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10.01.2025
Dollar Strength Is a Given

The very first slice of statistical data on business activity from the United States this year reaffirmed an almost clear irrelevance and even potential hurtfulness of any immediate steps towards further lowering interest rates on U.S. Dollar-nominated loans from a purely economic point of view. The ISM Manufacturing PMI (Purchasing Managers Index), based on polls compiled from executives in over 400 industrial companies in late December, came out at 49.3 points vs 48.4 a month ago and 48.2 in average analyst estimates. This showed that a slowdown was occurring at a slower or even insignificant pace, keeping inflation risks on the table, especially when the price component increased from 50.3 to 52.5 with a similar rate of increase in new orders. Meanwhile, non-manufacturing PMI came out at 54.1 on Tuesday, compared to 53.5 in analyst polls and 52.1 a month ago, with a contribution of business activity components even jumped to a surprising 58.2 against declining from 57.2 in November to only 53.7 in December.

In other words, the economy is not cooling, and is rather in a positive acceleration, which in turn may lead to a recovery in wage rises and therefore to higher demand pressure, which may be reflected soon in higher producer purchase and output prices. Doubts of the major U.S. financial regulator are understandable at this point after its triple rate cut from 5.5% to 4.5% in 2024. The Federal Reserve (Fed) will now pay closer attention not only to consumer inflation measures, but also to producer prices (PPI), which is just going to be released on coming Tuesday, January 14. And so, this will become the next reference point in the further U.S. Dollar’s trajectory. The Greenback index (DX) is picking up steam since reaching a new record high for the last two years at 109.35, with its temporary pullbacks being limited by a 107.50 support area that previously served as a strong multi-month technical resistance.

In this context, the British Pound (GBPUSD) updated its lows since November 2023 to touch 1.2237 on January 9, EURUSD feels quite comfortable within a range between 1.02 and 1.0450, which corresponds to its 2-year bottom, and having a bias towards a possible further decline. The Aussie (AUDUSD) is one-step away from taking the path for a breakthrough to a quite unknown territory of its 5-year lows that were last time recorded when the initial outbreak of the Covid-19 happened.

A varying extent of the American Dollar strength is surely data dependent as the market community is eagerly waiting for the U.S. job data later today. The average expectations on new Nonfarm Payrolls is just a bit above 150,000 vs 227,000 in early December 2024 and nearly 160,000 for the previous four months on average. However, any value close to 150,000, plus or minus 20,000, or any higher number, may be considered as another positive sign for the Greenback, following the ADP national employment report which contained only 122,000 on Wednesday. The oppressive nature of average hourly wage in its dynamics, +0.4% each time from September to December, also matters.

The protective quality of investing more funds into the U.S. Dollar and U.S. bonds against tariff threats is switched on anyway, based on more than a 95% chance for the Fed to keep rates on pause at its January 29 meeting, according to CME's FedWatch tool. Federal Reserve officials never go against a well-established market consensus, when it is almost unanimous, for not to rock the boat of relative market trend stability. The central bankers' reluctance to shift the Fed fund rates lower before mid-March, if not early May, continues to play in favour of short-term speculative transactions on the foreign exchange market, bearing in mind all the listed currency instruments. Some intraday volatility may take place, especially in the case of appearing an abnormal two-digit non-farm value, but not a change in overall direction.

09.01.2025
VeChain Is Suffering on Rising Borrowing Costs

VeChain (VET) has fallen 12.7% this week, trading at $0.0445, underperforming the broader cryptocurrency market. Bitcoin (BTC), the leading cryptocurrency, has declined by 5.6% to $93,220, with bearish momentum building as it approaches key support at $89,000-$91,000. This decline is largely attributed to tightening monetary conditions in the United States, which continue to weigh on risk assets. Investor confidence is further shaken by significant net outflows from spot BTC-ETFs, which lost $583 million on Wednesday, marking the second-largest single-day outflow on record.

