later today. No change to their monetary policy is expected ahead of the federal elections on 20 Sep. Anything hawkish will prove beneficial for the CAD.

TRADING PLAN

1. Currencies:

Keep short USD and long NZD, & CNH. Strong USD on the day but nothing to write home about. The market is still in a range.

Key resistance/support levels -

USDCNH 6.53–54. Stay short and earn the positive funding rates.

NZD support is at 0.6790–6800. The NZD remains supported. Stay long.

2. Commodities: Uranium & Energy — These continue to outperform. Stay long and patient.

Key risks: Spread of the delta strain & comments from Fedspeakers which may affect the tapering timeline.

3. Equities:

Equity Index: Long Nasdaq futures. Not much to say but stay long. Stay long and patient. Look to buy dips on approach of support levels at 13950–14000.

Single Stocks: New highs every other day. Find out which addition to our TrackRecord Model Portfolio has nearly doubled in a matter of days and continues to power higher!

Key risks : Spread of delta strain & the Fed tapering timeline.

WHAT HAPPENED YESTERDAY

Market movements as of New York Close 7 Sep 2021
  • The U.S. Dollar Index advanced +0.6% to 92.54. AUD weakened after the Reserve Bank of Australia stuck with plans to taper its bond buying but said it would extend the timeline as the economy struggles with coronavirus lockdowns. GBP also dropped after the British government set out a plan to raise taxes. Cryptocurrencies plunged sharply on Tuesday with bitcoin dropping as much as -19% on the day and ether falling -23%, before paring losses. Several crypto trading platforms said they experienced performance issues on Tuesday, though it was not clear if these were a contributor to, or a result of, the volatility. The drop also came as El Salvador on Tuesday became the first country to adopt bitcoin as legal tender. Bitcoin was last down -10% on the day at $47,153 and ether was down -12% at $3,460.
  • The 10-yr yield increased 5 basis points to 1.38% while the 2-yr yield increased 1 basis point to 0.22%.
  • Nasdaq Composite (+0.1%) eked out intraday and closing record highs on Tuesday, while the S&P 500 (-0.3%), Dow Jones Industrial Average (-0.8%), and Russell 2000 (-0.7%) closed lower, as investors leaned defensively into the mega-cap stocks.
  • The decline in the S&P 500, however, was mitigated by the continued strength in the mega-caps. Apple (AAPL 156.69, +2.39, +1.6%) and Netflix (NFLX 606.71, +16.18, +2.7%) both set record highs, with NFLX receiving a Street-high, price-target increase ($780) at Atlantic Equities.

HEADLINES & MARKET IMPACT

U.S. House panel sets debate this week on its portion of $3.5 trillion bill

Notable Snippet: A U.S. House of Representatives committee this week will attempt to advance sweeping legislation to expand healthcare benefits for the elderly and other social services as part of Democrats’ $3.5 trillion domestic investment plan.

The House Ways and Means Committee plans to debate its wide-ranging measure that also would expand Medicare health coverage for the elderly to include dental, vision and hearing benefits in work sessions on Thursday and Friday.

Thematic Context: “When push comes to shove, we believe that the US government will do the right thing and they are on the edge of unleashing unprecedented fiscal money. We have been saying that Biden’s best work has to be accomplished from now to midterm elections and each day later just coils the springs of explosive growth as he will have to go faster and more aggressively within a shorter period of time. Don’t miss the forest for the trees at this point in the cycle.” — 21st July 2021

COMMENTS/IMPACT: The flood of money continues and the game hasn’t changed, stay invested in assets.

Biden tours flood-hit areas; calls climate change ‘existential threat’

Notable Snippet: President Joe Biden on Tuesday toured sites of deadly floods in the Northeast and said Hurricane Ida demonstrated the ravages of climate change as he pressed for investments to boost infrastructure and fight global warming. Biden made fighting climate change a key plank of his 2020 presidential campaign and a top priority of his administration, but some of his goals rely on getting the U.S. Congress to pass multi trillion-dollar legislation on infrastructure and other priorities.

Thematic Context: “As more money gets pumped into the system and supply chains get attacked or reshored, we expect more persistent inflation spikes which on average will increase overall inflation on absolute terms. Inflation is bad for savers and makes government bonds “certificates of confiscation”, as a result, stay invested in assets.” — 10th June 2021

COMMENTS/IMPACT: “Global Warming” is good political cover to reinforce the need for larger spending packages to fight climate change. The theme remains the same.

Biden says he is sure China will try to work out arrangement with Taliban

Notable Snippet: Asked if he was worried that China would fund the group, which is sanctioned under U.S. law, Biden told reporters, “China has a real problem with the Taliban. So they’re going to try to work out some arrangement with the Taliban, I’m sure. As does Pakistan, as does Russia, as does Iran. They’re all trying to figure out what do they do now.”

The United States and its Group of Seven allies have agreed to coordinate their response to the Taliban, and Washington has blocked the Taliban’s access to Afghanistan’s reserves, most of which are held by the New York Federal Reserve, to ensure they live up to their pledges to respect women’s rights and international law.

COMMENTS/IMPACT: This is a situation to monitor as it has more to do with the credibility of the US and its waning role on the global stage.

SENTIMENT

FX

STOCK INDICES

Phan Vee Leung
CIO & Founder, TrackRecord

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