The Pattern Trader

Time 2020-10-02 08:03:36

Web Name: The Pattern Trader

WebSite: http://www.conradalvinlim.com

ID:67356

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With regard to Yield Spreads,we’ve been monitoring the 3mth/10yr spread this week for the possibility of a first indication that a U.S. Recession may be on the cards this year. As a guide, the inversion on the 3mth/10yr has to be maintained for at least 10 trading sessions to be taken seriously as an indication of an oncoming downturn in the economy in about 6 months to a year later.On 22 May 2019, the 3m/10y spread was only +1bp at 2.38/2.39. The following session on 23 May 2019, it inverted for the second time this year (the 22 March to 28 March 2019 inversion was only 5 sessions) to 2.37/2.31 (-6bps). On Thursday 6 June, the 10-day incubation period was completed with the 3mth/10yr spread yielding an inverted -21bps at 2.33/2.12.Historically, this has led to some of the most significant recessions in the last 50 years. In fact, in the last 30 year alone, the 3mth/10yr inversion has been the precursor to the Inflationary Recession of 1990, the Dot.com Crash and the Sub-Prime Mortgage Crisis.Given the consistency of the cycle, the current inversion is the second clear indication that the U.S. economy is at the end of this 10-year expansion, after the 10-year crossed below the Fed Funds Rate in the second week of May.Obviously, we at Pattern Trader™ will be looking for yet another sign to give us more clarity on the situation and it is the ultimate inversion the 2-year / 10-year inversion. 11-minute readOn Monday 15 April 2019 at about noon, I decided to take the day off and not work or trade. So I picked up my swimming gear and went to the pool. No one was in the pool at that time maybe because it was a blazing hot Monday lunch time or that the kids were in transition to or from school. I was in the mood for a long swim so I prepped myself for an Ironman distance swim of 3.8km or 76 laps. This is a ritual I do every two or three months. Normally, I’d swim 20 laps because I don’t have much time and 40 laps when I do have an hour, at least twice a week.I’ve done long distance swims many times in my life but only four times in competitive open water swims for two Ironman Triathlons (3.8km swim, 180km bike and 42.20km run) and half that distance in two Triathlons (1.9km swim, 90km bike and 21.10km run) when I was much younger. Trust me when I tell you it is much more challenging in open water than the peaceful pool at my condo. For those not in the know, the 3.8km open water swim is the equivalent of a full marathon (42.20km) and definitely more challenging.At the end of my swim, I was met by two caucasian couples who were tanning by the side of the pool. They complimented me on my swim. One lady even said that what I just did was “sick”. I thought that was the coolest compliment. They proceeded to ask me how I did it, how fit I have to be, how long have I been swimming like this, how old I am, etc. I didn’t mind their curiosity because I felt they wanted to do the same but were unsure if they would be able to make the grade. After I told them what it would take to swim like that, there were the usual excuses like having no time, “I sink like a rock”, being too old, unfit, untrained, etc.Strange that we were having this conversation because during my swim, I was thinking about what I had done in my past to get me to this level of efficiency in the water. I traced back every memory I had with regard to my swimming. After all, there’s not much else to do when you’re swimming. The history of my swim told a very interesting story which is exactly is what my whole life is about today.But before we go there, the timing you see on the stopwatch of 1:39:15 is for 3.8km (76 laps). (I went on to complete 80 laps after that because I have a bit of OCD)  Even when I was half my current age, I could never do 3.8km under 1:45:00. And if you told me that I’d be doing sub 1:40s in my mid 50s back then, I’d laugh in your face and buy you a coffee.I have to tell you that this didn’t come by by accident nor was it planned. It was a string of events which I had no control over that led me to swim the way I do today. This is also much of the story of my life a string of events, many of which I had no control over but inevitably had to overcome and become better for it. It’s like everything happened for a reason except that I didn’t know why it did and where it would lead.  I simply did what needed to be done in order to keep moving forward and improving my life.I have always been huge on endurance sports since I can remember when. I’ve run, swum and cycled more than a thousand competitive kilometres in my lifetime and never failed to finish even one race. But as you can imagine, those achievements didn’t come easy and sacrifices had to be made. At the end of it all there was satisfaction, gratification, vindication and a lot of weight loss without fanfare, hype or recognition except for maybe a T-shirt and a medal to proof that you completed the race.It was all about me and the pride of knowing I did something that most people couldn’t or wouldn’t do. It made me feel special and gave me confidence. It told me that I was better than most.But that’s missing the point completely and I was going to find that out the hard way. I ran my last marathon in 2002 to get my mind off my bankruptcy and find some motivation to get back up in life. I was 38 years old and fit as f**k. But this run ended my love-affair for endurance sports because immediately after this, I developed a thyroid problem and gout took my running feet away for good. For the next twelve years, I would be in the worst physical shape of my entire life. Sports and fitness became a slow jog, static exercises and upper body workouts. I hated that my beloved endurance sports were just memories to be consigned to history. I hated exercising so much that the frequency began tapering off. I started making excuses like having no time, getting old and always being in pain.Then things became worse.Between the years of 2011 and 2014, I went through a series of operations to fix my gout bunions before they rendered me a cripple for life. But after recovering, I was still a “cripple” because I could never again enjoy marathons or even take a slow jog. Taking away my endurance sports was cutting off the only thing I truly loved and enjoyed about my sporting life and the only thing that gave me any sense of achievement and gratification. Now taking away my slow jog was the final insult to injury even if I hated it. In that state of misery, I gave up and resigned myself to my fate.THE SECOND WINDThat was until I moved to my current condo. The pool gave me a new lease on my sporting life. I’ve always been an avid water-sports person and swimming is something that comes naturally to me. I wondered why I never thought about hitting the water again when I couldn’t run anymore. Here was a gorgeous 50m lap pool where I could restart my sporting life and there would be no excuses for not giving it a go.It had been such a long time since my last competitive swim that I struggled at first. Plus my physical condition was no longer what it used to be so it was a real challenge to relearn everything head position, half goggle tilt, rotate, breathe, recover-reach-catch-pull, kick, glide, etc. It was like learning everything from scratch, getting rid of old habits and adopting new practices.Fortunately, I knew a student who attended my Investment Workshop in 2009 who was a Facebook friend and swim coach, Tang Siew Kwan. When Tang saw my Facebook posting on my struggles in the water, he offered to swim with me and tidy up my technique. After one session, my technique improved and Tang gave me a few online video links to watch and learn to further improve my technique.Thereafter, it was all training and training to perfect the technique. Muscles ached, tendons were stretched and the lungs were pushed to its limits. The body was conditioning itself to build up stamina while the mind was focused on tolerance. These were conditions I was used to when I trained for endurance competitions. So I knew from experience what to expect and how much more I could push my body without breaking it down.I had rediscovered my love for endurance sport through swimming. But I wanted more. I wanted to go faster and further.I was introduced to Shinji Takeuchi in November 2015 by Tang. The man is a legend and a Master of Total Immersion swimming, made popular by the late great, Terry Laughlin. You can watch their video at the bottom of this post.I spent a session with Senpai Tekaeuchi who corrected, defined and fine-tuned my technique even more and left me with a host of challenges which required even more hours of practice and patience.The art of competitive swimming is a science that has to be learnt and practiced. It requires a lot of dedication and discipline but above all, a passion to want to excel and do better every time. Although I don’t compete anymore, my determination to outperform myself today is no different from when I was less than half my age now. And that’s where I get my motivation from.IN RETROSPECT That is generally the story of my life when it comes to new challenges and propositions. I don’t take on anything if I am not going to finish it. I never accept a proposition without first knowing everything about it. I refuse to accept a challenge until I am sufficiently prepared, trained and experienced for it. This applies to sport, business, trading, family and life. In short, I don’t believe in doing things half-f**ked. The processes I take are nothing short of obsessive and they include (and are not limited to);LearningTechniquePracticeTrainingConditioningStamina/ToleranceEnduranceFocusPatienceExperienceDedicationDeterminationDisciplineMotivationPassionThat’s a lot of “to do” things if I want to do anything well. Surely it can’t be smooth sailing all the way, right? Surely there are failures and disappointments along the way, right? How do I handle situations that are beyond my control? What do I do to overcome the hurdles?These setbacks can be summarised by any endurance athlete. We call them “walls” or “barriers”. The Navy Seals have the 40% rule, which means you usually hit mental resistance at about 40% of your capacity and that’s when most people quit.Marathon runners hit a physical barrier at around the 12km mark when the legs are screaming “no more!” and the lungs are threatening to seize and the heart wants to rest permanently. It might sound easier said than done but the simple solution is to focus on putting one foot in front of the other focus on breathing  over and over again and before you know it, you’ll be clocking up the kilometres again with ease. That’s until you reach the 25km to 27km mark when you get hit by a psychological wall. The brain tells you that it’s not worth it, you’re killing yourself for nothing, the bus is right there take it! Once again, focus on putting one foot in front of the next.It is exactly the same thing in life, business and everything else we face challenges in. Stay focused on the objective, keep pressing on to improve/progress, keep the discipline and be grateful for any result you get because everything happens for a reason.Nothing is impossible giventhe right motivationand the right attitude.And that is why I DON’T SET GOALSSetting a goal is to satisfy an expectation. I learnt the hard way that those expectations are a double-edged sword because missing or failing to achieve those targets and goals have only served to deliver disappointments. When those goals were not met or if it took longer than planned, those disappointments were severe psychological challenges to overcome in order to get motivated to go at it again. Often, I felt like it was pointless, fruitless and a waste of time. And when I did meet my targets or if I achieved my goal, I became complacent and unmotivated to aim higher. Targets and goals become more challenging and seemingly more impossible when a higher level is finally attained.Today, rather than set up expectations, goals and targets, I strive to outdo myself at every level regardless of what I have already achieved. This way, I don’t set myself up for disappointments by failing to meet expectations.When all is said and done,there is always one more thing you can do.Sport, business and life are nothing more than endurance tests and we all have to run at least one of those races. It’s not how or where we finish the race that matters nor what we achieved in the process. It is the race itself that is the journey to be endured, enjoyed and embraced. How you run your race is how you will live your life or run your business.I run all my races with the same attitude do it well or do it better there is no