If BTC falls below the critical support level of $89,000-$91,000, VeChain is likely to extend its losses, with prices potentially declining another 10% to $0.0400. A sustained drop in BTC could push VET even lower, towards $0.0300. Conversely, a strong rebound in BTC prices to the $100,000 level could drive VET back up to $0.0500, representing a recovery of approximately 12% from current levels.

06.02.2025
Perfect As the Enemy of Good

Here is the problem, which is nearly at a primary school level. A simple logical puzzle. A shopping street has two grocery stores. One of the stores is much more popular than the other. But both shops are full of customers every day. So both shops are raking in money. Sales output of a more popular store roughly doubled over the past year, from $14.5 billion to $30.8 billion - oh, yes, it's a very big shop - which led to tripling of its market value. Meanwhile, sales in the second store have already grown by 69%, albeit by its lower standards, namely from $2.3 billion to $3.9 billion. Please draw a conclusion, by what percentage the market value of the second store could increase, assuming that professional appraisers are rather objective. It seems ridiculous, but the correct answer is that the second store's market value lost 35% within the same year, and it even dropped by 50% from its peak price of the last spring. Holy Cow! That was a story of some failed expectations of mine. Since the big store is, of course, Nvidia, and the small one (and also, in fact, quite a prosperous marketplace) is Advanced Micro Devices (AMD). And their goods are not essential food, but chips for artificial intelligence (AI) related data centers, which are also in high demand.

Moreover, AMD shares reportedly tumbled 10% additionally on February 5, only because the firm's AI chip revenue failed to be exactly in line with elevated projections of Wall Street analyst pool, which somehow bet on a 80% pace of data centre growth to as much as $4.15 billion YoY. Okay, one might say that Nvidia's "store" sells 8 times more chips that everyone needs. And even remember that Nvidia chips are of better quality, that Nvidia occupies about 80% of global chip market share. Again, Nvidia's last quarter will be finally counted only by February 26, when Nvidia's financial report is scheduled, a month later than in AMD's case. Like most large investment houses, here I have provided growth metrics regarding the major data center segment, which is a proxy for the AI playground, where AMD struggles to compete with Nvidia. Well, AMD CEO Lisa Su admitted that her company's data center sales in the current quarter may go down about 7% from the just-ended quarter, but this announcement was exactly in line with an overall expected decline. Is it really such a big deal that AMD shareholders have to experience pain from seeing their chosen stock falling to a 14-month low, with further need for a 100% rally just to match last year's record prices?

The same Lisa Su declined to give the particular forecast for the company's AI chips, but she said that AMD expects "tens of billions" of dollars in sales "in the next couple of years". And I see no reason to doubt her words. AMD CEO added that the firm is now working to compete against Broadcom (AVGO) in collaborating with its customers like Meta and Microsoft to create custom AI chips for their purposes, as Broadcom helps its partners to design their own chips, contrary to mostly "off-the-shelf" processors by AMD and Nvidia. They know their weaknesses as opportunities for strengthening to work in that direction, so what's wrong with the market's adequacy of perception? Perfect Nvidia is the enemy of good AMD, according to the crowd's opinion. Besides AI chips, AMD is also one of the largest providers of personal computer chips. Until recently, this point was generally the source of their main income. Consumers continue to buy new PCs, which also can handle generative AI tasks, by the way.

Actually, AMD has been the only loss-making company in my large portfolio for a long time, so it even makes me smile now. At least, because it is only a matter of time before AMD's pogo stick ultimately uncoils to come loose. Record annual revenue and earnings have to entail recovering to record market value eventually. I am not sure this will happen in the first half of 2025, even though AMD forecasts its revenue rise between $6.8 billion and $7.4 billion for the current quarter, with the market consensus midpoint being slightly lower at $7.04 billion. If you don't believe me then analysts at Stifel are of the opinion that AMD is well positioned for AI compute and "It is likely" that some of its customers "are waiting for 325/350 systems, which should drive a much stronger second half". Again, the median estimate by the Wall Street's analyst pool was now declined to about $150 per share vs $166.5 before the last downside move, yet even $150 sounds much better compared to $112 on closing price this Wednesday or an intraday low at $106.56 during the last trading session. Anyway, there is a strong technical and psychological support zone near the round figure of $100, from where AMD stock had begun its cool ascension in late 2023.

