| A | B |
|---|
| The Volatility Index (VIX) | (1) is the fear Index (2) it measures the sentiment of the market in terms of how much fear is felt |
| VIX | (1) measures fear by measuring how many put options are being sold (2) created by the Chicago Board Options Exchange (CBOE) |
| Put Options | (1) are sells (2) shorts (3) if traders are selling the positions, why are they shorting the mkt? |
| Risk On Currencies | (1) CAD -- tied to oil (2) AUX -- tied to gold (3) NZD -- tied to agriculture and exports |
| Equities are risky | (1) has a risk on profile (2) they can go to zero value quickly |
| Indices are risky | (1) they are stocks (2) they are held up by stocks |
| Bond Debt | (1) are risk off products (2) if gov't owned, they are low risk (3) they can be safe havens (4) if owned by companies, they're high risk |
| Risk off Currencies | (1) USD (debtor nation) (2) CHF (creditor nation) (3) JPY(creditor nation) (4) don't tie these currencies to a commodity d/t being safe havens |
| Safe Haven Assets | (1) doesn't give very much yield (2) they don't fall in value too much (3) used to store money until market risks dissipates |
| YEN | (1) is seen as secure because Japan is known as a creditor nation |
| Creditor Nation | (1) invest more in the world than the world invests in them (2) are those that lends more money to the world than it borrows from it |
| EUROZone Creditor Nation | (1) Germany & Switzerland have been the main creditors |
| In Asia | (1) Japan (2) mainland China (3) Hong Kong (4) Singapore are the main nations investing in increasing amounts in other countries (5) China, Japan & Singapore have all been increasing their international investment positions, with China in particular buying large amounts of U.S. Treasury bonds (6) In North America, only Canada is a creditor nation |
| Deflationary Pressures | (1) people will get more for their money across the board (2) the money in you purse has strengthened in comparison to where it was yesterday (3) if the currency in your pocket is stronger then that will resonate in the charts |
| what is defation | (1) too many goods chasing too few dollars (2) a general reduction in the price of good and services in an economy (3) currency is strengthening |
| Inflation | (1) is when demand for things gets out of balance with the supply for things (2) the value of the dollar in your pocket doesn't go as far as it did yesterday |
| If tariffs between US & China ended | (1) it would be risk on |
| The 4 different money markets are | (1) bonds -- the largest in the world (2) commodities -- thing we use(3) forex -- the most liquid (4) currencies |
| Currencies | (1) Foreign Exchange Market (2) everything has to come back into the forex emarket |
| currencies | (1) forex market |
| Equities | (1) riskier assets (2) usually react to changes in sentiment (3) tend to appreciate in risk on environ (4) depreciate in risk off environ |
| beta currencies | (1) risk on sentiment VIX below 20, NZD, AUD, CAD are supported (3) tend to be pressured in risk off environs (4) supply & demand are important |
| Gold | (1) traditional safe haven VIX above20 (2) tends to be pressured during risk on sentiments (3) supported in risk off (4) risk on buy commodities except gold |
| Commodities that are traded are sorted into 4 categories | (1) metal (2) energy (3)livestock (4) meat (5) agriculture |
| Currencies | (1) forex exchange |
| Four different money markets are | (1) currencies (2) bonds (3) commodities (4) equities |
| Ways to invest in commodities | (1) futures contract (2) options (3) exchange-traded funds (ETFs) |
| Equities | (1) stocks/cash market (2) futures market indexes (DOW US3D) (3) 24hr global view of risk and money flow (5)highest liquidity time of day is when US & London markets overlap |
| Relationships | (1) invers between bonds & commodities (2)invers between USD & the various commodities mkt, particularly gold (3) US mkt declines; gold mkt goes up |
| CRB | (1) Commodity Research Bureau Index (2) shows inverse relationships |
| Commodity Research Bureau Index | (1) if CRB is selling; USD by itself, is buying |
| Bonds | (1) tell which way the interest rates are heading (2) a trend that influences stock prices |
| Commodity Prices | (1) tell us which way inflation is headed (2) which influences bond prices and interest rates |
| US Dollar | (1) largely determines the inflationary environment (2) influences which way commodities trend |
| Overseas Equity Markets | (1) often provide valuable clues to the type of environment the US market is a part of |