room for failure. After all Failure is only complete if and when you quit.Have a wonderful week end everybody! A common query I get is what the life of a “full-time” trader is like. Many are also curious about what kind of life I lead being a trader, a teacher, a mentor, counsellor, consultant and author/writer. But they forget to ask about my life as a father, husband, son and a friend which is also part of the life of being a Trader.Firstly, I’d like to dispel any preconceived notions that you might have about this “full-time trader” thing it is not as glamorous or as nice as many think it is. And it certainly isn’t full-time. I don’t regard myself as a full-time trader because I have a life and several income streams. I’ve had my hand at full-time trading and I hate it. It is stressful not knowing if you will make enough to pay your bills and feed the kids. It is even more stressful when you’re on a losing streak. And when you’re profitable, you’re stressed out for fear of losing it and that can ruin your trading confidence.During periods between 2011 and 2014, I went through a series of surgical operations that rendered me bed-ridden and all I could do was write and trade. The first solitary confinement almost drove me crazy. I had to get out of the house to regain my sanity so I grabbed my crutches and went for the Pattern Trader’s Monthly Gathering against doctor’s orders. I even refused to cancel any of my classes following the subsequent surgeries. I had to have a life and I needed to be out and about.You’d have to be a real anti-social loner to be able to trade full-time without any human interaction or external activity in your life. For some, that’s a dream  life but to me, what’s the point? If you’re just trading to make money or pass the time without making a difference to other people’s lives, then why do you exist?But that’s just my opinion and you don’t have to agree or argue with me about it.This is a run-down of 30-hours of my life starting on the evening of Wednesday 27 March 2019 to Thursday 28 March 2019;30-HOURS IN THE LIFE OF A TRADER•••WEDNESDAY 27 MARCH 201918:45 Singapore Stock Exchange talking to 60+ investors and traders about Sector Rotation and Global Macro for the U.S., Hong Kong and Singapore markets. These days, I take more joy in sharing what I know for free than when I was in the seminar business. I cannot express the kind of gratification I get out of doing talks like these.21:35 Home to catch the market open and monitor my positions. No oil trade today because the Oil Inventory Report will be released in about 50 minutes. The equity market gapped up on weak market internals and doesn’t look like sustaining its gains.By 23:30, I’m tired and there’s nothing to do in the markets so I am not going to force a trade on a day that’s divergent and directionless with no macroeconomic motivation. DOW seems to be finding support at 25,400 but it’s still on weak internals;Mixed average volume (NYSE 282 mln vs. avg. of 293 mln; NASDAQ 1,059 mln vs. avg. of 1,044 mln)Decliners outpacing advancers (NYSE 970/1920, NASDAQ 808/2126)New highs outpacing new lows (NYSE 109/30, NASDAQ 56/51)Answered a few queries, rendered some assistance to several Pattern Traders online and did a bit of writing (started writing this article) before retiring for the day at 01:50. Tomorrow is going to be a long day.THURSDAY 28 MARCH 201909:37 Home at work to answer emails and messages and catch the Asian Breakout on Crude. Equity market closed flat-to-downside last night to vindicate my opinion that it was a directionless and divergent session.09:52 WTI broke below my Kill Box for a short but is trading along the 59.10 support that saw it get rejected twice at that level on Tuesday. Volumes are weak and I’m not comfortable with the short given the previous day’s inventory report that crude had a build of only 2.8 mln which was way short of covering the previous week’s draw of almost 10 mln barrels. EIA also reported weekly that the U.S. oil production showed no change with production at 12.1 mln barrels per day. No short this morning and not enough gearing to get the price out of the Kill Box to the upside. Might consider the short again for the European Breakout.But I’ll be on the move in the afternoon.11:15 Scotts Road tim-sum brunch with two of my graduates. She is a graduate from PTT in 2009 who returned from Canada to re-sit the Tutorial in February this year and her husband attended Wealth Academy in 2009 while I was still a Trainer there. She goes back to Toronto on Sunday. Interesting conversation in which I found out a lot about the different cultures in the various parts of Canada. Such a vastly different life there. 12:45 Far East Plaza pops me a nostalgic surprise! While shopping for a bouquet for my Mom, I came across a shop with a very familiar signboard I’ve not seen since the early 1980s. The Attic was the shop I bought all my imported vinyl LPs from when I was a teenager when they were at the top floor of Centrepoint. The owner, Bobby Yeo, even recognised me after all these decades. He was formerly a member of a local band, The Survivors back in the 70s. It’s great that vinyl is making a comeback and that CDs are ending their domination because it’s great that Bobby can continue running this business that was once a dying trade. If you’re into vinyl, Bobby is your man at Far East Plaza #03-42.  It’s a much smaller place compared to Attic’s glory days in the 80s but the spirit of vinyl LPs is still alive and very well in this shop.13:20 On the road. This is when I do some of my best thinking, while driving or swimming. Sometimes, I wonder what “slowing down” means. I left the seminar business so that I could slow down and focus on the things that are important to me and to have the time to do the things that matter in my life. But I’ve been busier than I’ve ever been since going on my own. I am not complaining because I am doing what I love to do and making the most out of the time I have now. 13:45 Tan Tock Seng Hospital with my Mom. She was diagnosed with early stage leukaemia a couple of months ago and has been undergoing “light” chemotherapy and blood transfusions. Now she’s getting fresh platelets and for the first time since being warded a couple of weeks ago, she was given home leave to get some reprieve yesterday. Today, she’s back in the ward and looking much better, up and about and back to her chatty and creative self. Doctors want her closely watched because her other “older”  medical complications may crop up as a result of her weakened state. So far, so good. Mom is a fighter.15:15 On the road again. Next appointment is at 16:00 in the East. I actually enjoy not having an office. Moving around keeps me alive and gives me time to think or clear my thoughts. Unless I am taking selfies of myself pretending to be driving while stuck at a traffic light.Which makes me wonder how much time do we actually waste waiting for traffic lights/jams, pedestrian crossings, elevators, airline flights and all the various queues? Or even time wasted waiting for tardy friends or appointments? I don’t have a number but I am sure it is a significant percentage of our daily life. I should know because I use that time productively either on my laptop or my phone and I do get a lot of things done while waiting. Which reminds me I really need to find time to work on the second group of Analytical Tools. Next trip up to K.L. is less than two months away and I have to get started soon.Which got me thinking I need to slow down and not think so much. I am going to burst a vessel at this rate.SIDE NOTE: At this time of the day on Monday, Wednesday and Thursday/Friday, depending on the weather, I will either be swimming (at least twice a week for a total of at least 4km a week) or at the gym (at least once a week for a 30 minute workout that excludes the treadmill and the stupid cycling thing that goes nowhere). 16:10 Starbucks at Tampines Mall to meet up with my IT project partner. Bumped into a fan/follower who has been an ardent reader of my books and articles. (I am so so sorry I forgot your name and didn’t take a picture with you!) This IT project is so close to delivery that it’s getting frustrating. The closer you get, the more you realise needs to be done. Thank goodness my partner is diligent and extremely knowledgeable about this project. Anyone interested in investing? 19:30 Jack’s Place at Parkway Parade for dinner and our precious family time. Quality family time has always been my family’s top priority and none more so than our dinner time which we must have at least once a week. It’s a culture that’s become a habit where we talk and catch up and rant (on the odd occasion). No mobile distractions, just good food and good discussions and lots of love and caring attention. That’s why no pictures here.SIDE NOTE: If I am not having a lovely dinner with family or friends at this time, then I am in class teaching or in a session doing some talk somewhere.21:15 Home and rueing the missed short on Crude between 18:00 and 20:30 gorgeous $1.00 slide. Damn.Well, if it’s yours, it’s yours. If it’s not, it’s not. There will always be another opportunity and better circumstances. After all, hindsight is always 20/20 and I will never know if I would have taken the trade at 18:00 in the first place. Such is the nature of trading. *sigh*21:50 Home. The market is looking like yesterday’s session, opening to the upside with no strength and no macroeconomic backbone. I’ll give it an hour or two then decide if I am going to do anything. In the meantime, I need to finish up my article on Value Investing: The Untold Truth to be posted in the morning on www.financialscents.com.The site also needs backend work to clean up dead links left behind by the original site programmers/designers. Facebook refuses to allow the site to use its login facilities as long as we don’t clean up the dead links. What a mess. Probably get some of that done early next week. Plus I have next week’s article to start on; Behavioural Finance in the 21st Century. Gawd that’s a tacky title. Going to have to think up some other title.00:35 Home. The market is not going anywhere. That GDP report really sucked big time and the market has no direction yet again. March has a tendency to end poorly and this is typical of another boring last week of March. Another wasted night. *sigh* Such is the life of a trader.Lower than average volume (NYSE 257 mln vs. avg. of 293 mln; NASDAQ 920 mln vs. avg. of 1,048 mln)Decliners outpacing advancers (NYSE 1408/1486, NASDAQ 1399/1526)New highs outpacing new lows (NYSE 93/26, NASDAQ 47/32)Guess I’ll pack it up for the night. Tomorrow is another long day with the Pattern Trader™ Options Trading Workshop starting its next batch in the evening. Gotta get some sleep.•••That’s my typical 30-hour life which describes how typical my daily routine is not.  And I am sure it isn’t what you thought a full-time trader’s life was supposed to be like. Sorry to disappoint you but the reality is that I do have a life and trading doesn’t rule my life. There was once when my whole life revolved around trading. That was insane. If trading is ultimately to help you to make money to improve your life, then it shouldn’t enslave you. I know a lot of people who get so caught up with trading that it consumes their lives and leaves little or no time for much else. That’s insane. That’s not what trading is about. That’s an addiction. Yes, trading can become a very unhealthy addiction especially if you find yourself staring at charts for more than a quarter of your waking time. If you find yourself having to trade to pay the bills, you’re in a lot of trouble. If you’re forcing a trade to pay off a debt, you are going to be in a worse world of pain. If you’re trading for the money instead of trading to trade well, you are truly unsuited for the market yet.Trading should be about another income stream that improves your life with the extra income. It should be about having the freedom to trade when you have a trade and taking the day off if there is nothing to trade. Proper trading should leave you the freedom to do the things you love and still have ample time for the family while the trade works to improve your life. If trading isn’t bringing you joy, you’re not trading well.Forget about full-time trading. Erase that illusion, that pipe-dream someone sold you. Focus on learning to trade professionally and master the skill to trade to trade well. Even if you’re planning on trading part-time, do it professionally and smartly. Nothing great comes from doing things half-baked. You wouldn’t trust a half-baked surgeon with your life, would you? So why settle for a half baked attitude to trading?That’s something worth thinking about, right?Finally, this is me writing this article at 18:20 on Friday 29 March 2019 in the classroom before we start the Options Trading Workshop for Pattern Trader™ Graduates at Singapore Shopping Centre.Have a great weekend and Happy Hunting always! This is a three-part article on “Online Trading: The Obvious Lie” which was originally posted at www.financialscents.com.The market is a pipe-dream to many and an office to others. What’s real and why do some make it while others wipe out? Part 1: Online Trading: The Obvious Lie Part 1 The second instalment asks why we spend money and take so much effort to learn what is safe when it is not the safe stuff that kills our trade or investment? Part 2: Online Trading: The Obvious Lie Part 2 In the final instalment, we’re going to get a greater understanding of what it means to think, analyse and work as a Global Macro Trader or Macrotrader. Part 3: Online Trading: The Obvious Lie Part 3 If you’re trading and getting no joy, you should read this … and get real.