14.01.2025
Merck Becomes Interesting to Be Added to a Portfolio

Merck & Co (MRK) stocks have shown signs of becoming a compelling buy opportunity. Over the past six months, the stock has been in a downtrend, declining 29.8% to $94.50 per share. However, since mid-November, MRK has demonstrated a reversal of momentum, rebounding by 10.0% to reach $104.87 on December 5. Following a brief pullback and consolidation period, the stock has retested the downtrend resistance and appears poised to continue its upward trajectory.

With prices currently positioned to target $110.00, this represents a potential 9-10% upside from the present levels. Setting a stop-loss at $93.50 aligns with a prudent risk management strategy, providing protection against further downside while allowing for upside potential. The recent consolidation phase further supports the case for a breakout, making this an attractive moment to consider initiating or adding to a position in MRK.

14.01.2025
Tezos Is Seen Hodling above $1.200

Tezos (XTZ) has declined slightly by 0.2% this week, trading at $1.249, following Bitcoin’s (BTC) drop to $89,158, which triggered widespread altcoin sell-offs due to concerns of a potential further decline in BTC to $80,000. However, Bitcoin managed to hold above the critical support level at $89,000-$91,000, offering some relief to the broader crypto market.

Speculation about a shift in U.S. trade policy has provided additional support to crypto assets. Reports suggest the new U.S. administration may pursue a gradual increase in tariffs rather than an abrupt hike, which could help alleviate inflationary pressures and lead to a less aggressive monetary stance from the Federal Reserve.

This development is a positive signal for the cryptocurrency market and may help Tezos maintain its position above the key support level of $1.200.

Rafael Quintana Martinez
Money Manager de alto rendimiento, con una sólida formación académica, profesional y de campo. Más de 9 años de experiencia especializada en el comercio de mercados financieros internacionales. La devoción, la fiabilidad, la responsabilidad y la ética impulsan mi vida. Actualmente me desempeño como Analista Senior para Metadoro. https://metadoro.com/es https://mx.investing.com/members/contributors/235587671/ https://es.tradingview.com/chart/EURUSD/rE9gVips/
Maker Went Flat with a Possible Downside

Maker (MKR) is lagging behind the crypto market. The altcoin missed the October crypto rally and lost around 11.0% to $1357. It has added 2.0% in November, while Bitcoin prices rose by 8.0%. It is worth reminding that MKR prices soared by 142% from June to October. This is much above what the majority of tokens performed during the October rally, but the absence of an upside for MKR during the last month itself is a sign of weakness. Its prices are moving sideways between $1250 and $1500 during the last two months. This flat run pushed the altcoin out of the uptrend, which is alarming. Whales are leaving the network too. Internal activity metrics are at high level so far, and prices may move towards $1500 per token. But there is simply no fuel for its prices to go further up. Lastly, the MKR was mentioned in the news, was when the Hong Kong Virtual Asset Consortium (HKVAC) added the token to its indexes. The token added 6.0% a month ago on the news. This is not enough now to support its prices.

