GLOBAL MARKETS OVERVIEW 23/09/2015: GOLD MAY SELL OFF!

A quick overview of what happened in the markets yesterday and my thoughts for today, Thursday’s markets. We start our analysis by viewing the Bonds & Bullion markets to determine dollar denominated sentiment. Yesterday, we saw demand for both the dollar and gold which is a bit unusual. We also saw US bonds selling off. The bond sell off created demand for the dollar. But there was also demand for Gold. See charts below:

If bonds keep selling off, we expect demand for dollar to increase and also gold to reverse its gains of yesterday and sell off. To confirm a sell off in gold, let us see if there is indeed demand for paper or fiat currencies versus gold. See charts of Gold vs Paper below:

From the 2 charts below, if US bonds keep selling and USDJPY keeps buying, I expect Gold and/or EURUSD to start selling. So I am a Gold bear today.

Other markets we look at below:
AUSSIE VALUE FLOW, GLOBAL EQUITY FLOWS, CRUDE OIL VALUE FLOW AND THE IMF SDR CURRENCY BASKET VALUE FLOW.

These models simple help us do a thorough intermarket and intracurrency analysis to determine what we should be trading and what direction we should be trading it in. Like I always say, there are three activities involved in professional trading:

1. RESEARCH AND ANALYSIS to determine bias and asset to trade. Our value flow models help us determine this.
2. TRADE EXECUTION this involves entering trades at the best possible price, with momentum on our side, when support becomes resistance and vice versa. We never enter until we have confirmed using our 7 step technical analysis approach.
3. RISK MANAGEMENT this involves getting the best exits, at maximum profit or at minimum loss. We use intelligent trailing stop and pyramiding to achieve this.

imf sdr 240915 1247am

Oil 240915 1247am

Equity 240915 1217am

Aussie 240915 1211am

Gold vs Paper 240915 1206am

Bonds&Bullion 240915 1201am

Trading is not easy, but it can be straightforward. We keep refining our approach at ValueFlowTrading.com to train aspiring traders become more professional and consistently profitable.

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FIRST TV, NOW RADIO! HOW THE TYPICAL YOUNG NIGERIAN WORKER CAN START SECURING A FINANCIAL FUTURE!

I was invited over the weekend to be a guest on an amazing radio show “Girlfriends on Radio”. The discussion centered around “Securing a financial future”. I really enjoyed it, although most of what I discussed was basic common sense principles of personal finance management, budgeting, saving and investing. I couldn’t discuss in detail on how to use the financial markets to achieve financial freedom, but still, the tips shared will be very helpful, especially to the typical young Nigerian worker.

Lately, I’ve been invited to speak at events and on radio/TV on how to achieve financial freedom, using the financial markets. It’s really humbling for me, because I started this blog two years back to document my own journey to financial freedom. It’s not easy making the switch from being an employee or being self employed to also becoming an active investor/trader, who survives mainly on income from investment profits, especially in a third world country like Nigeria. I know because I have spent the better part of my working life using my own life as a guinea pig, a pilot test case! But gradually, it seems that my progress is starting to become more visible! I am really looking forward to the future!

To understand why I am so happy, you may need to read some of my earliest posts on this blog. Find them here:

https://mytrustfunddreams.wordpress.com/2013/03/

https://mytrustfunddreams.wordpress.com/2013/04/

I have not arrived, but I am not where I used to be and most importantly, I am still moving and making progress.

So, watch the radio show and learn a few basic starting points!

Yours in the quest for success, and beyond that, significance.

Olufukeji Adegbeye, CWM

NIGERIA REMOVED FROM JPMORGAN’S EMERGING MARKET BOND INDEX

So, Nigeria was removed, as the headline implies. Read the article in the following link for more details:

http://www.bloomberg.com/news/articles/2015-09-08/jpmorgan-to-remove-nigeria-from-emerging-market-bond-indexes

I stumbled upon a comprehensive article by a seasoned Nigerian investment banker and CFA. His opinions on how this will impact the markets are very well articulated here:

https://www.linkedin.com/pulse/impact-nigerias-exclusion-from-jp-morgans-gbi-em-femi-ademola-cfa?trk=hp-feed-article-title-comment