~~~~~~~~~~~~~~~~~~~~~ WEEK IN REVIEW January 07 to 11 :Stocks Extend Rally into Earnings SeasonThe S P 500 gained 2.5% this week, rising for the third straight week and extending its rally to 10.4% since its Christmas Eve low. The Dow Jones Industrial Average gained 2.4%, the Nasdaq Composite gained 3.5%, and the Russell 2000 gained 4.8%.All 11 S P 500 sectors finished higher with industrials (+4.1%), real estate (+4.0%), consumer discretionary (+3.7%), energy (+3.4%), and information technology (+3.4%) outperforming the broader market.Many have characterized the market s rally to be a technical rally from a deeply oversold condition. The market, however, has benefited from improved investor sentiment that has been lifted by the stronger than expected December employment report, the assurance from Fed Chair Powell that the Fed will be patient with its policy approach, and reports U.S.-China trade talks among deputy officials went well.  Those developments have fostered a propensity to buy the intraday dips and have made the market resilient to selling efforts.The buy-the-dip mentality lifted the market whenever it was down and allowed the S P 500 to flirt with its 2600 level, which approximates the bottom end of the trading range that persisted for most of 2018.Strikingly, this week s gains were forged in the face of earnings warnings from Macy s (M), American Airlines (AAL), Apple (AAPL) supplier Skyworks Solutions (SWKS), and Samsung Electronics.It was this resilience to selling efforts amid bad news that presumably drew in sidelined participants fearful about missing out on further gains and pushed out weak-handed short sellers expecting a downturn after a 10% increase in the S P 500 from its December 24 low.Investors saw some room for trade optimism this week when a scheduled two-day trade meeting in Beijing extended into a third day. In addition, China s Vice Premier Liu He is reportedly expected to visit Washington for further trade talks at the end of the month.Separately, the Federal Reserve released its minutes from its December policy meeting. The minutes revealed a view that the path of U.S. monetary policy is less clear than before, and a contention that the Fed can afford to be patient about future rate hikes.In light of more recent remarks from many Fed officials discussing a more patient-minded approach, including Fed Chair Powell, the view communicated in the minutes wasn t altogether surprising. Still, it is this rhetoric from the Fed that is contributing to the fed funds futures market s belief that there won t be another rate hike in 2019.U.S. Treasuries lost ground amid the gain in equities, pushing yields higher across the curve. The 2-yr yield increased seven basis points to 2.55%, and the 10-yr yield increased four basis points to 2.70%. The U.S. Dollar Index lost 0.5% to 95.68, and WTI crude rose 7.8% to $51.68/bbl.The fourth quarter earnings reporting period will get its official start in the coming week and will be closely watched to see if the market got ahead of itself with concerns about an earnings slowdown in 2019.  Additionally, there will be a key Brexit vote in the UK Parliament and continued attention to the partial government shutdown in the U.S., which is about to become the longest on record.Dow Jones Industrial Average +2.9% YTD (up for the week +2.4%)Nasdaq Composite +5.1% YTD (up for the week +3.5%)S P 500 +3.6% YTD (up for the week +2.6%)Russell 2000 +7.3% YTD (up for the week +4.9%)U.S. ECONOMIC UPDATE(Economic Excerpts from Briefing.com)Monday 07 January:ISM Non-Manufacturing Index decelerates in December The ISM Non-Manufacturing Index slipped to 57.6% in December (consensus 58.8%) from 60.7% in November.  The dividing line between expansion and contraction is 50.0%, so the December reading reflects a deceleration in non-manufacturing business activity in the final month of 2018.The key takeaway from the report is that it follows form with the ISM Manufacturing Index in showing a slowdown in activity in December.  That is in keeping with the market s perception of economic matters and threatens to bleed into a slowdown in earnings growth.According to ISM, the past relationship between the overall economy and the non-manufacturing index corresponds to a 3.2% increase in real GDP on an annualized basis.The New Orders Index increased to 62.7 from 62.5.The Employment Index fell to 56.3 from 58.4.The Prices Index dropped to 57.6 from 64.3.The Backlog of Orders Index decreased to 50.5 from 55.5.Tuesday 08 January:Consumer Credit sees nice expansion in November Total outstanding consumer credit increased by $22.2 billion in November after increasing a downwardly revised $24.9 billion (from $25.4 billion) in October.The key takeaway from the report is that the healthy expansion in consumer credit is a good portent for consumer spending activity when matched with good feelings about job security and income growth.Nonrevolving credit increased by $17.3 billion to $2937.0 billion.Revolving credit increased by $4.8 billion to $1042.2 billion.Consumer credit increased at a seasonally adjusted annual rate of 6.75% in November, with revolving credit increasing at an annual rate of 5.5% and nonrevolving credit increasing at an annual rate of 7.00%.Thursday 10 January:Initial claims keep toeing solid labor market lineInitial claims decreased by 17,000 to 216,000 (consensus 225,000) for the week ending January 5. Continuing claims for the week ending December 29 decreased by 28,000 to 1.722 million.The key takeaway from the report is that it fits neatly with the market s latest awareness that the labor market has held up fine despite the burgeoning concerns about the economy slowing.The four-week moving average for initial claims increased by 2,500 to 221,750.The four-week moving average for continuing claims increased by 15,250 to 1,721,250.Initial claims have held below 300,000 for 201 consecutive weeks.Friday 11 January:December CPI supports Fed s patient-minded stance The Consumer Price Index (CPI) for December was right in-line with the consensus estimates that called for a 0.1% month-over-month decline in total CPI and a 0.2% increase in core CPI, which excludes food and energy.The key takeaway from the report is that it supports the Fed s born-again belief that it can be patient with its policy approach given that the core inflation trend is stable around the longer-run target at a time when data here and abroad is revealing some softening in economic activity.The monthly changes left total CPI up 1.9% year-over-year, versus 2.2% in November, and core CPI up 2.2%, which was unchanged from November.The decline in total CPI in December was fueled by the energy index, which fell 3.5% on the back of a 7.5% decline in the gasoline index.A 0.3% increase in the shelter index drove the increase in core CPI, which was offset somewhat by a 0.2% decline in the price index for used cars and trucks.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~FOMC minutes for December meeting releasedKey Excerpts :Based on their current assessments, most participants expressed the view that it would be appropriate for the Committee to raise the target range for the federal funds rate 25 basis points at this meeting. A few participants, however, favored no change in the target range at this meeting, judging that the absence of signs of upward inflation pressure afforded the Committee some latitude to wait and see how the data would develop amid the recent rise in financial market volatility and increased uncertainty about the global economic growth outlook.With regard to the outlook for monetary policy beyond this meeting, participants generally judged that some further gradual increases in the target range for the federal funds rate would most likely be consistent with a sustained economic expansion, strong labor market conditions, and inflation near 2 percent over the medium term. With an increase in the target range at this meeting, the federal funds rate would be at or close to the lower end of the range of estimates of the longer-run neutral interest rate, and participants expressed that recent developments, including the volatility in financial markets and the increased concerns about global growth, made the appropriate extent and timing of future policy firming less clear than earlier. Against this backdrop, many participants expressed the view that, especially in an environment of muted inflation pressures, the Committee could afford to be patient about further policy firming.A number of participants noted that, before making further changes to the stance of policy, it was important for the Committee to assess factors such as how the risks that had become more pronounced in recent months might unfold and to what extent they would affect economic activity, and the effects of past actions to remove policy accommodation, which were likely still working their way through the economy.Recent readings on household and business spending, inflation, and labor market conditions were largely in line with participants expectations and indicated continued strength of the economy. By contrast, financial markets were volatile and conditions had tightened over the intermeeting period, with sizable declines in equity prices and notably wider corporate credit spreads coinciding with a continued flattening of the Treasury yield curve; in part, these changes in financial conditions appeared to reflect greater concerns about the global economic outlook. Participants also reported hearing more frequent concerns about the global economic outlook from business contacts,,, Investors perceptions of downside risks to the domestic and global outlook appeared to increase over the intermeeting period, reportedly driven in part by signs of slowing in foreign economies and growing concerns over escalating trade frictions.Concerns over escalating trade tensions, global growth prospects, and the sustainability of corporate earnings growth were among the factors that appeared to contribute to a significant drop in U.S. equity prices.Several participants noted that business fixed investment remained solid despite a slowdown in the third quarter, as more recent data pointed to a rebound in investment spending. Business contacts in several Districts reported robust activity through the end of 2018 and planned to follow through or expand on their current capital expenditure projects. However, contacts in a number of Districts appeared less upbeat than at the time of the November meeting, as concerns about a variety of factors—including trade policy, waning fiscal stimulus, slowing global economic growth, or financial market volatility—were reportedly beginning to weigh on business sentiment.A couple of participants commented that the recent decline in oil prices could be a sign of a weakening in global demand that could weigh on capital spending by oil production companies and affect companies providing services to the oil industry. FOMC Minutes:~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~KEY ECONOMIC DATA UPDATEFOR ASIA-PAC EUROPEAsia-PacificAustralia s December AIG Manufacturing Index 49.5 (last 51.3). November trade surplus AUD1.93 billion (expected surplus of AUD2.23 billion; last surplus of AUD2.32 billion). November Imports +2.0% month-over-month (last 3.0%) and November Exports +1.0% month-over-month (last 1.0%). November Building Approvals -9.1% month-over-month (expected -0.3%; last -1.5%) and Private House Approvals -2.6% month-over-month (last -1.5%). December AIG Services Index 52.1 (last 55.1)China s December FX Reserves $3.07 trillion, as expected (last $3.06 trillion). December CPI 0.0% month-over-month (expected 0.3%; last -0.3%); +1.9% year-over-year (expected 2.1%; last 2.2%). December PPI +0.9% year-over-year (expected 1.6%; last 2.7%). The Chinese communist party will reportedly set its 2019 GDP growth