It was another bloody day on the markets today. Well, yesterday was more bloody and today the markets did not crash as hard as yesterday but things are not good. Ebintu bizibu.
The Uganda shilling closed at 3459 on the US dollar, 5005 on the British pound, 3905 on the Euro, 34 on the Kenyan shilling and 2493 on the Canadian dollar. As much as it looks like the Uganda shilling has stabilized, remember that a year ago it was at 2500 or so on the US dollar. The worry here is what will happen after the elections. We will definitely see inflation shoot up but the other worry is the new government, do they have any idea how broke Uganda is?
Coffee Arabica closed at $3.01 per kilo. It fell some 3.2% but remember it had jumped up a bit so people do take out some profits.
Coffee Robusta closed at $1.63 a kilo. It fell 2.5%. You need to know that people who trade commodities like coffee do not buy 1 ton (1000 kgs), they buy a container 22 tons (22,000 kilos) so a change of $0.05 per kilo means $1,100 on one container (for Robusta). For Arabica, we saw a change recently of $0.25 per kilo. That is a whopping $5,500 on one container.
Gold closed at $1,188 per ounce. A tiny fall of $2.88 but it had risen up far too much in a short time someone needed to take out some of their profit.
Oil fell 7.07% losing $2.34 and closing at $30.77 a barrel. It has more downside and should recover around the last low at $27.50. This is today’s chart. Every time we approach the 50 day moving average (MA) and back off it, we fall down. Because that blue line is the resistance we have to close above in order to continue going above. If you look lower on the chart, there is no line there so we have no support except some white candles from last week and the week before which could help us hold our heads above the water.
Shanghai is doing rather well. It lost only 18 points and the chart does show that it is turning upwards.
Hong Kong is back at its usual game. No change. I think it is waiting for Shanghai to tell it to jump.
Tokyo — Wait. Would you just believe that! The Nikkei dropped hard like a hot potato. This is the ugliest chart of today. Some 5.4% losing 919 points? Was there an earth quake on that Island or what?
Frankfurt threw in the towel. It fell 1.11% (100 points). This chart is as ugly looking as the one for Tokyo. No support in sight. Just free falling.
Paris – okay, I give up. The sky is falling. The CAC fell 1.69% losing 69 points. The Tokyo chart now has good company in the DAX and the CAC).
London – fell too and followed a similar pattern to Frankfurt (DAX) and Paris (CAC). I had no idea that Europe even pays attention to Japan. And to imagine that Japan pulled a negative interest move, why are they not celebrating?
Toronto fell 2.02% (253 points). Remember what I keep mentioning that the TSX is oil heavy so when Oil drops, the TSX drops. A stock index is usually many companies with a weighted average of how much they constitute in that index. Toronto tends to have many oil companies weighted a bit more than others. This is why it reacts to oil.
Dow Jones Industrial fell 0.08% (only 13 points). The fall is nothing given that it stayed within the last hammer candle it formed. This is good because it gives us hope that the markets will rise.
Standard and Poor fell 0.07% (1.23 points). In fact it only hesitated from going up likely because the other friends were misbehaving. It looks like it is turning down but it remained within two hammers. Not terribly worrisome.
NASDAQ fell off the chart. A whole 15 points. This might not look like much but the chart shows that it ran away from yesterday’s closing level. It had fallen a lot harder but recovered somewhat and still closed way down. The Nasdaq tends to be Tech heavy and yet if the Dow and S&P make a move down, it falls because you kind of need money in order to buy the techies.
In the news, Obama signed the Electrification Act for 50 million Africans to get electricity. Kyoka USA also. If they insisted on accountability, they would find that a lot of money go missing. — http://www.theinsider.ug/obama-signs-africa-electricity-initiative-into-law/
Iran has not put out its 500,000 to 1 million barrels of oil on the market yet. We will see the insanity of this when they do start putting those barrels on the market.
Russia and Syria are bombing ISIS a lot and Aleppo might fall down any of these days. Then Iran and Israel are at their usual and Saudi Arabia warns the world to stay out of their affairs. Okay, good luck with Yemen and ISIS.
Canada has decided to get out of Syria and only provide training. Well, we are taking in 25,000 refugees and where to put them is in the works. So why continue to bomb them only to have to help them?
There are many reasons why markets tend to move violently (today you are getting a bonus).
- Irrational Exhuberance (Greenspan). When the crowds think that things are looking good and they all buy and push the stocks up. Or when they all think things are falling and they all sell.
- The fear factor – what if things get worse, then some people get out prematurely, selling what they have or covering what they borrowed by buying (shorters).
- Unexpected events. For 9/11, I watched all the tickers on my computer screens freeze up and when I swtiched on CNBC, the second plane went through another building. Many of us were wiped out. Never trade with money you cannot afford to lose.
- Margin calls. You need to understand to understand this concept and I had written about it earlier. This is one of the biggest reasons why you see markets drop or shoot up. http://www.theinsider.ug/primer-on-stock-market-turbulence/
Martha Leah Nangalama
The writer is an IT analyst for an oil company and has traded stocks, options and forex. All my opinions are mine and mine alone. They do not reflect on my employer or any organisation I am affiliated with.