Foreigners sold net $1.1 bln of Saudi stocks in week to Oct 18

Foreigners sold a net 4.01 billion riyal ($1.07 billion) in Saudi stocks in the week ending October 18, exchange data showed on Sunday - one of the biggest selloff since the market opened to direct foreign buying in mid-2015.

The selloff came during a week when investors were rattled by Saudi Arabia’s deteriorating relations with foreign powers following the disappearance of journalist Jamal Khashoggi.

Riyadh said on Saturday that Khashoggi died in a fight inside its Istanbul consulate, its first acknowledgement of his death after denying for two weeks that it was involved in his disappearance.

A breakdown of the data showed foreigners sold 5 billion riyals worth of stocks and bought 991.3 million worth.

The Saudi stock market is down about 4 percent since Khashoggi’s disappeared. The market had started to weaken before the incident as foreign funds slowed their buying after MSCI’s announcement in June that the kingdom will be included in its global emerging market benchmark next year.

As of Sunday, the Saudi index was up 5 percent so far this year, but down 5 percent this quarter.

Read: Saudi stocks plunge 7% on Khashoggi fallout; $33 billion lost in 2hrs

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Saudi explanation of Khashoggi death not credible – British minister

Saudi Arabia’s explanation of the death of journalist Jamal Khashoggi at its consulate in Istanbul is not credible, Britain’s Brexit minister Dominic Raab said on Sunday.

After denying any involvement in the disappearance of Khashoggi, 59, for two weeks, Saudi Arabia on Saturday morning said he had died in a fistfight at the consulate. An hour later, another Saudi official attributed the death to a chokehold.

Asked during an interview with BBC if he believed the explanation, Raab said: “No, I don’t think it is credible … We support the Turkish investigation into it and the British government will want to see people held to account for that death.”

Raab said Britain needed to know the facts of what happened before it could make a “sensible and sober judgement call” on what to do next.

“We are not going to throw our hands in the air and terminate our relationship with Saudi Arabia, not just because of the huge number of British jobs that depend on it but also because if you exert influence over your partners you need to be able to talk to them,” he said.

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Stalking Sterling for next week – as Brexit panic sets in.

Stalking Sterling for next week - as Brexit panic sets in.


In the screncast I start off with GBPAUD             on a weekly time frame and move on into much lower time frames across other pound-pairs.

The geopolical/macroeconomic picture for the UK with Brexit, creates uncertainty.

There are reliable reports of preparations for pharmaceutical stock piling, big push in logistics sector for storage of tinned food and firelighters and Whitehall preparing ‘war games’ scenarios. Such preparations would not be happening if there was no realistic probability of a hard Brexit.

The issue of course for us traders is not about Brexit as a politico-economic event. We need to be prepared to make some money out of it. Right? This is not a moral issue for me, but if it is for some traders, then avoid Pound pairs.

USDJPY: Ascending Triangle

USDJPY: Ascending Triangle


The primary pattern in USDJPY             is the large Symmetrical Triangle, formed from the 2015 highs and 2016 lows.

We have since broken to the upside, to form a secondary Ascending Triangle , which is bullish .

If price couldn’t rally to test the prior highs in the 114 area, my medium-term bias would have been neutral. But the fact that price has rallied to this level for the 4th time in 2 years, indicates that a new uptrend might be just beginning.

First target would be the 118 area, followed by the 123 area.

I am bullish-biased, but flat, awaiting a suitable entry.

DOW JONES: Ever The Jewel In The Crown

DOW JONES: Ever The Jewel In The Crown

US Wall St 30 OANDA:US30USD


As expected, the Dow, when compared with the SPX             and the NASDAQ to name two, presents the most bullish of the bunch. The recent drop was severe, but no long-term damage has been done. And while the SP500             and NASDAQ closed red last week, the DJIA             closed green. This is telling us that though profit-taking has set in, bullish fundamentals underpin this market.

Although it was a large drop, we have only tested the breakout line of the 2018 Symmetrical Triangle, which is a texbook move. It would be very bullish to ride this line down, making new lows, without a breakdown.

