The energy crisis continues, and the risks of stagflation loom before developed countries. Meanwhile, Netflix’s hottest TV series Squid Game is getting millions of views, which naturally boosts the streaming service’s capitalization. What’s going on? The US dollar sank this week. The dollar performed worst of all against the currencies of developed countries. USD/CAD dipped by almost 1.5%; AUD/USD, on the contrary, increased by 1.5%; NZD/USD added nearly 1.6%. In the week from 11.10 to 15.10, the essential news was the inflation data. The consumer price index in annual terms for September was 4%, with an inflation target of 2%. The number of jobs according to JOLTS statistics was published worse than forecasted, at 10.4 million.
- Alibaba +6.77%. Trading up with $100 and a multiple of X20 could earn $135.40.
- BTC/USD +9.2%. Trading up with $100 and a multiple of X10 could have earned $92.
- Tesla +3.11%. You could have earned $62.2 by trading up with $100 and multiple X20.
Meanwhile, the leading currency pair of the Forex market EUR/USD practically did not change over the week. On the daily chart, the price is testing the level of 1.15900 – 1.16000, where the trend line is. If the breakout takes place, then we will face a deeper correction in the dollar.
In the medium-term time frame, the delta of vanilla put options with a strike of 1.16600 is 0.74, which means that most market participants are confident that the EUR/USD quotes will remain below 1.16600 for a 2-week time frame.
The American stock market did not rally. The Dow Jones formed a gap on 07.10 that finally got closed by bears on Tuesday 12.10. Thus, we can say that the market is flattening. The horizontal support level is at 33,800 points, and the resistance level is at 35,000 points. Approximately the same picture is observed in the S&P 500 index and the Nasdaq 100. As you know, a trend reversal in the market often occurs after a flat, which means that now it is necessary to expect a further decrease in the capitalization of companies rather than continuous growth.
We suggest paying attention to two more interesting points. Firstly, the earnings season has started on the stock market. On 13.10, a reasonably good report was published by JP Morgan, and on 14.10, Morgan Stanley also reported well. The market reacted to both reports but rather weakly – Morgan Stanley shares made a gap up, but almost immediately pulled back down, the price of JP Morgan shares fell altogether. That is, even quite strong financial indicators of companies are not helping the market at present. Second, there has been another talk of a move to restrictive monetary policy, which, of course, should hurt stocks. Deutsche Bank announced last week that we are “on the verge of one of the most aggressive rate hikes by the global central banks.” Therefore, in general, our view of the market is now rather pessimistic.
At the same time, there are still companies on the market that can be very interesting in the long term. One such company is Netflix. Netflix shares are in an upward price channel with support around $608 and resistance around $650. If the bulls manage to break higher, then the long-term target for the stock will be $780.
Following the discounted cash flow (DCF) model we built, the company’s fair value exceeded $800 billion. At the same time, the company’s capitalization does not exceed $280 billion, which means that the share price in the long term may grow by more than 2.8 times. In addition to the usual mathematical calculations, one can also note the projects that Netflix has launched. For example, the series “Squid Game” gathered 111 million viewers in 17 days and became the most popular project for the company. Well, in this game, Netflix is â€‹â€‹ahead of its competitors.
Hydrocarbons continue to strengthen in price, while Brent crude oil has renewed a new maximum at $84.24 per barrel. Local support is at the level of $83.75. Oil has continued to trade in the current medium-term bullish trend since late August. And so far, there are no prerequisites for a trend change. The International Energy Agency (IEA) released a monthly report last week. According to them, global oil supplies fell by 260 thousand barrels per day (to 96 million barrels per day) in September. The decline in production in the United States is due to the impact of Hurricane Ida. In Canada and Norway, it is due to a reduction in production due to maintenance. We also took factors such as a seasonal decline in production into account.
The next critical moment for the oil market will be the OPEC+ meeting on November 4. At the last meeting, the cartel decided to keep the production unchanged. Changes in OPEC+ production volumes can significantly change the balance of power. From September to the end of 2021, global production is expected to grow by 2.7 million barrels per day, with OPEC+ accounting for 1.5 million barrels per day.
Natural gas corrected in price to the level of support to $5,450 per million British thermal units. At this point, there was an intersection of the uptrend line and the support level. As a result, the price bounced back and, by the end of the week, again came close to $6,000. Nevertheless, the gas price has added more than 120% since the beginning of the year despite the correction.
Several circumstances hindered the rally’s growth: milder weather and Vladimir Putin’s gas policy. According to him, Russia is ready to increase gas supplies to Europe if they ask. It will soon become clear how long these bearish factors will keep the price from further speculation. It is worth keeping in mind the longer-term consequences of high commodity prices, which will create additional costs for companies. In the worst-case scenario, this can lead to stagflation – a combination of high inflation and falling actual output, leading to a new wave of recession.
Bitcoin continues to grow. The asset is close to the $60,000 mark. From there, it is not far from the all-time high, just below $65,000. After a strong breakout of the downtrend line, BTC is consolidating, forming a flag pattern. Local support for the whole last week has been the level of $54,000. Arcane Research analysts believe the current rally is driven and supported by increased open interest in bitcoin futures on the CME. The indicator increased in two weeks from 12% to 17% and equaled the data for February. Many on-chain metrics also confirm the increased interest in Bitcoin. For example, the aggregate daily transaction volume in the bitcoin network set a new record of $31 billion.
Many market participants are determined to continue the current trend and renew the historical maximum. Some analysts believe that Bitcoin will hit the psychological $100,000 mark this winter. Cryptocurrency market capitalization has grown over the week from $2.3 to $2.4 trillion. The daily trade turnover is almost $110 billion.
Not all altcoins have grown with the leading cryptocurrency. This caused an increase in BTC domination from 44.0% to 45.1%. The Fear and Greed Index slightly decreased. It moved to the state of Greed around 70 points. If we talk about retail traders, most of them believe in a short-term reversal and a fall in bitcoin. This is evidenced by the ratio of Long and Short positions on the main CEX. China continues its prohibitive cryptocurrency policy. According to several media reports, some Chinese departments have begun to prepare for prosecutions in crypto asset trading and mining cases. At the end of the year, Binance will remove the Chinese yuan from the over-the-counter (OTC) markets and generally close access to OTC trading to users in mainland China. China expelled miners from its territory. At the same time, the United States of America occupies the leading position in terms of the place of production of the leading cryptocurrency. Since May 2021, the US share in the total hash rate has grown from 17.8% to 35.4%. The shares also increased in other countries – in Kazakhstan from 7.4% to 18.1%, Russia 7.2% to 11.2%, and Canada from 4.7% to 9.6%.
The stock market went flat. Dow Jones closed the gap and is trading in a price range. At the same time, there is a slight correction in the US currency in the foreign exchange market – the dollar is weakening against the backdrop of high inflation in the US and weak data on unemployment.
The commodity market continues to grow. In the long term, this could lead to stagflation and a new wave of a global recession. The cryptocurrency market continues to grow. Bitcoin rushed to renew its all-time high, supported by on-chain activity and interest from institutional investors.