Next week's trader's playbook - 18.11 - 22.11.2019

Financial markets this week have set record after record, with a serious FOMO effect set in, sending the bears into full hibernation. Low interest rates in the US are beginning to take effect, attracting not only domestic but also foreign, fresh capital. It's just that no one wants to lose this rally! The economic factor is one-on-one, but in addition to the more affordable stocks due to low interest rates and the weak US dollar, the trade war is a key element in supporting the emerging absolute euphoria and greed.

Hope can be a very powerful psychological weapon, and maintaining it regularly before an important political event, for example, in a presidential election, can be contagious but dangerous. The inflation of the indexes is in fact supported by the hope, against the background of not so shiny economic data. What lies "under the hood" is still unconvincing, despite the partial rays of light especially in consumption and the labor market. And Phase I Deal, as Kudlow says, is coming "very soon." The Federal Reserve is officially on pause and we would not expect any specific action by the end of the year.

Will the market endure "very soon" next week?

Any diversified price action, sectoral divergences and correlation indices are totally ignored by seemingly only market buyers. This is definitely the highlight. It is quite possible that everyone will be surprised at the weekend and next week, or be postponed once again. What expectations can we have?

Keeping the tensions up to the last moment, we will expect the stock markets to continue their appreciation, reaching ever higher maximum and steep extremes. The US dollar in this case will continue to recede, and overall risky assets will continue the winning streak. The yen, franc and gold will be expected to continue to fall in price as cash flow from defensible assets to cyclical, risky assets continues. By maintaining the positive sentiment that the trade war will end, we will expect oil to continue its recovery as well as industrial metals.

The mood for next week will again be completely driven by trade talks, but regardless of the lightweight calendar, there are a few important events to note.

Monday - warm-up day, nothing significant.

Tuesday, the Asian session begins in the latest RBA meeting report. In the pre-market phase of the US session, we will expect the start of new homes and building permits.

Wednesday, Japan's trade balance will cast a shadow over the yen. China's interest rate will be the next observed event during the Asian session. Before the US trade begins, Canada's CPI will also release US national oil reserves. 2 hours before the close of trading, we will expect the latest report from FOMC.

On Thursday, the market will focus on the latest report from the ECB-BoE meeting, initial requests for US aid, sales of existing homes and the Philadelphia Production Index.

And if you think that on Friday, the pace will decrease, on the contrary. From the East, Japan will meet us with inflation figures, after which traders in Europe will monitor GDP and production in the PMI services sector as well as in the Eurozone. We will expect the same from the United States, and from Canada retail sales. Shortly after the start of the state session, data on Michigan's consumer sentiment will be released.

Trade carefully.

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