There's only one way to explain what's happening in the markets right now.
It's FUNK!
Today's Highlights:
- More Market Funk
- No Way But Right?
- More Crypto Vol
Please note: All data, figures & graphs are valid as of February 22nd. All trading carries risk. Only risk capital you can afford to lose.
Traditional Markets Funk: Dow Jones
Everything was going fine on Wall Street, they came back from lunch in a buying mood, but somehow things started to turn sour. By about an hour before the close, things started to get downright ugly and by now we're more than 500 points off the peak of that yellow circle and we're now 3.82% from the all-time high.
Once again, the movement began in the bond markets, with the yields on the 10-Year spiking to a new high of 2.94% by the end of the day.
And of course, volatility can be seen with the VXX shooting up into the close.
Italian Splinters:
It’s been five days since Italy stopped publishing opinion polls ahead of the national elections on March 4th in order to stop them having an influence on polling day itself.
That said, as we learned in Brexit and the Trump elections, polls can't always predict what's going to happen, and in Italy, even less so. And this one is set to be even more interesting than usual.
Nevertheless, some analysts have come to the conclusion that the only party with an actual shot of winning an outright majority is Forza Italia, led by Silvio (I can't believe I'm even writing this) Berlusconi.
This is still anyone's game though, and even though there are 945 seats across two Houses of Parliament, alliances are so fractured that candidates are now battling for every single voter.
For the markets it's still not clear what the effects might be, but as Europe's 4th largest economy, and with the EU's 1st largest economy still in a political deadlock, I'm looking squarely at the euro.
In this chart, we can see the effect that a decisive election had on the EUR/USD on April 23rd (yellow circle). Notice the large gap up that seemingly took the market from flat to flying in a single weekend when it became clear that Marine Le Pen had no chance of victory.
Crypto Volatility Continues:
When Wal-Mart Stores Inc's (NYSE:WMT) stock dropped 10% on Tuesday, it was a really big deal, but when Bitcoin dropped an equal percentage on Wednesday, somehow it just doesn't seem all that significant.
On that thought, here's a meme I made yesterday. :)
That's just the level of volatility that we've come to expect from this market. So please be aware that when I say cryptos are volatile, what I mean is they're extremely volatile.
One thing that I keep noticing in the crypto-market is that when things are going up, we can expect to see different levels of returns in different coins and general divergence. However, when things are going down the correlation gets stronger and everything falls together.
You should be able to see that in this chart pretty clearly.
As always, let me know if you have any questions or if you need anything further.
Have a groovy day!!
eToro, Senior Market Analyst
Disclosure: This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results. All trading carries risk. Only risk capital you're prepared to lose.