target between 6.0% and 6.5%, down from the 2018 target of about 6.5%.Japan s Monetary Base +4.8% year-over-year (expected 5.8%; last 6.1%). December Household Confidence 42.7 (expected 42.8; last 42.9). November Average Cash Earnings +2.0% year-over-year (expected 1.3%; last 1.5%) and Overtime Pay +1.1% year-over-year (last 1.9%). November Leading Index 99.3 (expected 99.5; last 99.6) and Coincident Indicator -1.9% month-over-month (last 3.3%). November Household Spending +1.1% month-over-month (expected 0.2%; last 1.8%); -0.6% year-over-year (expected 0.0%; last -0.3%). November Current Account surplus JPY1.44 trillion (expected surplus JPY1.10 trillion; last surplus JPY1.21 trillion). December Bank Lending +2.4% year-over-year (expected 2.1%; last 2.1%). December Economy Watchers Current Index 48.0 (expected 50.5; last 51.0)Hong Kong s December FX Reserves $424.60 billion (last $423.20 billion)Singapore s December FX Reserves $287.70 billion (last $289.50 billion)South Korea s November Current Account surplus $5.06 billion (last $9.16 billion). December Unemployment Rate 3.8% (last 3.8%)EuropeEurozone December Business and Consumer Survey 107.3 (expected 108.2; last 109.5). November Retail Sales +0.6% month-over-month (expected 0.2%; last 0.6%); +1.1% year-over-year (last 2.3%). January Sentix Investor Confidence -1.5 (expected 2.0; last -0.3). November Unemployment Rate 7.9% (expected 8.1%; last 8.0%)Germany s November Industrial Production -1.9% month-over-month (expected 0.3%; last -0.8%). November Factory Orders -1.0% month-over-month (expected -0.2%; last 0.2%). November Retail Sales +1.4% month-over-month (expected 0.4%; last 0.1%); +1.1% year-over-year (expected -0.7%; last 5.2%). November trade surplus EUR19.00 billion (expected surplus EUR17.60 billion; last surplus EUR17.90 billion). November Imports -1.6% month-over-month (expected 0.4%; last 0.8%) and NovemberUK s December Halifax House Price Index +2.2% month-over-month (expected 0.5%; last -1.4%); +1.3% year-over-year (expected 0.4%; last 0.3%). December BRC Retail Sales Monitor -0.7% year-over-year (expected -0.3%; last -0.5%). December BRC Retail Sales Monitor -0.7% year-over-year (expected -0.3%; last -0.5%). November GDP +0.2% month-over-month (expected 0.1%: last 0.1%). November Construction Output +0.6% month-over-month (expected 0.2%; last -0.2%); +3.0% year-over-year (expected 2.5%; last 4.1%). November Industrial Production -0.4% month-over-month (expected 0.3%; last -0.5%); -1.5% year-over-year (expected -0.7%; last -0.9%). November Manufacturing Production -0.3% month-over-month (expected 0.4%; last -0.6%); -1.1% year-over-year (expected -0.7%; last -0.7%). November trade deficit GBP12.02 billion (expected deficit of GBP11.40 billion; last deficit of GBP11.95 billion)France s November Industrial Production -1.3% month-over-month (expected 0.0%; last 1.3%). November trade deficit EUR5.10 billion (expected deficit of EUR4.90 billion; last deficit of EUR4.10 billion). December Consumer Confidence 87 (expected 90; last 91). Italy s November Retail Sales +0.7% month-over-month (expected 0.2%; last 0.2%); +1.6% year-over-year (last 1.6%). November Unemployment Rate 10.5%, as expected (last 10.6%). November Industrial Production -1.6% month-over-month (expected -0.3%; last -0.1%); -2.6% year-over-year (expected 0.2%; last 1.0%)Swiss November Retail Sales -0.5% year-over-year (expected -0.7%; last 1.0%). December Unemployment Rate 2.4%, as expected (last 2.4%). December CPI -0.3% month-over-month (expected -0.2%; last -0.3%); +0.7% year-over-year (expected 0.8%; last 0.9%)Spain s November Industrial Production -2.6% year-over-year (last 0.7%)~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Friday 11 January 2019Stocks Close Mixed Ahead of Earnings SeasonThe S P 500 (-0.01%) finished just a hair below its flat line on Friday. The benchmark index never traded in positive territory but did close at its session high. It also finished the week with a gain of 2.5%.The Dow Jones Industrial Average (unch), the Nasdaq Composite (-0.2%), and the Russell 2000 (+0.1%) closed mixed, finishing with weekly gains of 2.4%, 3.5%, and 4.8%, respectively.The S P 500 sectors also finished mixed with energy (-0.6%), utilities (-0.4%), and materials (-0.4%) weighing on the broader market. Conversely, the consumer staples (+0.3%) and health care (+0.3%) sectors finished atop the standings.The benchmark index came into the session up 10.4% from its Christmas Eve low, suggesting to many that the broader market had gotten overbought on a short-term basis and was due for a pullback. The S P 500 was down 0.7% in the early going with weakness presumably being a function of profit-taking as opposed to any news-driven catalyst.In addition, given the number of earnings warnings already announced this week, and with earnings season set to kick off next week, some took this as another reason to take some profits. Nevertheless, some buying interest throughout the session slowly recouped the broader market s losses.General Motors (GM) for its part jumped 7.1% after it increased its adjusted fiscal 2018 and 2019 earnings above consensus. Its strength, however, was not enough to lift the consumer discretionary space (unch).The lack of a distinctly positive reaction in the market to GM s upbeat earnings news, in light of the market overcoming prior earnings warnings this week, was reflective of a tired market preferring to take a breather.U.S. Treasuries closed out the week on a higher note, pushing the 2-yr yield down two basis points to 2.55% and the 10-yr yield down three basis points to 2.70% in the wake of a market-friendly consumer inflation report. The U.S. Dollar Index gained 0.1% to 95.67. WTI crude, meanwhile, snapped its nine-day winning streak, losing 1.9% to $51.68/bbl.Market Internals Friday 11 January 2019Lower than average volume (NYSE 803 mln vs avg. of 1131 mln; Nasdaq 2057 mln vs avg. of 2541 mln)Advancers outpacing decliners (NYSE 1675/1281, NASDAQ 1657/1407)New highs outpacing new lows (NYSE 16/5, NASDAQ 26/13)Dollar: Weakness PersistsThe U.S. Dollar closed lower yet again for the week at $95.66 from $96.20 the previous week. Other currency pairs;EUR/USD: 1.1461GBP/USD: 1.2837USD/CNH: 6.7603USD/JPY: 108.51Bonds: Sideways Week Ends on Higher NoteUS Treasuries ended the week on a higher note, but intraday action featured a modest pullback from highs that were notched two hours after the start of the cash session. The early gains took place after economic data from Europe showed a decline in November industrial production in the UK (-1.5% year-over-year), Italy (-2.6% yr/yr), and Spain (-2.6% yr/yr) on top of contracting output in Germany (-4.7% yr/yr) and France (-2.1% yr/yr), which was reported earlier in the week. Treasuries extended their opening gains as the stock market struggled at the start of the session, but it wasn t long before equities climbed off their opening lows while Treasuries backed off their highs and spent the remainder of the session near the midpoint of the day s trading range. The 2s10s spread tightened by three basis points to 15 bps since last Friday while the 2s30s spread remained unchanged at 49 bps. The yield curve remains kinked at the front end with the 52-week bill yield (2.59%) sitting higher than the 2-yr yield (2.55%), the 3-yr yield (2.51%), and the 5-yr yield (2.53%).2-yr: up 7 bps to 2.55% from 2.48% from the previous week5-yr: up 5 bps to 2.53% from 2.48% 10-yr: up 4 bps to 2.70% from 2.66% 30-yr: up 7 bps to 3.04% from 2.97%The flanks of the yield curve rose to flatten the curve somewhat while inverting the 2yr against the 5yr. The spread on the 2s5s inverted to -2bps. The spread between the 5s10s narrowed to 17bps from 18bps the previous week while the 10s30s widened to 34bps from 31bps the previous week. The spread that matters most, the 2s10s, narrowed by 3bps to 15bps from 18bps the previous week.Commodities The Bloomberg Commodity Index settled at 79.66, higher than 78.34 the previous week as Energy and Gold settled higher.WTI oil closed at $51.59 p/b, higher than the week before at $47.96. The spread between WTI and Brent narrowed to $8.89 from $9.10 the previous week as Brent settled at $60.48 p/b.EIA petroleum data for the week ended January 04Crude Oil Inventories had a draw of 1.7 mln from the prior weekPrior week was unchU.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.7 mln barrels from the previous week. At 439.7 mln barrels, U.S. crude oil inventories are about 8% above the five year average for this time of year. Total motor gasoline inventories increased by 8.1 mln barrels last week and are about 5% above the five year average for this time of year. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories increased by 10.6 mln barrels last week and are about 5% below the five year average for this time of year. Propane/propylene inventories decreased by 1.9 mln barrels last week and are about 3% below the five year average for this time of year. Total commercial petroleum inventories increased last week by 13.3 mln barrels last week.Natural gas inventory showed a draw of 91 bcf vs a draw of 20 bcf in the prior week. Working gas in storage was 2,614 Bcf as of Friday, January 4, 2019, according to EIA estimates. This represents a net decrease of 91 Bcf from the previous week. Stocks were 204 Bcf less than last year at this time and 464 Bcf below the five-year average of 3,078 Bcf. At 2,614 Bcf, total working gas is below the five-year historical range.Baker Hughes total U.S. rig count remained unchanged at 1075 following last week s decrease of -8.February Crude Oil futures: $51.59/barrel from $47.96/barrel the previous weekMarch Brent Crude Oil Futures: $60.48/barrel from $57.06/barrel February Natural Gas: $3.11/MMBtu from $3.04/MMBtuMetals: Gold and Copper gain, Silver correctsFebruary Gold: $1289.50/oz from $1285.80/oz the previous weekMarch Silver: $15.66/oz from $15.77/oz March Copper: $2.66/lb from $2.65/lb Agriculture: Soy and Corn correct, Wheat strengthensMarch Corn closed at $3.79/bushel from $3.83/bushel from the previous weekMarch Wheat closed at $5.20/bushel from $5.16/bushel January Soybeans closed at $9.11/bushel from $9.22/bushel ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~THE WEEK AHEADWeek 03 (14 to 18 January 2019)WEEK03 14 to 18 JanThe third week is mostly bullish but end very bearish on FridayJanuary Expiration Week has been down of the DOW 11 of the last 20January Expiration Day is usually bearish but has been improving up on the DOW 9 of the last 10According to our 5, 10 and 15 year seasonal models:Benchmarks Indices (21 year average) for wk03:The DOW is expected to be mildly bullish from Monday to Wednesday and ends the week bearish on Thursday and Friday.The S P is expected to be mildly bullish on Monday and Tuesday, very bullish on Wednesday, bullish on Thursday and ends the week bearish on Friday.NASDAQ is expected to be bullish on Monday, bearish on Tuesday, bullish again on Wednesday and Thursday and bearish on Friday.Week 03 Key Economic DatesImportant releases in the coming week include US preliminary reading of Michigan consumer sentiment, industrial output, and producer and foreign trade prices; UK inflation; China trade figures; and Japan inflation. Investors will also react to UK parliamentary vote on Brexit deal and OPEC s monthly report. Sun 13 JanuaryAustralia MI Inflation Gauge m/mChina Trade BalanceMon 14 JanuaryNo significant data to be reportedTue 15 JanuaryUS PPI and Core PPI m/m, FOMC Member George SpeaksEU ECB President Draghi SpeaksUK Parliament Brexit VoteAustralia Westpac Consumer SentimentWed 16 JanuaryALL G20 MeetingsUK BOE Gov Carney Speaks, CPI y/y, PPI Input m/m, RPI y/yJapan   BOJ Gov Kuroda SpeaksUS Crude Oil InventoriesThu 17 JanuaryALL G20 MeetingsUK BOE Credit Conditions SurverUS Initial Claims, Philly Fed Manufacturing Index, FOMC Member Quarles Speaks, Nat Gas Inventories, Fri 18 JanuaryUK Retial Sales m/mUS FOMC Member Williams Speaks, Consumer SentimentEARNINGSIt looks like the securities have switch their earnings dates for 2019 with four DOW components featured in the first week of Quarter 4 Earnings Season. This is because the SEC allows companies a larger window to file their annual reports relative to quarterly updates. As a result, we will see pre-announcements throughout January and fourth quarter earnings season will drag on into March. Notable earnings out next week include:Monday (Jan 14)    BMO: C SJRBMO: BBT CBSH FAST HOMB IIIN KEY MS MTB MTG PPG SASR WNSAMC: AXP JBHT NFLX OZK PBCT PRGS TEAM January is normally a very bullish month. But we ve had a few horrible Januarys in the last half decade to knock that confidence off. So be cautious, stay hedged and get ready to be very nimble. The First Five Days indicator has spoken:Apparently, if the first five days are up, the year is likely to finish up with an 83% reliability over the last 66 years when 35 out of 42 first-five-days finished up. Then again, how much credence would you put on it? This is like the lowest form of analysis but it does have a high probability, doesn t it? There are those that will rubbish it and those who will swear by it.Me? I never discount anything. But I never take any one thing wholesale either. This is just one part of a multi-layered risk management technique. So there s much more to this than just a five day indicator. So stick around till the end of the month and the end of the quarter when more of such indications should make it clearer to read the market s intention for the rest of the year.This has been the best opening two weeks since before the sub-prime (2006) and has dragged the DOW and S P500 out of Correction Territory. But before we get ahead of ourselves, be reminded that Earnings Season begins in the coming week and this bullish open to 2019 could be nothing more than the market pricing-in some protection/buffer ahead of earnings.And although it isn t likely, I am not discounting the possibility that this mini rally was also prompted by short-covering after selling down more than 15% in December. After all, if you re pricing-in upwards to buffer a bearish earnings season ahead, it would make sense to cover shorts that are massively profitable, wouldn t it? The market internals haven t been all that convincing when the market was running up. More than half of the opening eight days have been largely divergent with one of the convergent sessions being the 3rd of January when the market sold down.The bond market is not suggesting anything new even if it did steepen a tad this week. More ominous is the closing of the spread between the Fed Funds Rate and the 10-year bond yield to only 24bps, indicating that any bull run may be near its end.Happy Hunting!