Wall Street’s Selloff Quickly Spreads East as Nikkei, Shanghai Composite Fall Hard

The Winter Olympics in Pyeongchang haven’t even started yet and already we’re seeing signs of mischief.

It seems the Norwegian Olympic team’s 109 competitors were extremely hungry for success when they accidentally put in an order for 15,000 eggs. Apparently, something got lost in translation and instead of getting 1,500 eggs they ended up with a full truckload.

Some are blaming Google translate and some blame South Korea’s complex counting system but whatever went wrong it looks like this order got scrambled.

Enjoy the games!!

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

• Free Deadlock
• Trading Volatility
• Goldman FUD Power

Please note: All data, figures & graphs are valid as of January 31st. All trading carries risk. Only risk capital you can afford to lose.

Politics & Markets

Global leaders seem to be in a good mood this morning. Looks like we might be getting some great deals in both the USA and Germany that should free up political deadlock in both countries.

Of course, politicians in both countries will still need to vote on the respective deals so we’re not quite out of the woods yet.

In Germany, it may take another three weeks before the 460,000 member SPD referendum takes place. In the meantime, the DAX remains on unsteady ground.

Here we can see the German Index has dropped below it’s rising trend line (blue) but bounced off psychological support at 12,000 (red). If it does manage to drop below the red line though, the next support isn’t for a long way down (yellow).

Trading Volatility

Though volatility has come down from Tuesday’s peak. It still remains elevated. Here we can see the VXX volatility index that is traded at eToro.

For those holding stocks long term and worried about volatility in the market, adding a bit of VXX could help to hedge your portfolio.

For short-term traders, there’s no need to highlight the benefits of trading such an asset. 😉

Financial analysts are afraid to call Tuesday’s movement a crash and some refuse to even use the word correction. In my view, if a 1000+ drop in the Dow Jones isn’t considered a crash, I shudder to think what is.

Today’s Meeting

The markets will be focused today on the Bank of England who will deliver their interest rate decision at noon in London.

As you can see, the GBPUSD has mostly recovered from the brexit crash already.

The Bank is not expected to make any changes in rates or policy today but you never know what can happen at these meetings. Their thoughts on inflation and brexit alone could potentially be market moving.

Crypto Bounce

The bounce in the crypto markets continued. Thanks in large part to a softer than expected stance from US regulators.

A recent analysis from Goldman Sachs says that cryptocurrencies will reach zero. This echoes comments from famed investor Warren Buffet and world class economist Dr. Nouriel Roubini (AKA Doctor Doom).

The analysis focuses on the high correlation factor within the cryptomarket. They seem to think that because all of the coins are moving in tandem, it indicates a high level of speculation.

While this may be true, those of you who have been reading my updates over this week know that since January 23rd the crypto market has been extremely correlated with the stock indices. So what can we learn from that?

What I find rather funny is that Goldman Sachs is in fact putting together a cryptotrading desk. So why go through that if they think there’s no value here? Could they possibly be trying to test their FUD power over the markets?

Wishing you an amazing day ahead!!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation. The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro. Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose. Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

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