Trading Journal

Many traders are already thinking about fresh strategies and the market forces which will shape the 2nd quarter of 2017. With that in mind, now is a good time to revisit and reconsider our individual trading styles and faults, and to see what we can improve.

Financial markets will now be faced with two important events: the Dutch elections and the Fed meeting in the US. As a matter of curiosity, the longest record to form a government (208 days) was in Holland and dates from 1977.

In the foreign exchange market, the Euro is still appreciating agains the dollar after the impulse candle from Tuesday of more than 1%.

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Construction permits declined 6.20% in February to 1.21 million, which may be a sign that higher interest rates are actually driving Americans to rethink their plans for housing.

As far as the banking sector is concerned, Deutsche Bank informed yesterday that it will start a capital increase of 8 000 M.€ after two consecutive years of losses. According to a press release issued by the institution, 687.5 million new shares will be issued, with a unit value of 11.65€, a value that represents a discount of 35.05% against the € 17.83 that the bank’s securities ended on Friday.

In the pre-opening, the European markets negotiated slightly higher, despite the uncertainty that stems from the terrorist attack in London. The Pound depreciated to the lowest of the last six days against the US Dollar. Investors, however, should monitor developments in the US political-economic landscape.

In March, the main US indices did not show any progress but also did not suffer any correction. After the sharp fall on the 21st March, some doubts seem to be emerging.

With regard to the real estate market, sales of new homes increased from 6.10% in February to 592,000, the highest of the last 7 Months. Estimates pointed to the 564,000 houses sold.

According to a study conducted by Bank of America in the week ending March 13, stock funds have been redeemed in the order of 8900 M.USD, the highest amount in the previous 38 weeks.

European markets closed higher, with concerns about US policy developments dwindling.

The financial sector, one of the most penalized in recent days, as well as the energy sector, helped by rising oil prices, helped to sustain market gains. Oil rose again, albeit mildly, after news of the collapse of production in Libya over conflicts with armed rebel factions. The Dollar recovered from recent declines that drove the US currency to a 4-month low over fears about the Trump Administration’s difficulty in delivering the anticipated, fiscal measures with an expected positive economic impact.

Asian stock markets closed lower, with investors showing some uncertainty over the Brexit process and its impact. The Yen appreciated affecting the main exporting companies.

US stock gain traction on upbeat GDP data, focus shifts to Fed speakers
After a relatively flat opening, the US stock markets seems to have gained traction and traded in positive territory during opening hour of trade on Thursday.

Investors' sentiment got a boost from upwardly revised fourth-quarter US GDP print that underscored strength in the domestic economy and supported views for additional Fed rate-hike actions through 2017. Hence, investors now look forward to speeches from couple of Federal Reserve members, later during the day.

At the time of writing, the Dow Jones Industrial Average added over 70-points and rose to 20,735, while the broader S&P 500 Index was up over 5-points to 2,367. Meanwhile, tech-heavy Nasdaq Composite Index gained 15-points to move back above 5,900 mark.
With today's up-move, major US equity indices have largely recovered their losses witness in the aftermath of the Trump administration’s failure to push through a legislation to repeal and replace Obamacare. Investors, however, will wait to see if Trump is able to gain sufficient support for his next legislative priority - tax reforms, which might eventually cap further gains in equity markets.

Meanwhile, with markets already trading with very high valuations, a slightest of hint that the tax reforms won't go through would serious dent investor confidence and has the ability to trigger a fresh leg of sell-off in equity markets.
 

Governor of the Bank of France, Villeroy de Galhau, said this week that the acceleration of inflation is not enough to remove Quantitative Easing and added that ECB policy will continue to evolve according to economic circumstances.

The number of weekly applications for unemployment benefits has decreased by 3000 to 258 000, thus maintaining the longest series since 1970 from a level of this indicator below 300 000.

Over the past month, European stock markets have reached a clear overperformance when compared to their US counterparts. In fact, during the month of March, the Eurostoxx50 appreciated 5.45%, the DAX 4.03%, while the S & P remained practically unchanged.

The Fed’s minutes have pointed out that the policy of reinvestment of the assets acquired under the Quantitative Easing programs will continue until the reference interest rates are at a standard level, possibly close to the level of Long-term equilibrium. The publication of the oil reserves (3.30 pm) which may still be an important point of the session.

Today’s session is expected to be somewhat defensive by investors who are preparing to monitor not only the Meeting between the US President and the Chinese counterpart, as well as the release of the minutes of the ECB Governing Council meeting at the meeting on 9 March, which should clarify further details on the next decisions of the Central Bank. It should be recalled that the rise in inflation, which reached 2.0% last month (the ECB target) triggered some expectation regarding the possibility of a faster withdrawal of stimulus from the Central Bank, as well as a change in the interest rates of reference. However, the ECB has not been confident of a sustained rise in prices, especially after data confirming that underlying inflation remained subdued. Investors will also take advantage of the speech by Mario Draghi, President of the ECB, to look at more details on the monetary policy conducted by the ECB.