~~~~~~~~~~~~~~~~~~~~~~~~~~~PATTERN TRADER™ TUTORIAL  INTRODUCTORY WORKSHOPDate: 24th January 2019, ThursdayTime: 07:00PM to 10:00PM(Registration starts at 06:30PM) ..With 14 years of educating, mentoring and supporting hundreds of participants (annually) in the arts and sciences of Finance and Economics, the Pattern Trader™ Tutorial has evolved to become the most sought-after boutique-styled class that caters to retail individuals, institutional professionals, businesses and families that are serious about their finances and their prospects as we move into the future.The small class environment and tutorial-styled approach gives the Tutorial a conducive environment that allows for close communication and interaction between the mentor and the participants.The hands-on style makes the Tutorial very practical for anyone who requires a start from the ground up. 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Register for the Introductory Workshop NOW!Download our promo slides here:The Pattern Trader™ Tutorial 2019~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~The schedule for the FEBRUARY 2019 Batch is here:Pattern Trader™ Tutorial February 2019~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Connect with me at LinkedIn WEEK IN REVIEW December 31 to January 04 :Fed Chair Powell, Strong Jobs Data Help Lift Stocks from Growth Concern AngstWall Street kicked off the first week of 2019 on a higher note, as robust jobs data and soothing commentary from Fed Chair Jerome Powell helped press pause on global growth concerns.The S P 500 gained 1.9%, the Dow Jones Industrial Average gained 1.6%, the Nasdaq Composite gained 2.3%, and the Russell 2000 gained 3.2%.Headline payroll growth in the Employment Situation Report for December was comfortably ahead of estimates while average hourly earnings (+0.4%) increased more than expected, lifting the year-over-year growth rate to 3.2%.There were some concerns, though, about how the central bank would react to stronger-than-expected jobs data.Fed Chair Powell eased those concerns when he said the Fed will remain patient given muted inflation readings. He added monetary policy will be nimble and shift if necessary, and he also softened his previous comments regarding the Fed s balance sheet reduction path being on autopilot.The stock market liked what it heard from Mr. Powell, and his comments helped solidify an equity rebound from previous angst over economic growth.A rare revenue cut from Apple (AAPL) and disappointing manufacturing data from the U.S. and China had exacerbated fears that economic growth might be slowing more quickly than anticipated, which would present a headwind to corporate earnings.The market is not free and clear from economic growth concerns, but with strong U.S. jobs growth and a friendlier-sounding Fed, the market saw renewed buying interest.U.S. Treasuries underwent wild swings this week amid the fragility in investor sentiment. At the end of the week, the 2-yr yield declined four basis points to 2.48%, and the 10-yr yield declined eight basis points to 2.66%. The U.S. Dollar Index lost 0.2% to 96.17. WTI crude rose 6.0% to $48.03/bbl.Dow Jones Industrial Average +0.5% YTD (up for the week +0.5%)Nasdaq Composite +1.6% YTD (up for the week +1.6%)S P 500 +1.0% YTD (up for the week +1.0%)Russell 2000 +2.4% YTD (up for the week +2.4%)U.S. ECONOMIC UPDATE(Economic Excerpts from Briefing.com)Wednesday 02 January:December U.S. Markit Manufacturing PMI- Revision 53.8, Prelim 53.9Thursday 03 January:Initial Claims Increase in Final Week of DecemberInitial claims for the week ending December 29 increased by 10,000 to 231,000 (consensus 220,000) from last week s revised reading of 221,000 (from 216,000). Continuing claims for the week ending December 22 increased by 32,000 to 1.740 million from last week s revised reading of 1.708 million (from 1.701 million).The key takeaway from the report is that claims continue hovering within a sideways range that has been maintained since mid-2018.The four-week moving average for initial claims decreased by 500 to 219,250.The four-week moving average for continuing claims increased by 26,000 to 1,703,500.Initial claims have held below 300,000 for 200 consecutive weeks.ISM Manufacturing Index Decreases in DecemberThe ISM Manufacturing Index for December decreased to 54.1% (consensus 57.8%) from 59.3% in November.The key takeaway from the report is that the December decrease was fueled by a sharp pullback in the New Orders component, which is the same element that lifted the November ISM Manufacturing Index into the neighborhood of its high from 2018.The New orders Index decreased to 51.1% from 62.1%. The index pulled back considerably after hitting its highest level since August 2018.The Prices Index decreased to 54.9% from 60.7%. The report noted that prices of steel and aluminum are increasing at a slower rate or declining altogether.The Production Index decreased to 54.3% from 60.6%.The Employment Index decreased to 56.2% from 58.4%.According to the ISM, the past relationship between the PMI and overall economy indicates the December reading corresponds to a 3.4% increase in real GDP on an annualized basis.Friday 04 January:December Payroll Growth Soars Past EstimatesThe Employment Situation Report for December produced an upside surprise on most fronts. Headline payroll growth was comfortably ahead of estimates while average hourly earnings (+0.4%) increased more than expected, lifting the year-over-year growth rate to 3.2%. In addition, job gains in October and November saw notable upward revisions.The key takeaway from the report is that employment data are unlikely to deter the Federal Reserve from its tightening path, especially if average hourly earnings growth remains on its current trajectory. December nonfarm payrolls increased by 312,000 (consensus 180,000). Over the past three months, job gains have averaged 254,000 per monthNovember nonfarm payrolls revised to 176,000 from 155,000October nonfarm payrolls revised to 274,000 from 237,000November private sector payrolls revised to 173,000 from 161,000October private sector payrolls revised to 281,000 from 251,000Persons unemployed for 27 weeks or more accounted for 20.5% of the unemployed versus 20.7% in NovemberThe U6 Unemployment rate, which accounts for unemployed and underemployed workers, was 7.6%, unchanged from NovemberDecember average hourly earnings were up 0.4% (consensus 0.3%), after increasing 0.2% in NovemberOver the last 12 months, average hourly earnings have risen 3.2%, up from 3.1% in NovemberThe average workweek in December was 34.5 hours (consensus 34.5) versus 34.4 hours in November.December manufacturing workweek increased to 40.9 hours from 40.8 hours in NovemberFactory overtime increased to 3.6 hours from 3.5 hoursDecember U.S. Markit Services PMI- Revision 54.4, Prelim 53.4, November 54.7Fed Chair Monetary Policy RoundtablePowell 2018 comments-A good year for the economy and ongoing data suggests momentum heading into 2019. Notes the strong jobs number and Unemployment below 4% for 9 straight months;Wages are continuing to gradually move higher which is welcomed. This does not raise concerns about too high inflation; Claims has remained near historic lows;Consumer Spending has remained strong;Notes yesterday s ISM Manufacturing miss, says had been at historically high levels so it is now at a level that is consistent with on-going moderate growth; The fact that it moved down so much in one month is worth tracking.Most recent data from China is mixed; Notes AAPL, and PMI numbers; Sees it spilling over into Asian economies and commodities; Notes China responding with stimulus so expects a solid pace.Sees continued growth in 2019; Good data is still the story for 2019.Financial Markets have been sending different signals. So strong data vs financial market conditions which are contrasting;Policy is very much set on risk management; Notes there is no pre-set course; Says with muted inflation readings it will be patient;Powell highlights if balance sheet normalization was part of the problem it would not hesitate to changeSays markets pricing in downside risksSays Fed is prepared to react if needed;Balance Sheet-Does not believe issuance is a big part of turbulence;Says would adjust plans to achieve goals;If came to conclusion that plans were impacting goals then it would not hesitate to change it.Yellen commenting on financial stability; Noting this as her comments on corporate debt a few weeks ago raised some market concernsKEY ECONOMIC DATA UPDATEFOR ASIA-PAC EUROPEAsia-PacificChina s December Manufacturing PMI 49.4 (expected 50.0; last 50.0) and Non-Manufacturing PMI 53.8 (expected 53.2; last 53.4). December Caixin China Manufacturing PMI 49.7 versus 50.2 prior. December Caixin Services PMI 53.9 (expected 52.9; last 53.8)Singapore s Q4 GDP +1.6% quarter-over-quarter (expected 2.9%; last 3.5%); +2.2% year-over-year (expected 2.7%; last 2.3%). Q4 URA Property Index -0.1% quarter-over-quarter (last -0.1%)South Korea s December Nikkei Manufacturing PMI 49.8 (last 48.6)India s December Nikkei Markit Manufacturing PMI 53.2 (last 54.0). December Nikkei Services PMI 53.2 (expected 52.5; last 53.7)Australia s Commodity Prices +10.5% year-over-year (last 13.4%)Hong Kong s November Retail Sales +1.4% year-over-year (last 5.9%). December Manufacturing PMI 48.0 (last 47.1)Japan s Manufacturing PMI 52.6 (expected 52.4; last 52.6)EuropeDecember Eurozone Manufacturing PMI 51.4 versus 51.4 prior. December CPI +1.6% year-over-year (expected 1.8%; last 1.9%) and Core CPI +1.0% year-over-year, as expected (last 1.0%). November PPI -0.3% month-over-month (expected -0.2%; last 0.8%); +4.0% year-over-year (expected 4.1%; last 4.9%). December Services PMI 51.2 (expected 51.4; last 51.4)Germany s December Manufacturing PMI 51.5, as expected (last 51.5). December Services PMI 51.8 (expected 52.5; last 52.5). December Unemployment Change -14,000 (expected -12,000; last -16,000) and Unemployment Rate 5.0%, as expected (last 5.0%)UK s December Manufacturing PMI 54.2 (expected 52.6; last 53.6). December Services PMI 51.2 (expected 50.7; last 50.4). November Mortgage Approvals 63,730 (expected 66,500; last 66,710) and November Mortgage Lending GBP3.45 billion (expected GBP3.96 billion; last GBP4.09 billion). December Nationwide HPI -0.7% month-over-month (expected 0.1%; last 0.4%); +0.5% year-over-year (expected 1.5%; last 1.9%)France s December Manufacturing PMI 49.7, as expected (last 49.7). December Services PMI 49.0 (expected 49.6; last 49.3). December CPI 0.0% month-over-month (expected 0.1%; last -0.2%); +1.6% year-over-year (last 1.9%)Italy s December Manufacturing PMI 49.2 (expected 48.4; last 48.6). December Services PMI 50.5 (expected 50.2; last 50.3). December CPI -0.1% month-over-month (expected 0.1%; last -0.2%); +1.1% year-over-year (last 1.6%)Spain s December Manufacturing PMI 51.1 (expected 