Of course, it is too early to say if this would happen, yet it remains on the table. The possibility of making new lows cannot be ruled out, especially in light of the incoming elections.

Another, more extreme possibility is that we whipsaw down, taking out the 2018 lows, and immediately return on an upward trajectory. This would also be a textbook whipsaw, as it would take out both the previous highs and lows of 2018, confusing everyone.

As always, we need to create the technical conditions that convert the consensus into bearishness.

I remain in a long-term long position, with funds ready to buy on further drops. The purple area is important - as long as we CLOSE above there, my bullishness remains. I am long-term bullish , short-term neutral.

SP 500: Possible Cradle

SP 500: Possible Cradle

US SP 500 CFD FOREXCOM:SPXUSD


Last week, prices were well sold at the 21 EMA . This indicates that the bears still have control.

An interesting possibility is that prices could hit a Cradle point formed by a confluence of the Triangle boundaries. This point is also reinforced as the lower boundary of a possible larger channel. This mythical point in space and time could present as very powerful buying opportunity. For now, the burden is on the bulls to prove themselves.

With the US elections hanging in the balance, we should see players take sides in the lead-up. A choppy trend could develop which will either be confirmed or negated by the outcome.

I’m bullish-biased with a short-term neutral/bearish outlook.

Desperately seeking stability

US  Markets

From sandstorms in Riyadh to headwinds in Rome, escalating risk has effectively capped the recent swell in US Treasury yields, while the combination of Federal Reserve policy tightening and increasing debt supply should keep the trapdoor from giving way. But none the less, market participants will jostle between US growth momentum and the ever-threatening and escalating geopolitical risk, that could trigger a more significant flight to safe-haven currencies and assets.

US equity markets struggled across the finish line on Friday as investors contiued to take profits after morning gains gave way when a report showed U.S. home sales fell for the sixth month in a row. US housing growth continues to disappoint on familiar themes and remains one of the few red lights and the most significant drag on the US economy.

China Markets

Although local Asia sentiment remains poor, the SHCOMP staged an impressive reversal of Friday after China rolled out a series of speakers and rule changes to stabilise markets, but the pace of reversion does suggest it was aided on by state-owned funds to add some vim.  But Chinese markets remain under pressure from every economic angle leaving more than a few investors extremely sceptical Friday’s recovery will have lasting legs.

Oil Markets 

It should be a hectic week ahead in oil markets anticipating colossal participation amidst escalating headline risk this week . Bullish sentiment is clearly under pressure as oil traders search for  the next equilibrium.

Brent crude oil probed back above the $80 per barrel on Friday after China reported record refinery throughput for September.Reuters But the critical benchmark still closed below that technically essential and psychologically significant level. ($80 per barrel)

West Texas Intermediate crude oil followed stronger performances in the Brent market, but like Brent, closed below a key level, $70 per barrel, which is a significant fail for bullish sentiment

In China, higher seasonal demand and suspected stockpiling are occurring, while similarly the US and the OECD continue building stockpiles ahead of potential supply disruptions this winter. But China demand is also surging due to Beijing ‘s enormous infrastructure projects and spends which are being used to stimulate the economy and is beefing up Oil demand.

However, concerns about demand growth slow down along with the prospect of more barrels  coming online has triggered a sizable reduction in bullish markets structures, the difference between bets on higher prices and wagers on falling priced — dropped  14 per cent to 242,855 futures and options in the week ended Oct. 16, according to the U.S. Commodity Futures Trading Commission.

But there’s a loud level of headline noise that seems to pop up like clockwork, where on the one hand views suggest OPEC can quickly cover the Iran shortfall while conspicuously well-timed documents continue to surfacing claiming that OPEC and its allies are having difficulty boosting production by 1 million bpd as it had promised in June. Sifting through the market noise will present its challenges none the less.

From various industry insider reports, Iran exports have fallen from 2.2- a million barrels per day (m b/d) in 1H’18 down to an expected 1.5-m b/d in October. Saudi Arabia has reportedly ramped production to 10.7-m b/d though. They could go to 11-m b/d and draw down 0.5-m b/d from inventories or even more if needed. (3-m b/d just boosted Saudi export capacity at Aramco’s Red Sea Yanbu terminal. Ras Tanura capacity is well above current export levels.) And Russia still has ~0.2-m b/d spare capacity to reach 11.5-m b/d.

