Nick Batsford, CEO of Tip TV, and Marc Ostwald, Market Strategist at ADM Investor Services, discussed the latest broker recommendations, Canada’s economic troubles and a technical view on major indices.
Oil continuing to decline will bode bad for CAD
Commodity currencies remain the hot favourites, especially CAD, as falling oil prices will keep the Bank of Canada tilted towards more easing.
Ostwald highlighted that if oil continues to decline, then Canada’s economy is in a mess. The forecasts are appalling, growth has been exclusively seen in energy related products, and continued dip in oil prices will bode bad for the manufacturing as well.
If oil prices weren’t enough, political concerns will keep the pressure on CAD, with upcoming election bringing fresh worries for the economy, will a radical left wing government get in?. While this uncertainty remains, Ostwald says that he doesn’t think it’s a time to bottom fish in USD/CAD yet.
Recommendations: VIX, Oil prices
Ostwald continued onto the VIX, which remains low – typical of a bull market. Ostwald noted the possible rise in volatility as a result of the rate rise potential in September, and also the likely chance of more volatility in the coming month.
To finish, when Batsford questioned Ostwald on West Texas, Ostwald responded that $35 is definitely possible, but the lower we go, the larger the rebound will be, but not above the highs we’ve seen this year.
Nikkei 225 remains strong, whilst Dow Jones could fall to 17000
Ostwald says how the low gild yields have led to a heavy dependence by investors on equity dividends. To this Batsford continued, taking a technical look at major indices:
S&P 500: Consolidating after losing momentum since March. The long-term trendline remains a key levels
Dow Jones: Remains weaker than SP500, and a move below the 17,500 support will pave way for 17,000.
DAX: The 11,800 remains a key level to the upside.
FTSE 100: The support remains at 6500, and the index sees probability of a double bottom price reversal formation ahead.
Nikkei 225 – Another upside test of 21,000 might be on the cards, above this will lead to further bullish climb.
Ostwald further mentions that volatility remains cheap in equities and the debt market space, and further suggests using option based strategies for trading.