52.4; last 52.6). December Services PMI 54.0 (expected 53.8; last 54.0)~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Friday 04 January 2019Wall Street Jumps on Strong Jobs Report,Soothing Powell CommentaryThe S P 500 gained 3.4% on Friday, as Fed Chairman Jerome Powell signaled patience and flexibility on rates in light of stronger-than-expected jobs data. Friday s gains helped the benchmark index secure a weekly gain of 1.9%.The Dow Jones Industrial Average (+3.3%), the Nasdaq Composite (+4.3%), and the Russell 2000 (+3.8%) also sported sizable gains to finish the week up 1.6%, 2.3%, and 3.2%, respectively.All 11 S P 500 sectors closed the session in the green, with gains ranging from 1.0% (real estate) to 4.4% (information technology). Apple (AAPL), for its part, recouped nearly half of its losses from Thursday.The major averages began the day on a higher note, helped by optimism surrounding upcoming trade talks with China next week and a robust Employment Situation Report for December.Specifically, nonfarm payrolls (consensus 180,000) exceeded expectations with an increase of 312,000, while average hourly earnings (consensus +0.2%) increased 0.4%, lifting the year-over-year growth rate to 3.2%.There were some market concerns about how the Federal Reserve would respond to the strong jobs report. The latest comments from Fed Chair Powell, however, eased those concerns, evident from stocks soaring to session highs and maintaining their gains.Some talking points from the Fed Chair that soothed the market included (1) the Fed will remain patient given the muted reading on inflation, (2) monetary policy will be nimble and shift if necessary, and (3) his softer tone regarding previous comments on the Fed s balance sheet reduction path being on autopilot.The CBOE Volatility Index (VIX) fell 4.1 points to 21.38, reaching its lowest level since mid-December.U.S. Treasuries ended the week sharply lower, surrendering their gains from Thursday. The 2-yr yield dropped 10 basis points to 2.48%, and the 10-yr yield dropped 11 basis points to 2.66%. The U.S. Dollar Index lost 0.1% to 96.17.Market Internals Friday 04 January 2019Lower than average volume (NYSE 1104 mln vs avg. of 1150 mln; Nasdaq 2549 mln vs avg. of 2567 mln)Advancers outpacing decliners (NYSE 2732/276, NASDAQ 2690/432)New lows outpacing new highs (NYSE 6/11, NASDAQ 9/35)Dollar: Weakens AgainThe U.S. Dollar closed lower for the week at $96.20 from $96.39 the previous week. Other currency pairs;EUR/USD: 1.1401GBP/USD: 1.2741USD/CNH: 6.8623USD/JPY: 108.44Bonds: Treasuries Surrender Thursday s GainsUS Treasuries ended  the week on a sharply lower note, surrendering their gains from Thursday. The pullback in the Treasury market began taking shape in overnight action and continued into midday trade. The overnight selling was accompanied by a rebound in growth-sensitive commodities like copper and crude oil while the news of an upcoming reserve requirement ratio cut in China was also welcomed by the market. In addition, China s Ministry of Commerce confirmed that trade talks with U.S. officials will take place on Monday and Tuesday of next week, injecting additional optimism into capital markets. However, it remains to be seen if that optimism is warranted, considering U.S. Trade Representative Robert Lighthizer has reportedly said that more tariffs may be needed in order to secure concessions from China. Friday Morning action saw the release of a much stronger than expected Employment Situation report, which was later followed by comments from Fed Chairman Jay Powell, who took part in a panel discussion with former Fed Chairs Yellen and Bernanke. Market participants locked in on Chairman Powell s acknowledgement that the policy course can be altered swiftly, but it should be noted that the Fed Chair has said on multiple occasions that monetary policy is not on a pre-set course. The Fed Chairman also reiterated that the Fed s economic outlook has not changed significantly, but today, the market was more focused on comments that could be categorized as dovish. Recall that just yesterday, the fed funds futures market entertained the prospect of a rate cut in December. Today, the implied probability of a December cut declined to 30.8% from yesterday s 49.3%.2-yr: down 4 bps to 2.48% from 2.52% from the previous week5-yr: down 9 bps to 2.48% from 2.57% 10-yr: down 8 bps to 2.66% from 2.74% 30-yr: down 7 bps to 2.97% from 3.04%The belly of the yield curve rose as investors ran their money into medium term safety. The spread on the 2s5s flattened to 0bps. The spread between the 5s10s widened to 18bps from 17bps the previous week while the 10s30s widened to 31bps from 30bps the previous week. The spread that matters most, the 2s10s, narrowed by 4bps to 18bps from 22bps the previous week.Commodities The Bloomberg Commodity Index settled at 78.34, higher than 77.59 the previous week as Energy, Precious and Grains rallied.WTI oil closed at $47.96 p/b, higher than the week before at $45.33. The spread between WTI and Brent widened to $9.10 from $6.87 the previous week as Brent settled at $57.06 p/b.EIA petroleum data for the week ended December 28Crude oil inventories remained virtually unchanged from the prior weekPrior week had a draw of -0.497 million barrelsNatural gas inventory showed a draw of 20 bcf vs a draw of 48 bcf in the prior week. Working gas in storage was 2,705 Bcf as of Friday, December 28, 2018, according to EIA estimates. This represents a net decrease of 20 Bcf from the previous week. Stocks were 450 Bcf less than last year at this time and 560 Bcf below the five-year average of 3,265 Bcf. At 2,705 Bcf, total working gas is below the five-year historical range.Baker Hughes total U.S. rig count decreased by -8 to 1075 following last week s increase of +3.February Crude Oil futures: $47.96/barrel from $45.33/barrel the previous weekMarch Brent Crude Oil Futures: $57.06/barrel from $52.20/barrel February Natural Gas: $3.04/MMBtu from $3.31/MMBtuMetals: Precious Rise, Copper FallsFebruary Gold: $1285.80/oz from $1283.00/oz the previous weekMarch Silver: $15.77/oz from $15.44/oz March Copper: $2.65/lb from $2.68/lb Agriculture: Grains Gain AgainMarch Corn closed at $3.83/bushel from $3.75/bushel from the previous weekMarch Wheat closed at $5.16/bushel from $5.11/bushel January Soybeans closed at $9.22/bushel from $8.83/bushel ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~THE WEEK AHEADWeek 02 (07 to 11 January 2019)WEEK02 07 to 04 JanThe second week tends to be a little volatile and divergentTuesday 08 Jan marks the First Five Days early warningAccording to our 5, 10 and 15 year seasonal models:Benchmarks Indices (21 year average) for wk02:The DOW is expected to be bearish on Monday, very bearish on Tuesday and bearish on Wednesday, bullish on Thursday and Friday.The S P is expected to be bullish on Monday, very bearish on Tuesday, bullish on Wednesday and Thursday then bearish on Friday.NASDAQ is expected to get more bullish from Monday till Wednesday, extremely bullish on Thursday and bearish on Friday.Week 02 Key Economic DatesNext week will be a busy week in US with FOMC minutes, inflation, ISM Non-Manufacturing PMI, trade balance, factory orders and US-China trade talks. Elsewhere in the spotlight will be: UK monthly GDP, industrial output and foreign trade; ECB meeting accounts; Eurozone business survey, retail trade and jobless rate; Germany trade balance; China inflation and producer prices and Japan consumer confidence. Mon 07 JanuaryUS ISM Non-Manufacturing PMIAustralia Trade BalanceTue 08 JanuaryJapan Average Cash Earnings y/yAustralia Building Approvals m/mWed 09 JanuaryUS FOMC Members Evans and Rosengren Speak, Crude Oil Inventories, FOMC Meeting MinutesUK BOE Gov Carney SpeaksThu 10 JanuaryEU ECB Monetary Policy Meeting AccountsUS Initial Claims, Nat Gas Inventories, FOMC Members Bullard, Evans and Clarida SpeakAustralia Retail Sales m/mFri 11 JanuaryUK GDP m/m, Manufacturing Production m/mUS CPI and Core CPI m/m~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~COMMENTARY I am still bullish in the long term, albeit very cautiously bullish while holding a short-term bearish attitude until this correction is done and dusted. I will be sticking with my usual oil trades and seasonal portfolios but they will be hedged until I get an all-clear from the market and economic data. Over the week, another indication that this bull-run could be ending soon is the convergence of the Federal Funds Rate and the 10 year bond yield.With the Fed releasing more information about their intentions this week, I will be looking for hints or confirmation whether the benchmark rate will continue hiking. With the spread between the FFR and 10yr only 24bps apart, another Fed hike coupled with more flight-to-safety on the 10yr will surely invert this spread. Thereafter, we can expect the Yield Curve to flatten on the 2/10 and possibly invert before the end of the month. And that will be all she wrote for the bulls.Singapore s GDP contracted QonQ from 3.5% in Q3 2018 to 1.6% in Q4. The Inflation Rate also fell from 0.7% to 0.3% in spite of the CPI and Core CPI holding at their highs. The benchmark index remained mired in red and still stays rooted below its 50/200DSMA Death Cross in Correction Territory, -15.5% from its May 2018 high. The index closed the first week of the year in the red.While the U.S. economic numbers continue to look healthy, parts of Asia and Europe are falling onto troubled times. GDPs in Japan, Hong Kong, Thailand, Germany, Italy, Switzerland and Sweden have contracted with some already in a technical recession. Manufacturing and production numbers have also fallen in several East-Asian economies.The coming week will be light on economic data that matters but will be full of key indications for where the U.S. Fed, BOE and ECB think their economies will be heading. If the early part of the coming week shows more divergence from the usual historical performance, I will be expecting a huge swing to the downside before the week is done. January is normally a very bullish month. But we ve had a few horrible Januarys in the last half decade to knock that confidence off. So be cautious, stay hedged and get ready to be very nimble.Happy Hunting!~~~~~~~~~~~~~~~~~~~~~~~~~~~PATTERN TRADER™ TUTORIAL  INTRODUCTORY WORKSHOPDate: 9th January 2019, WednesdayTime: 07:00PM to 10:00PM(Registration starts at 06:30PM) ..For more than 13 years of educating, mentoring and supporting hundreds of participants (annually) in the arts and sciences of Finance and Economics, the Pattern Trader™ Tutorial has evolved to become the most sought-after boutique-styled class that caters to individuals, professionals and families that are serious about their finances and their prospects as we move into the future.The small class environment and tutorial-styled approach gives the Tutorial a conducive environment that allows for close communication and interaction between the mentor and the participants.The hands-on style makes the Tutorial very practical for anyone who requires a start from the ground up. It is the perfect beginning for anyone who wishes to take that first step in improving their financial and economic literacy.If you re looking to make a huge difference in your financial life and get the most value our of your education investment, there s no better choice than the time-tested and well reputed Pattern Trader™ Tutorial. Register for the Introductory Workshop NOW!Download our promo slides here:The Pattern Trader™ Tutorial 2019~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~The schedule for the FEBRUARY 2019 Batch is here:Pattern Trader™ Tutorial February 2019~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Connect with me at LinkedIn and much to aim for.Are you financially equippedto face the coming year?Do you have what it takes toride out a storm and still be profitable?Make Financial Literacy your TOP PRIORITY of must-haves on your 2019 list of Resolutions.PATTERN TRADER™ TUTORIAL  INTRODUCTORY WORKSHOPDate: 9th January 2019, WednesdayTime: 07:00PM to 10:00PM(Registration starts at 06:30PM) ..For more than 13 years of educating, mentoring and supporting hundreds of participants (annually) in the arts and sciences of Finance and Economics, the Pattern Trader™ Tutorial has evolved to become the most sought-after boutique-styled class that caters to individuals, professionals and families that are serious about their finances and their prospects as we move into the future.The small class environment and tutorial-styled approach gives the Tutorial a conducive environment that allows for close communication and interaction between the mentor and the participants.The hands-on style makes the Tutorial very practical for anyone who requires a start from the ground up. It is the perfect