According to industry reports, Canada’s crude production was ~4.6-m b/d in August, with Jan-Aug growing ~280-k b/d y/y, even with Syncrude upgrader problems, which has since recovered. Oversupply and US refinery maintenance have put WCS and Syncrude into a massive   discount WTI  pipeline bottlenecks meaning more and more WSC needs to be shipped by rail with new longer-term rail shipping contracts agreeing to at ~$20/bbl to the USGC

And with Trump’s acknowledging that Saudi Arabia’s findings behind the Khashoggi death were credible, this could offer more opportunity for the US administration to pressure the kingdom to tap its spare capacity resources before the Iran sanctions take effect in November. So, there will be an intense focus on the Saudi Royal family’s relations with the Whitehouse this week, while US Congress will face increasing pressures to block all arms sales and deliveries. All the while  global business leaders continue to shun “Davos in the Desert.”

US-Saudi relationships are vital to maintaining peace in the middle east and must continue, however, the Khashoggi case will give the US leverage and which will likely cause Saudi Arabia to increase oil production if possible. But you know this is not going to leave the headlines anytime soon as most everyone considers the official Saudi explanation as a complete fabrication.

While the supply-demand equilibrium remains fragile, the anticipated impact from Iran sanctions is diminishing as prompt Brent remains in good short-term supply despite growing uncertainty about supply disruptions continue to build down the road.

Gold Markets

Investor sentiment is much-improved from even a week ago on increased portfolio hedges against more sustained equity market drawdown which over the short term,  should give rise to haven demand and boost Gold prices.

But China has rolled out some rule changes to stabilise markets. And while the longer-term effects from these changes amount to little more than putting a band-aid on a broken leg, the generally usually work and have some influence over the short term. Since  China equities are deep in oversold territory, there is lots of room for a bounce in local markets which has clipped momentum in Gold markets as even headlines around Brexit, and the Italian budget was more positive heading into the weekend. heading into the weekend although most traders remain a bit cynical on those fronts

While the upcoming US election will offer up many challenges on US political risk front and support Gold, ultimately however past Nov 6 USD and Fed hiking cycle are likely back in the driver’s seat for bullion pricing. While mainly priced in, the USD could strengthen ahead of December rate as higher US interest rates and a stronger USD could discourage gold investors from pushing the envelope higher unless of course, the equity market rout continues.

Currency Markets

From sandstorms in Riyadh to headwinds in Rome, escalating risk has effectively capped the recent swell in the US in Treasury yields, while the combination of Federal Reserve policy tightening and increasing debt supply should keep the bottom from giving way. But none the less we will bond, and currency traders are left to jostle between US growth momentum and tightening global risk, that should trigger a more significant flight to safe-haven currencies and assets.

Last weeks FOMC minutes reaffirmed the Fed’s hawkish lean and should keep the dollar supported. Markets remain in pins and needles of the Italy budget and Brexit stalemate, but with equity markets volatility on the rise, traders will continue to assess China policy adjustments on Friday to see if the moves will have a sticky effect.

Traders will soon factor in US midterm elections where the tail risk clearly, is a Democratic sweep. Mind you; its anyone’s guess just how economically active GOP tax cuts will be in 2019 while facing a massively ballooning debt. But it is while is more clear-cut that  a Blue Wave tsunami would dent market sentiment and likely push the dollar lower

The Euro

So far ECB policymakers have remained somewhat mute on Brexit, but one would think this divorce will not play out pretty for either the EU or UK economies which might influence ECB policy guidance. But EURUSD is back above 1.1500, reflecting quietening in alarm bells over equities & Italy. Moody’s finally cut Italy’s ratings to Baa3 as expected. Italy’s banks are vulnerable because of the high proportion of the country’s bonds they own, but this was widely expected so no major surprise.

The Canadian Dollar

The CAD miss on CPI has overwhelmed whatever remnants of bullishness I had in the CAD. The shocking miss on the CPI has shattered my confidence on next week’s BoC. Given there are no significant data releases between now and the BoC meeting, its time to stop being so unabashedly bullish on the loonie.

