STATE OF THE MARKETS
Markets at a juncture. US stocks closed sharply lower on Tuesday, with Dow (-1.63%) and Nasdaq (-2.83%) to S&P (-2.04%) and Russell (-2.25%) lost bids after US economic reports pointed to slower recovery. US bond yields of various maturities spiked up as Fed’s chair Powell and Treasury secretary Yellen testimonies sent jitters to the markets. Dollar index (DXY) was fast approaching 93.80 mark and climbing to the 94 handle at writing as demand for cash was elevated.
In the commodities market, Dollar demand and strength on yields spike sent both crude and gold lower as markets repositioned towards the final quarter. Crude settled below $75.30/bl while gold below $1,733.70/oz as New York closed. Elsewhere, iron ore was at a juncture, waiting for the catalyst in the next move.
In the FX space, King Dollar was seen advancing in demand with the Euro in the short and medium term accounts while ousting Aussie, Kiwi and Sterling. Long term accounts were little changed other than the sell-off in Sterling. Markets will continue to watch Fed’s and Treasury testimonies to congress on Wednesday.
OUR PICK – No New Stock Pick
No new stock picks as we are at maximum equities exposure. Currently we are holding 8 stocks – 7 longs and 1 short. We are long AUY (21% undervalued) with dividends yielding 2.96%, T (15% undervalued) at 7.64% yields and COG (14% undervalued) yielding 2.02%. CLVS is currently 21% overvalued with -7.19 z-score but trading central projects a rebound towards 5.62-5.87 where we will most likely close our positions. We remain bullish with VIPS (46% undervalued with 5.59 z-score), GT (47% undervalued with 1.28 z-score) and CRON (15% undervalued with 9.18 z-score) while bearish GE (26% overvalued with 1.36 z-score).
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Disclaimer:
This article is for general information purpose only. It is not an investment advice or a solicitation to buy or sell any securities. Opinions expressed are of the authors and not necessarily of MFM Securities Limited or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.