beginning for anyone who wishes to take that first step in improving their financial and economic literacy.If you re looking to make a huge difference in your financial life and get the most value our of your education investment, there s no better choice than the time-tested and well reputed Pattern Trader™ Tutorial. Register for the Introductory Workshop NOW!Download our promo slides here:The Pattern Trader™ Tutorial 2019~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~The schedule for the FEBRUARY 2019 Batch is here:Pattern Trader™ Tutorial February 2019~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Connect with me at LinkedIn WEEK IN REVIEW 24 to 28 DECEMBER 2018 :Stocks Bounce in Wild Roller Coaster RideThe S P 500 rallied 2.9% during a week that featured its worst Christmas Eve in history, a historic rally, and a stunning reversal in late trading action. Wall Street s end-of-the-year Santa Claus rally, which began taking shape on Wednesday, has pared the benchmark index s monthly decline to 9.9%.The Dow Jones Industrial Average (+2.8%), the Nasdaq Composite (+4.0%), and the Russell 2000 (+3.6%) also cut their monthly losses to 9.7%, 10.2%, and 12.7%, respectively.Nine of the eleven S P 500 sectors finished the week with gains with consumer discretionary (+4.7%), information technology (+3.7%), communication services (+3.6%), and financials (+3.3%) leading the advance. The utilities (-1.9%) and real estate (-0.1%) sectors were the lone groups to finish with losses.Investors had to wait for the rally, though. The holiday-shortened trading week began with a continued effort to reduce exposure to risk, which left Wall Street with little Christmas joy.Nevertheless, the belief that the market had become deeply oversold, in conjunction with rebounding oil prices, strong holiday sales, and some short covering, helped drive the S P 500 to its best one-day gain (+5.0%) since March 2009.What ensued was an unsurprising inclination to sell into strength. What surprised many, however, was the reemergence of the buy-the-dip mentality that carried stocks from steep losses to notable gains in the same session. Many attributed the late reversal to pension fund rebalancing activity, but short-covering and a rush of speculative buying interest likely played a contributing role in turning things around in such a hurry.More so, the ability to hold up this week in the face of bad news, which included the partial government shutdown, softening economic data, and the European Central Bank highlighting an expectation for slower global growth in 2019, added to the bull case for a sustainable rebound heading into 2019.The bond market, though, signaled a more cautious-minded mentality with risk-free U.S. Treasuries remaining resilient to selling efforts. The 2-yr yield declined nine basis points to 2.52%, and the 10-yr yield declined five basis points to 2.74%. The U.S. Dollar Index fell 0.6% to 96.34.Investors will not receive any notable economic data on Monday, which will be a full day of trading on Wall Street.Dow Jones Industrial Average -6.7% YTD (up for the week +2.5%)Nasdaq Composite -4.6% YTD (up for the week +3.7%)S P 500 -7.0% YTD (up for the week +2.6%)Russell 2000 -12.9% YTD (up for the week +3.0%)U.S. ECONOMIC UPDATE(Economic Excerpts from Briefing.com)Wednesday 26 December:Analysis delayed due to partial government shutdown Due to the partial government shutdown, a number of economic reports slated for release will not be published until affected departments receive funding.The November New Home Sales report, previously scheduled to be released on Wed 26 Dec, will not be released.  The Adv. International Trade in Goods, Adv. Retail Inventories, and Adv. Wholesale Inventories Reports, previously scheduled to be released on Fri 28 Dec, are likely to be delayed as well.October Case Schiller Home Price Index 5.0% vs consensus of 5.0%; September was revised to 5.2% from 5.1%Thursday 27 December:Initial claims print better than expectedInitial claims for the week ending December 22 decreased by 1,000 to 216,000 (consensus 225,000) while continuing claims for the week ending December 15 decreased by 4,000 to 1.701 million.The key takeaway from the report is that initial claims continue to print at low levels that don t suggest any meaningful softening has occurred in the labor market despite the concerns about a slower growth outlook.The four-week moving average for initial claims decreased by 4,750 to 218,000.The four-week moving average for continuing claims decreased by 1,000 to 1,675,750.Initial claims have held below 300,000 for 199 straight weeks.October FHFA Housing Price Index grew 0.3% M/M vs. +0.2% in September FHFA reported house prices +5.7% Y/Y.Housing stocks (ITB -0.4%, XHB -0.7%) outperforming (SPY -1.3%) in early trade.Consumer Confidence Registers Another Pullback in DecemberThe Conference Board s Consumer Confidence Index decreased to 128.1 in December (consensus 133.7) from a revised 136.4 (from 135.7) in November.The key takeaway from the report is that consecutive declines in the Expectations Index point to a growing belief that the pace of economic growth will decelerate in the first half of 2019. The Present Situation Index decreased to 171.6 from 172.7 as fewer consumers described business conditions as good. The view of the labor market did not change much relative to the November survey.The Expectations Index decreased to 99.1 from 112.3 as fewer consumers expressed belief that business conditions will improve over the next six months. Consumers also had less favorable expectations for the labor market in the near future.Friday 28 December:Chicago PMI Ticks Lower in DecemberThe MNI Chicago Business Barometer, colloquially known as the Chicago PMI, decreased to 65.4 in December from 66.4 in November. The December pullback took place after the Index soared by nearly eight points in November.The key takeaway from the report is that the overall reading remained elevated thanks to strong order backlogs and an increase in the Production Index.The New Orders Index decreased to 67.9 from 72.5The Production Index increased to 71.0 from 65.2The Employment Index declined to 52.1 from 55.4The Prices Paid Index decreased to 65.6 from 73.2KEY ECONOMIC DATA UPDATEFOR ASIA-PAC EUROPEAsia-PacificSingapore s November CPI +0.3% year-over-year (expected 0.6%; last 0.7%). November Industrial Production +2.8% month-over-month (expected 1.6%; last 2.4%); +7.6% year-over-year (expected 2.3%; last 5.5%). Japan s October Leading Index 99.6 (expected 100.5; last 99.6). BoJ Core CPI 0.5% year-over-year (expected 0.6%; last 0.6%). November Housing Starts -0.6% year-over-year (expected -0.4%; last 0.3%) and Construction Orders -10.7% year-over-year (last -16.5%). November Unemployment Rate 2.5% (expected 2.4%; last 2.4%). November Industrial Production -1.1% month-over-month (expected -1.7%; last 2.9%) and November Retail Sales +1.4% year-over-year (expected 2.2%; last 3.6%). December Tokyo CPI +0.3% year-over-year (last 0.8%) and December Tokyo Core CPI +0.9% year-over-year, as expected (last 1.0%)Japanese press noted that there are growing expectations among economists for the Bank of Japan to ease monetary policy in 2019 if equities remain weak.China s November Industrial Profits -1.8% year-over-year (last 3.6%)Hong Kong s November trade deficit HKD45.00 billion (last deficit of HKD44.50 billion)South Korea s December Consumer Confidence 97 (last 96). November Retail Sales +0.5% month-over-month (last 0.2%) and November Industrial Production -1.7% month-over-month (expected -0.2%; last 1.3%); +0.1% year-over-year (expected 1.1%; last 10.9%). January Manufacturing BSI Index 72 (last 74).EuropeSpain s November PPI +3.0% year-over-year (last 4.5%). November Retail Sales +1.4% year-over-year (last 2.1%). December CPI -0.4% month-over-month (last -0.1%); +1.2% year-over-year (expected 1.5%; last 1.7%). Q3 GDP +0.6% quarter-over-quarter, as expected (last 0.6%); +2.4% year-over-year (expected 2.5%; last 2.5%). October Current Account surplus EUR300 million (last EUR900 million).France s November Jobseekers Total 3.41 million (expected 3.40 million; last 3.43 million)Swiss December ZEW Expectations -22.2 (last -42.3), December KOF Leading Indicators 96.3 (expected 98.7; last 98.9)U.K. s November Gross Mortgage Approvals 39,400 (expected 38,900; last 39,700)~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Friday 28 DecemberStocks Trade Mixed to Close Volatile WeekThe S P 500 lost 0.1% on Friday in what was another whipsaw day of trading that saw the S P 500 up as much 1.3% at its high and down as much as 0.6% at its low. The benchmark index finished a remarkably volatile, and history-setting, week with a gain of 2.9%.The Dow Jones Industrial Average (-0.3%), the Nasdaq Composite (+0.1%), and the Russell 2000 (+0.5%) also experienced roller-coaster action on Friday and finished with weekly gains of 2.8%, 4.0%, and 3.6%, respectively.Price action was relatively tame (for this week anyway) after the S P 500 fumbled an early rally effort shortly after the start of trading. However, at around 1:30 p.m. ET, the benchmark index climbed from a loss of 0.2% to as high as 1.3% without any news to account for the move.All sectors were up and all major indices were higher.Nevertheless, stocks would retreat just as quickly as they had climbed with no news catalysts to account for the subsequent downturn either.  It was perhaps fitting that the S P 500 ended the session close to where it started as that was an accurate reflection of the lack of conviction that characterized today s trading action.Efforts to flatten out positions in front of the weekend, which could be a four-day weekend for many (the market is open December 31 and closed January 1) were likely responsible for some of the late-day selling.The S P 500 sectors finished mixed with energy (-0.9%) and materials (-0.6%) underperforming the broader market. Conversely, the consumer discretionary (+0.3%) and real estate (+0.2%) sectors outperformed.U.S. Treasuries remained resilient to selling pressure with the 2-yr yield and 10-yr yield decreasing one basis point each to 2.52% and 2.74%, respectively. The U.S. Dollar Index lost 0.1% to 96.34.Market Internals Friday 28 December 2018Lower than average volume (NYSE 898 mln vs avg. of 1012 mln; Nasdaq 2020 mln vs avg. of 2367 mln)Advancers outpacing decliners (NYSE 1897/1048, NASDAQ 2122/946)Dollar: Lower for the week, up for the yearThe U.S. Dollar closed lower for the week at $96.39 from $96.95 the previous week. For the year, the Dollar gained 4.92%.Other currency pairs;EUR/USD: 1.1444GBP/USD: 1.2697USD/CNH: 6.8804USD/JPY: 110.37Bonds: Treasuries Edge Higher, but Long Bond LagsUS Treasuries ended the week on a mixed note as most tenors recorded slim gains while the long bond settled in the red. The Treasury complex started the day in negative territory, but the lower open was followed by a swift rebound that had 10s and 5s trading in the green just two hours into the cash session. The long bond also made a brief appearance in the green, but that s where resistance was found, pressuring the 30-yr bond back to its starting level. Shorter tenors, meanwhile, continued their advance into the early afternoon, hitting fresh highs for the week in the process. The 10-yr note finished at its best level since early February while 2s and 5s settled at their best levels since the start of June. The slope of the yield curve was little changed today, but it steepened during the week. The 2s10s spread ended the week six basis points wider at 22 bps while the 2s30s spread widened by 12 bps to 52 bps.2-yr: down 11 bps to 2.52% from 2.63% from the previous week5-yr: down 07 bps to 2.57% from 2.64% 10-yr: down 05 bps to 2.74% from 2.79% 30-yr: up 01 bps at 3.04% from 3.03%The yield curve steepened as shorter maturities rallied to send their yields down while the 30 year yield popped 1bps. The spread on the 2s5s is 5bps. The spread between the 5s10s widened to 17bps from 15bps the previous week while the 10s30s narrowed to 30bps from 24bps the previous week. The spread that matters most, the 2s10s, widened 6bps to 22bps from 16bps the previous week.Looks like we re holding off an any sort of inversion the curve for a while more, thus theoretically giving the risk markets more headroom in the months to come. Commodities The Bloomberg Commodity Index settled at 77.59, lower than 78.70 the previous week as Energy and Grains lost more ground.WTI oil closed at $45.33 p/b, lower than the week before at $45.59. The spread between WTI and Brent widened to $6.87 from $8.23 the previous week as Brent settled at $52.20 p/b.EIA petroleum data for the week ended December 21Crude oil inventories remained virtually unchanged from the prior weekPrior week had a draw of -0.497 million barrelsU.