| USD | (1) goes the opposite way of the commodities mkt (2) they have an inverse relationship |
| QE | (1) used to stimulate the economy (2) caused decreased value to US dollar |
| Commodities | (1) are known to be risky investment propositions because their market (supply & demand) is subject to natural disasters |
| Dovish | (1) expansionary monetary policy (2) quantitative easing |
| Hawkish | contractionary monetary policy (2) QT |
| Expansionary Policy | (1) increase the money supply to stimulate the economy (2) create inflationary pressure |
| Contractionary Policy | (1) decrease money supply to slow down the economy (2) create deflationary pressure |
| Interest Rate Hike | (1) causes slower inflation (2) lower economic growth |
| Interest Rate Cut | (1) causes faster inflation (2) higher economic growth |
| Interest Rates Action | (1) number one tool of the central bank during normal market conditions to control money in the economy (2) rates are increased to slow inflation (contractionary) (3) rates are decreased to encourage economic growth (expansionary) |
| Reserve Currencies | (1) United States Dollar (USD) (2) Canadian Dollar (CAD) (3) New Zealand Dollar (NZD) (4) Australian Dollar (AUD) (5) Great Britain Pound (GBP) (6) Euro (EUR) (7) Swiss Franc (CHF) (8) Japanese Yen (JPY) |
| Deflation | (1) general reduction in price of goods & services in an economy (2) too many goods chasing to few dollars |
| What Caused The Value To Change? | (1) sentiment (2) supply & demand (3) scarcity & abundance |
| Demand Side of Change Cause | (1) consumer confidence (2) employment levels (3) wages (4) interest rates (5) changes in international exports (6) changes in government spending |
| Supply Side of Change Cause | (1) raw material costs (2) government regulation (3) overhead expenses (rent, transportation, licensing for intellectual property, labor, utilities, etc) |
| The Four Currency Markets | (1) Bonus (2) Forex (3) Equity (4) Commodities |
| Equities Risk On | (1) stock ownership in a company (2) not protected -- value can go to zero quickly |
| Bond Risk Off | (1) IOU if government backed |
| Bonds Backed by Company | (1) risk on for the same reason for stock ownership in a company |
| Inverse Relationship | (1) stocks (2) bonds |
| Commodities/ Real Goods | (1) risk on for all except metals (risk off (1) gold (2) silver |
| Futures Risk On | (1) CAD (2) NZD (3) AUD |
| Futures Risk Off | (1) USD (2) CHF (3) JPY |
| the supply of products/services has not changed, but the demand for those same amount of good services has increased | (1) therefore the manufacturer will increase prices instead of producing more goods/services? |
| When is inflation a good thing? | (1) If you have a lot of debt, inflation on is good for you. You can pay off your debt with devalued dollars; with dollars that are worth less than when you created the debt. |
| Cost Push Inflation | (1) costs decreased for goods d/t excess products (2) companies push the cost of production on to the consumer (3) company does not take all excess expenses on themselves; they push it/pass it on to the consumer |
| Demand Pull Inflation | (1)low supply forcing higher prices |
| Asset Inflation | (1) sudden increase in exports which causes an under evaluation of the currency for the export |
| When the availability of a currency changes | it's value changes |
| When a currency is very available and money is flowing | this weakens the currency (2) a devaluation of the currency occurs |
| If the light switches on -- VIX switches on | you are looking for risks; high yield risks |
| If the light switches off -- VIX switches off | (1) you're looking for low risk products (2) looking to get out of high risk positions and into safe havens |
| S&P | is the benchmark |
| S&P 500 | 500 companies |
| VIX above 20 | risk off -- buying puts options |
| VIX below 20 | risk on -- selling (2) puts down |
| What is a vector? | (1) a rapid change in price in any direction |
| Vector | (1) can be seen as 3 candlesticks (3 pushes) via image or 1 big candlestick Note: these make up the legs of the M & W we are looking for on the charts. (2)an aggressive or swift push in the opposite direction of the trend. It entices traders to take a position in the wrong direction |
| Currency & economy are different animals | (1) they have an inverse relationship (2) what’s good for the economy is not necessarily good for the currency i.e., inflation is good for the economy, but a lot of money flowing into the economy cheapens & weakens the currency |
