Trading Gold? Consider These Three Factors Now

February 24th, 2016 by VantagePoint Software

gold

We aren’t living in your grandfather’s trading environment anymore. Traders need to keep their finger on a lot of pulses these days. Maybe you’re a Gold bug looking to focus only on the technical and fundamental factors affecting this precious metal. Or maybe you are also trading crude oil. But wait, there’s the Indian growth data to consider and what did Mario Draghi just say? Throw a bunch of economic reports and indicators as well as inter-related global markets together and everything from soup to nuts seems to matter to the markets now. The truth is, knowing where this precious metal is going can be difficult.

Regardless of where you fit on this spectrum, there are three macroeconomic factors you need to remember when trading Gold and one technical solution that can help you quantify this seemingly unquantifiable data.

How to make money when interest rates are negative

You can’t. It may seem counterintuitive, but if you put your money in the bank, you will have to PAY them to hold your cash. The Bank of Japan followed other central banks in going negative on rates in late January, a sign of the continuing global trouble from plummeting low oil prices, stalling international trade and slowing growth in China. Japan’s Prime Minister, Shinzo Abe, is seeking new ways to break the country’s cycle of decline. The BOJ joins a growing group of global central banks with negative interest rates including the European Central Bank, Sweden, Denmark and Switzerland.

So this all should be good for Gold, right? Global central bankers remain concerned about sluggish growth and below-target inflation. This loose monetary policy around the world should be a bullish sign for Gold as this is a hard asset that should gain in value.

Gold isn’t the only metal that matters

There are many things that affect the price of the metal. Comex copper futures tumbled to their lowest level in late January since April 2009. While they have rallied back recently, China’s insatiable appetite for copper has tumbled as their aggressive building and construction phase slows. Weak copper demand signals global growth is likely to remain weak, which will keep global central banks with their hands on the easing button, which should be a long term positive for Gold.

Stock market correlation affects Gold

When things were getting super dicey for US equities in January, Gold was rallying. The standard view is that these two markets are inversely linked: when the stocks go up, the yellow metal dives, and vice-versa. Why do we often see a negative correlation between the stocks and the shiny metal? When traders go into defensive mode, they may prefer Gold as opposed to riskier stocks. The saying goes that this metal is a safe-haven, so naturally it’s correlated inversely (or, at least, uncorrelated) to stocks during a serious financial turmoil.

The stock market has rebounded but volatility seems to be here for the long haul. These economic factors make it tough to quantify the true impact on the price of Gold. It’s difficult to decide which input should be weighted the most.

By combining Intermarket Analysis with a Neural Network process, VantagePoint quantifies these relationships. The end result is the output of an accurate forecast of where Gold is heading.

To see this technology in action watch the video below. You’ll see recent market forecasts for Gold as well as stocks that are impacted and influenced by the price of Gold.

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How to Profit From FANG Stocks

February 3rd, 2016 by VantagePoint Software

FANG

Love him or hate him, Jim Cramer is in your face. Whether he’s screaming at you while you’re drinking your morning coffee watching CNBC or you’re reading his bold proclamations on the TheStreet, Cramer’s impact on how we view and discuss the stock market can’t be discounted. Cramer coined the FANG acronym back in 2014 and it is now rolling off the tongues of all the financial TV talking heads.

In case you’ve missed out, FANG is a snappy acronym for Facebook (FB), Amazon (AMZN), Netflix (NFLX) and Google (GOOG), the quartet of turbocharged technology businesses that have a tremendous impact on the stock market.

While the fab four were major drivers behind the rally in early 2015, the FANG stock’s performance in 2016, along with the rest of the stock market, has been mixed. Valuations can be tricky for these kinds of companies. They are investing tons of money for future growth, so current earnings don’t really paint the whole picture.

Considering this new market paradigm, traders can no longer buy and hold the FANG stocks and hope for double-digit returns. That doesn’t mean there aren’t profitable opportunities from both the long and short sides of the market. Today’s traders who use market forecasting tools like VantagePoint can have confidence getting into trending trades in both directions.

Trading FANG with VantagePoint

FANG stocks netflix

In this NFLX chart, VantagePoint forecasted a downward move when the predicted moving average crossed below the traditional moving average all the way back in mid- December 2015. Many traders were still loving the FANG stocks, especially NFLX at that time, but VantagePoint traders could have potentially been short from $125 all the way down to $85.

Watch the video below to see a full analysis and breakdown of VantagePoint’s forecast for NFLX since early December.

For traders who are uncomfortable with shorting the FANG stocks or have account restrictions, all four stocks have very liquid options contracts with very high open interest and tight bid ask spreads.

If the current market volatility is taking a bite out of your FANG investing profits, you can bite back having VantagePoint’s market forecasting tools for two way trading opportunities.

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