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) remained virtually unchanged from the previous week. At 441.4 mln barrels, U.S. crude oil inventories are about 7% above the five year average for this time of year. Total motor gasoline inventories increased by 3.0 mln barrels last week and are about 4% above the five year average for this time of year. Finished gasoline remained the same, but blending components inventories increased last week. Distillate fuel inventories remained unchanged last week and are about 11% below the five year average for this time of year. Propane/propylene inventories decreased by 1.0 mln barrels last week and are about 5% below the five year average for this time of year. Total commercial petroleum inventories decreased last week by 2.0 mln barrels last week.Natural gas inventory showed a draw of 48 bcf vs a draw of 141 bcf in the prior week. Working gas in storage was 2,725 Bcf as of Friday, December 21, 2018, according to EIA estimates. This represents a net decrease of 48 Bcf from the previous week. Stocks were 623 Bcf less than last year at this time and 647 Bcf below the five-year average of 3,372 Bcf. At 2,725 Bcf, total working gas is below the five-year historical range.Baker Hughes total U.S. rig count increased by +3 to 1083 following last week s increase of +9.February Crude Oil futures: $45.33/barrel from $45.59/barrel the previous weekFebruary Brent Crude Oil Futures: $52.20/barrel from $53.82/barrel January Natural Gas: $3.31/MMBtu from $3.82/MMBtuMetals: Gains across the boardFebruary Gold: $1283.00/oz from $1257.80/oz the previous weekMarch Silver: $15.44/oz from $14.70/oz March Copper: $2.68/lb from $2.67/lb Agriculture:  Grains lose more groundMarch Corn closed at $3.75/bushel from $3.79/bushel from the previous weekMarch Wheat closed at $5.11/bushel from $5.14/bushel January Soybeans closed at $8.83/bushel from $8.83/bushel ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~THE MONTH AHEADJanuary 2019January 2019 has 21 trading days and two public holidays. January is the first month of Quarter 1 that sees the start of Earnings Season for Q4 Results beginning on the second week of the month. January is the third month of DOW s and S P s Best Six Months of the trading calendar and the last month of the year s best three month for S P gains.January usually starts out mildly bullish but becomes very bullish mid-month and ends rather flat and sometimes bearish. The month is famous for its January Barometer Indicator where As January goes, so goes the year with an 87% accuracy. Every down January on the S P500 has preceded a new or extended Bear Market, a flat market or a 10% correction without exception since 1950. January s First Five Days have indicated a full year of gains 84% of the time.TRIVIAThe last trading day of the year (December 31, Monday) has been down on the NASDAQ 16 of the last 18 (Last year down)WEEK01 31 Dec to 04 JanThe first week of the year tends to be mildly bullishTuesday 01 January 2019  Markets closed in observation of New Year s DayThe first trading day of the year has been up on the Russell 2000 7 of the last 10 but also down 17 of the last 28Second trading day of the year has been up on the DOW 19 of the last 27Thursday 3rd January marks the end of the Santa Claus RallyWEEK02 07 to 04 JanThe second week tends to be a little volatile and divergentTuesday 08 Jan marks the First Five Days early warningWEEK03 14 Jan to 18 JanThe third week is mostly bullish but end very bearish on FridayJanuary Expiration Week has been down of the DOW 11 of the last 20January Expiration Day is usually bearish but has been improving up on the DOW 9 of the last 10WEEK04 21 Jan to 25 JanThe fourth week tends to be flat-to- bearish but ends slightly bullish on FridayMonday 21 January Markets closed in observation of Martin Luther King DayWEEK05 28 Jan to 01 FebThe fifth week starts bullish, turn bearish mid-week and ends very bullish on FridayWednesday 30 January @1400EST FOMC Monetary Policy DecisionThe first trading day of February (Friday 01 February) and been up on the DOW 13 of the last 16~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~THE WEEK AHEADWeek 01 (December 31 to January 04)The first week of the year tends to be mildly bullishThe last trading day of the year (December 31, Monday) has been down on the NASDAQ 16 of the last 18 (Last year down)Tuesday 01 January 2019  Markets closed in observation of New Year s DayThe first trading day of the year has been up on the Russell 2000 7 of the last 10 but also down 17 of the last 28Second trading day of the year has been up on the DOW 19 of the last 27Thursday 3rd January marks the end of the Santa Claus RallyAccording to our 5, 10 and 15 year seasonal models (Tuesday 01 January 2019 is a Holiday);Benchmarks Indices (21 year average) for wk01:The DOW is expected to be very bearish on Monday, bullish on Wednesday and Thursday and bearish on Friday.The S P is expected to be extremely bearish on Monday, bearish on Wednesday and bullish on Thursday and Friday.NASDAQ is expected to be extremely bearish on Monday, bullish on Wednesday, Thursday and Friday.Week 01 Key Economic DatesAnother week that s light on data but Friday will be a hive of activity as the New Year kicks into gear with the January Non-Farms Payroll number and Fed Speak.Sun 30 DecemberChina  Manufacturing PMI, Non-Manufacturing PMIMon 31 DecemberNo economic data or activity expectedTue 01 JanuaryUS, UK, EU, Australia, Japan Banking and Trading holiday China  Caixin Manufacturing PMIWed 02 JanuaryUK  Manufacturing PMIThu 03 JanuaryUK  Construction PMIUS Initial Claims, ADP Non-Farm Employment Change, ISM Manufacturing PMIFri 04 JanuaryEU  CPI and Core CPI Flash Estimate y/yUK  Services PMIUS Non-Farm Employment Change, Unemployment Rate, Crude Oil Inventories, Nat Gas Inventories, Fed Chair Powell Speaks, FOMC Member Bostic Speaks~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~COMMENTARY2019 PREVIEW I am holding to the opinion that this is still only a correction, the one that was long overdue and expected. All the talk of an economic slowdown or recession have been nothing more than speculative projections by Wall Street and some cautious corporations  But for now, the numbers don t say it. For now, this is just another correction. The market made a valiant effort albeit on much lower volumes  to recover its losses for the year. However, it seem very highly unlikely that the DOW can recover 1,657 points (6.7%) in the single remaining session on Monday. Neither will the S P500 regain its 188 points (7.1%). It might be possible for the NASDAQ to claim 319 points (4.6%) in a single session but The last trading day of the year (December 31, Monday) has been down on the NASDAQ 16 of the last 18 (Last year down)The index that really matters to me, the Transports, need to recover 9.7% on Monday to breakeven for the year. I doubt that will happen seeing that it struggles to make 10% in a single quarter under normal conditions.SELF-FULFILLING PROPHECIES, YIELDS AND FFRThe Bulls are hanging on the hope that a Santa Claus Rally could bring the market out of this funk. I have to say, it is looking hopeful at this rate. If it happens by 3rd January, then another bullish prophecy will be in play; that the third year of the President s term is a bullish year. This adds to the (skeptical) bullish Black Friday/Cyber Monday  sales that points to a bullish year ahead. The only downer is that the market didn t sell off in May that usually means that greed suffers the following year.Now that the Yield Curve seems to be steepening again after that brief false alarm, the market should be good for more upside until the curve says otherwise. The spread between the 10yr bond yield and the Fed Funds Rate is 24bps wide and converging quite a bit. If the Fed hikes the benchmark rate up to 2.75% in January and the 10yr maintains the status quo, this could be an early warning signal that everything is about to change again. If the spread remains, then we can still look forward to more upside or at worst, not see more downside.Oil remains my bread-and-butter and I think it should range between $42 and $55 for most of the coming year unless we get confirmation of a recession that will send the black stuff lower. Gold should make higher highs. Resistance for now is at $1,320 with a higher 52week high just below $1,400. Should the metal rise, I ll be counting the months (up to five) in anticipation of a market capitulation if the macros are convergent. Check back with this in May 2019.BTC (Disclaimer: I am highly prejudiced about this) should see more downside to break below $3,000 within the first half of 2019. Support should hold above $2,500 but a break below that in the second half of the year should see it get down to $1,200. Remember, there is no way to value BTC fundamentally. I don t trade this so this is my license to be irresponsible about my call on BTC. But I still hold my call for BTC to be no higher than $300 in the long term. So far, I ve not been wrong about crypto since it popped up above $1,000 in January of 2017.SINGAPORE UPDATEThe STI looks set to finish another disappointing year for the 8th year running since 2010. The local benchmark index looks set to close out the year -10% down in Correction Territory and under its 50/200 DSMA Death Cross, having breached its critical 3,100 support in October. Macro-economic numbers are suggesting that the island-state is heading for a slowdown/recession in the coming year in spite of a seemingly healthy GDP. Interest rates keep rising in spite of the lower Inflation Rate while Manufacturing and Retail Sales keep falling. The Government Budget is practically non-existent, Government Spending has decreased and Consumer Spending increased only because of higher transportation costs, utility costs and fuel costs. This, as I ve said before, is going to be a long haul pain ride.SUMMARYAt the start of 2018, I said that I was expecting a troublesome year ahead that was going to either be very volatile or very flat we got both at different times of 2018. But I never saw that year-end sell-off coming. That was a bonus! It might be too soon to say this but we finally got that correction we ve waited so long for. Are we there yet? Maybe, but I d rather wait for a clearer picture before I commit to making bullish calls.For now, I reckon 2019 will see some upside by the end of the year but not without some major rocking and rolling before we get there. Recession? That s something we ll just have to wait and see because there s nothing on the six-month horizon to suggest it yet. All in all, I am still bullish in the long term, albeit very cautiously bullish while holding a short-term bearish attitude until this correction is done and dusted. I will be sticking with my usual oil trades and seasonal portfolios but they will be hedged until I get an all-clear from the market and economic data. In the meantime, I d like to wish all my readers a very Happy and Profitable 2019 ahead. Happy Hunting!~~~~~~~~~~~~~~~~~~~~~~~~~~~PATTERN TRADER™ TUTORIAL  INTRODUCTORY WORKSHOPDate: 9th January 2019, WednesdayTime: 07:00PM to 10:00PM(Registration starts at 06:30PM) ..For more than 13 years of educating, mentoring and supporting hundreds of participants (annually) in the arts and sciences of Finance and Economics, the Pattern Trader™ Tutorial has evolved to become the most sought-after boutique-styled class that caters to individuals, professionals and families that are serious about their finances and their prospects as we move into the future.The small class environment and tutorial-styled approach gives the Tutorial a conducive environment that allows for close communication and interaction between the mentor and the participants.The hands-on style makes the Tutorial very practical for anyone who requires a start from the ground up. It is the perfect beginning for anyone who wishes to take that first step in improving their financial and economic literacy.If you re looking to make a huge difference in your financial life and get the most value our of your education investment, there s no better choice than the time-tested and well reputed Pattern Trader™ Tutorial. Register for the Introductory Workshop NOW!Download our promo slides here:The Pattern Trader™ Tutorial 2019~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~The schedule for the FEBRUARY 2019 Batch is here:Pattern Trader™ Tutorial February 2019~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Connect with me at LinkedIn Conrad Alvin Lim Singapore, Married, 2 KidsTrader ... Trades in the U.S. Stocks, Futures, Bonds, Options & Currencies Educator ... Financial$cents Pte Ltd Author ... Two #1 Best-Sellers, One Top 10 Best-Seller Complete profile

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