Australian Dollar
There were around $A10B of Australian government bonds redemption on October 21 and given much better yields away, unless so governed to buy Australian Bonds, most of those maturing investments likely funnelled into US or other much higher yielding bonds. Thus, the AUD is holding up well despite a lot of selling pressure last week and could outperform this week provided China volatility continues to ease after mainland regulators policy tweaks on Friday.
Been avoiding trading AUD vs the USD like the plague but given shifting sentiment on BoC policy next week, the long AUDCAD trade could see some appeal early this week.

On the energy front, multiple news sources have confirmed that Australia’s colossal and much delayed Ichthys liquefied natural gas (LNG) plant has started shipments in recent weeks. But comes at a favourable time and could offer some much-needed respite to Australia’s dwindling heavy sweet crude oil production.

The Malaysian Ringgit

It still feels like risk off but with a less weak Yuan and the monetary policy easing story in China playing out well on the SHCOMP. While the mainland equity recovery was positive on the surface, other regional bourses barley blinked as the China market reversal was little more than it a short covering.

In what could best be described as hope for the best but prepare for the worst. Malaysia slashed its economic growth targets and deserted its plans to balance its budget by 2020, not exactly a ringing endorsement for the financial in Malaysia. And with capital gains taxes and other consumption taxes on the horizon, it’s not to difficult to figure out why Malaysia equity markets remain under pressure.

The combination of macro risk off as well as on-shore danger around the upcoming budget will keep the Ringgit trading defensively.

The leak on oil prices notwithstanding, regional risk sentiment remains ever so fragile as any sliver of optimism from US earnings gave way to that reality that trade tension and geopolitical unrest continues to gurgle. There were around $A10B of Australian government bonds redemption on October 21 and given much better yields away, unless so governed to buy Australian Bonds, most of those maturing investments likely funnelled into US or other much higher yielding bonds. Thus, the AUD is holding up well despite a lot of selling pressure last week and could outperform this week provided China volatility continues to ease after mainland regulators policy tweaks on Friday.
Been avoiding trading AUD vs the USD like the plague but given shifting sentiment on BoC policy next week, the long AUDCAD trade could see some appeal early this week.

Israel to negotiate border land lease extension; Jordan says no

Jordan told Israel on Sunday it would not renew a 25-year lease of two tracts of territory along its border, where Israel had certain rights under a 1994 peace treaty, but Israel said it would negotiate with Jordan to extend the lease.

Under the treaty, Israel retained private land ownership and special travel rights in Baquora in the northwestern part of the kingdom and Ghumar in the south.

King Abdullah, who has been under increasing public pressure to end the leasing arrangements with Israel, told senior politicians the kingdom wanted to exercise its “full sovereignty” over the two areas, Petra state news agency said.

Prime Minister Benjamin Netanyahu said on Sunday his country will negotiate with Jordan an extension of the 25-year lease.

Netanyahu, in public remarks, said Jordan wants to implement its option to end the lease, and Israel “will enter negotiations with it on the possibility of extending the current arrangement”.

Under an annex to the peace agreement, Israel leased about 1,000 acres (405 hectares) of agricultural land in the southern sector of its border with Jordan, as well as a small area known as the “Island of Peace” near the Sea of Galilee.

The 25-year lease expires next year.

Under the terms of peace treaty, the lease would be automatically renewed unless either of the parties notified the other a year before expiry that it wished to terminate the agreement, according to a Foreign Ministry statement.

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NASDAQ: Still Short

NASDAQ: Still Short

US Nas 100 OANDA:NAS100USD


First, note how price backed off and failed to touch the higher trendline in August.

Next, the market provided another clue, as the next rally showed bearish divergence on the Stoch RSI .

Though prices bounced from a fairly critical trendline , the last week as confirmed the down direction as price as sold at the 20EMA.

It is fair to assume that more downside is coming, with the critical trendline and a secondary trendline providing support. Ultimately, we would need to see horizontal support (purple rectangle ) to keep long-term bullish posture.

I am neutral-short at this point.