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Rafael Quintana Martinez
Money Manager de alto rendimiento, con una sólida formación académica, profesional y de campo. Más de 9 años de experiencia especializada en el comercio de mercados financieros internacionales. La devoción, la fiabilidad, la responsabilidad y la ética impulsan mi vida. Actualmente me desempeño como Analista Senior para Metadoro. https://metadoro.com/es https://mx.investing.com/members/contributors/235587671/ https://es.tradingview.com/chart/EURUSD/rE9gVips/
OMG is Unlikely to Go Up Much Further

The OmiseGO (OMG) token has lost 6.5% to $0.65 since the beginning of the week. The token has performed several upsides and even went to the $0.80 this week, the highest since June 24. However, the token failed to hold above $0.75 resistance and went into correction. Its prices tested the support of an uptrend for a third time to reach its recent highs. Further upside moves are unlikely as the Bitcoin rally is over, while the project itself doesn’t generate sufficient drivers for the prices to continue up above 4.5 month highs. OmiseGo network metrics are far from being hot. The number of active addresses in the network is rising steadily but the share of whales is decreasing. This could be interpreted as a deterioration of the belief in the project perspectives. So, the support could break down after prices test is for a third time. Then a decline would become a primary scenario.

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Timely Profit Taking in Google

I suggested it was a good moment to buy Google stocks late October. The tech giant just lost nearly 9% of its market value despite its solid quarterly report, due to a purely technical correction from somewhat overbought positions. As I was not ready to consider a lack in revenue growth from the cloud computing segment as a real reason behind a situational move down in Google stock prices, when this piece of its business structure showed 22% YoY compared to higher crowd's expectations. My idea was to bet on a quick recovery of the stock from a $125-127 area to above $140 at least. Artificial intelligence bots, as well as strong return from Google's search engine and YouTube formed a sound basis for more than three weeks of a gradual rebound as it happened to $138.70 at the market's close on November 16.

The distance covered by Google stock since late October is much longer than the rest of the path to my first target area. So, I feel reasonable to proceed with a phase of partial profit taking. Balancing a risk/reward ratio is an important thing in every trading strategy for not to miss your profit. This Friday, or maybe the start of the next week, looks to be a high time for this pleasant task. However, a new all-time peak on Microsoft share price in combination with an active engagement of both tech companies, Microsoft and Google in AI-related agiotage allows me to think that the ultimate target for Google stock is also higher than its historical levels. Therefore, I am planning to keep nearly one third of my current buy positions in Google for a longer-term investment horizon.

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Buying Dips in Walmart

Walmart stock (WMT) suddenly plunged by nearly 6% on a pre-market trading after the giant discount store chain said it cannot rule out moderate damage from additional pressure on consumers wallets ahead of upcoming holiday season, which usually plays an important final chord for annual results. The warning partially offset a solid profit and sales beat for the latest quarter, which has been freshly released. Urgently buying dips in Walmart would be my common sense based response to the crowd's up-to-the-minute revaluation. After all, Walmart not only posted its better-than-expected numbers in both top and bottom lines, with $1.53 of EPS vs $1.50 a year ago, on a $160.8 billion of revenue vs $152.8 in the same quarter of 2022, but also raised its annual sales and profit forecast. I don't think that a couple of cautious comments from executives, like that shoppers were slowing purchases at the end of October, in contrast to brighter spending patterns earlier in the quarter, or like "there's just a flag that maybe there's reason to be a little more cautious on the consumer given some of what we've seen", could be a solid reason to doubt the multi-month uptrend in Walmart shares.

The stock already tried the same trick of falling down and then bouncing to even higher peaks after its August report, when its market price fell from $162 to $155 for a while, and then in two days of early October, when it quickly tested a technical support area between $151.5 and $155, with further coming back to move to a new all-time high at nearly $170 in mid-November. This could be the same pattern now, I suppose, bearing in mind Walmart's size (5,300 stores in the U.S.) and its ability to keep prices low for the economy class shopping despite inflation, as such a life-style is becoming popular even for higher-income consumers who want cheaper options for food and consumables, and sometimes for apparel or home goods too. Shopper visits already rose 3.5% in Q3, even though householders are "very choiceful and using discretion", waiting for promotional events like Black Friday and Cyber Monday, Walmart's chief financial officer John Rainey recalled, adding that his company would "outperform relative to others in this holiday period". I believe it would do so.

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