My personal opinion is that one must not forget that there are several vested interests involved here. Profit taking and capital preservation is the short to medium term trading objectives of offshore financial speculators versus the longer term objectives of the CBN, DMO and FMF which is the stabilisation, regulation and growth of the Nigerian economy (both the finncial markets and more importantly, the real sector). In this particular scenario, both objectives conflict, which is why I like the fact that the Nigerian government is more committed to currency moves that will grow our real sector rather than currency moves that will make our financial markets more profitable for foreign investors, especially when those investors repatriate their profits from those financial markets back to their offshore locations without ploughing back those profits into the real sectors of the economy that produced them. Once crude oil prices stabilise, Nigeria’s favorable macroeconomic story will make us an investors haven. Our stocks will then be so cheap that they will be irresistible to foreign investors, especially if the US markets implode, which is inevitable given the reckless QE and debt that US has been racking up for years.That being said, our CBN needs to be more tactically in their efforts to artifically suppress the naira. Demand still outweighs supply and all the CBN has effectively done with their policies/bans is create 3 exchange rates. 197 official, 216 avg black mkt/BDC rate for physical dollars and then 235 for electronic transfer/inflow domiciliary accounts. I am a financial markets trader, but I am also a patriotic Nigerian, and in this case, I prefer the exclusion. PS: The top banks are notorious for publicly bashing a particular asset so it will sell off and then they can buy it at bargain prices. Imagine Goldman Sachs issuing a sell bias for Gold in July, August, only to be covertly buying physical bullion cheaper as Gold ETFs sold lower. I won’t be surprised if JPM’s emerging markets prop desk is picking up bluechip Nigerian stocks in this bloodbath dump.

In closing, I leave you with an article that that reiterates why emerging markets and even “third world” economies, I daresay, are the future of value investing globally.

http://www.bloomberg.com/professional/blog/emerging-markets-are-still-the-future/?bbgsum=DG-WS-CORE-SL-LI

Yours in the quest for significance, beyond success.

Olufukeji Adegbeye CWM

THE US ECONOMY AT A GLANCE

http://ig.ft.com/sites/us/economic-dashboard/

The average retail technical analyst trader doesn’t like fundamental analysis, primarily because the variables seem to be too many and there are not too many fundamental analyst traders who have a systematic non discretionary strategy that can be used to mentor aspiring traders. I can empathise with both parties. As a trader who relies mainly on my proprietary value flow trading strategies which are mainly sentiment analysis based, I have always wanted a way of graphically representating and tracking fundamental analysis indicators. So imagine my joy when I stumbled on this Financial Times articles that shows the most relevant fundamental analysis indicators that influence the US dollar.

I think all traders should study these charts and adopt these formats of indicators and look for how to identify and track their equivalents in other currencies that they trade.

Thanks Financial Times!

Click here to view the article:

http://ig.ft.com/sites/us/economic-dashboard/

SEPTEMBER TO REMEMBER!

Today is the first trading day of the month. Let’s review the markets going forward.
Equities & Traditional Safe Haven Instruments:
We see that there was a continued sell off in global equities. The VIX fear index is trending up and global market indices are trending down. This means there is still risk aversion in the markets. Typically this should create demand for safe haven assets like Gold, and US Treasuries. However, if you look closely at Bonds & Bullion, it seems there is also selling pressure on US bonds. What this tells me is that investors are generally wary of trading anything that is dollar denominated.
This makes sense given that the market is waiting for Yellen’s interest rate decision this month, so, in view of this, I would be focusing on trading EUR and trading gold or other assets like equities and crude oil. I also have a proprietary way of gauging the flow of value in crude oil, i.e, a value flow trading approach for crude oil.

My immediate bias for the Euro is a buy. Resistance has become support and my other value flow instruments are confirming that the buy may be sustained at least till this time tomorrow. So, we look for good entries with tight stops and risk to reward ratios of 1:2, minimum to buy the euro.
This is my analysis and bias for direction. But note that if the market gives us reason to believe that bullish sentiment for the euro has ended, then we get ready to do a fresh analysis to sell euro. But for now, buy looks like a better higher probability trade.

Please remember that before you buy any asset, you must confirm 2 things on the 1minute chart of that asset.
1. Is the 1minute giving you higher highs and higher lows?
2. Are previous resistance levels flipping to become support levels?

There are 3 parts to a successful trade:
1. Research/Analysis: to determine what asset to trade and what direction to trade it in.
2. Trade Execution: to determine the best price and best entry, using technical analysis concepts of support & resistance flip zones as well as higher highs/lows for uptrends and lower highs/lows for downtrends.
3. Risk Management & Compliance: to determine the best exits. Best exits can mean exiting at minimum losses, or exiting at maximum profits.

This being said, keep working on perfecting these three areas of trading activity and you are well on your way to becoming a successful private trader.

eurusd 15m 09012015 623 01092015 609 Bonds 1H 01092015 609 1H Global Equities 09012015 556pm

If you would like to be taught how you can achieve financial freedom by trading the global financial markets, feel free to contact me. Or register at http://www.valueflowtrading.com.

I will be glad to mentor you in the areas of Forex Trading, Binary Options Trading, Value Investing in Nigerian stocks and wealth management advisory.

Yours in the quest for significance, beyond success.