Nasdaq passed 7,000 points for the first time in history

The Nasdaq Technology Index has passed the psychological limit of 7,000 points for the first time in its history on Monday. The other two indexes, S&P and Dow, rose to new record highs. The hopes that tax cuts will be the Christmas gift to investors were at the core of stock market growth.
The broad S&P 500 rose to nearly 2,700 points, from which the border only separated a few points.
The US indices enjoyed an almost year-round rally this year, focusing on their best performance in 2013.
Twitter's stocks were among the highest rising for the day, adding over 8%. This happened after JPMorgan predicted double-digit growth in social networking users next year.

Long bitcoin is the most crowded deal on the market

Bad news for the owners of bitcoin. Currently, a long position in the cryptocurrency is determined by the financial institution Bank of America Merrill Lynch as the most overcrowded deal. And usually, such deals do not end well...
Managers of large institutional investors do not really help, buying bitcoins, unwilling to miss the trades of the year.
The fact that the bitcoin is the most crowded deal on the market at the moment is based on a survey of 203 managers, $558 billion worth of management.
It is not a big surprise that everyone is going to buy bitcoins, given the astronomical rise in the cryptocurrency. It rose by 1,800% against the US dollar since the beginning of the year, with its market capitalization already more than $300 billion.

Gold rose

Gold appreciated yesterday as a result of continuing uncertainty as to when tax reform will be presented. This weighs on the dollar and initiates a rise in precious metals.
The dollar index was down, which was a good news for gold. Traditionally, the price of gold is in reverse correlation with the level of the dollar.
If the tax reform sees the world, it is possible for the price of gold to fall, but only for a moment.
Expectations that the tax reform will trigger economic growth, and this will lead to inflation and appreciation of the dollar, generally discourage gold from more serious growth, commented market observers.
The spot price of gold added 0.5% to 1 261.30 dollars per ounce. Metal futures added 0.6 percent to $1,264.40 per ounce.
For the next year, it is expected the price of gold to drop by between $25 and $50, due to good prospects for the US and world economy, Fed's rising interest rates, and the potential rise in the dollar.
In the first part of 2018, however, potential concerns and correction of the stock markets may bring some strength to the noble metal.

Here's why the US indices are overestimated (2)

The S&P 500 is currently trading at 25% above its 200-day moving average, and the RSI index is at a level of 83.4 points or far out of overpriced territory.
The premium above the 200-day average is close to that of 2007.
Therefore, according to some analysts, the market is currently extremely volatile on news that could lead to sales.
Experts who forecast a potential downward correction in the short run are becoming more and more.
Whether it will continue the rally next year will depend mainly on banks, energy and healthcare companies.

Here's why the US indices are overestimated (1)

Today, US indices rose to new historical records, following expectations for a recent introduction of US tax reform. Now, however, it is entirely possible that they are in overpriced territory.
Indeed, the broad S&P 500 index is close to the next psychological limit of 2,700 points. And this level is only 4% of the consensus opinion of the analysts for an index value of 2,800 points by the end of the year.
In other words, most of the market participants do not count on a significant increase in the index next year. By comparison, if the current S&P 500 index ends the year at current level, it would be an increase by over 20% for the year.
On the other hand, investors are good at following the "buy news, sell rumors" principle. That is, a very good time to get out of the market could be - the adoption of tax reforms. This may give the final impetus to the indexes that will lead them to new peaks that will last for a long time.

Are tax reliefs not fully calculated in stock prices?

After months of delays and postpones, tax cuts are getting closer to reality. They, to a large extent, were at the base of the growth of US indices, leading them to new historical records.
But JPM, the US investment bank, has good news for the investors - the growth is not fully reflected in stock levels.
In a letter to investors on Monday, bank analysts said tax cuts were reflected in just 50 percent of stock levels. This gives space for the index to rise to 2,800 points by the first months of next year, according to analysts.

Emerging markets indices catch up with their currencies

Rising indices in emerging markets have finally made them catch up to a certain extent in the growth of currencies.
The relative performance of the MSCI Inc. index since the beginning of 2007, before the financial crisis, shows that the growth of the indexes lags behind that of the developing currencies by only five percentage points, compared to 30 points in the beginning of 2016.
And while the shares and currencies of the developing countries are moving toward their best year since 2009, the rise in the indices is more than three times that of the currencies.
Shares performed better than currencies with more than 20 percentage points in 2007, before falling over six times more than currencies in the next year of financial crisis.
The indices offset some of their lag in 2009 and 2010, but the gap widened again in 2015 to begin narrowing in the next 2106.
Since the end of 2006, the MSCI Emerging Markets Index has risen 23%, comparing to 28% rise of the MSCI Emerging Market Currency Index.
Concerns that the Fed may continue with the policy of increase in interest rates may reduce cravings for high-risk assets and strengthen the negative correlation between the currencies of developing countries and the interest rates on US government bonds.

A mysterious trader continues to bet for volatility

The mysterious trader, who has become famous for his big bets on volatility, continues to get into the media. The final bet for a volatility would have brought him $260 million.
The US indices, which are at record levels in their history, have initiated a record low volatility. Indeed, the leading US indices have a record long period of no adjustment of 3% or more.
Exactly two months, following a vicious bet on VIX that the volatility index would rise to December, expectations were continued until January.
Or the position was the rolled-over for the first month of the year, with a potential for profits of the fascinating $260 million.
In the preferred scenario in which the VIX index rises but remains below 25 points before December, the trader would initiate a profit of $260 million.
If the index rises above $35, however, the trader will start losing money. The spot of the volatility index was trading momentarily at 13.57 on Friday.
Information about the trade was revealed before the Bloomberg financial magazine by a trader familiar with the deal.
Market observers comment that the bet is probably not speculative, but aims to insure a large institutional investor's portfolio from potential volatility in the markets.

The dollar appreciated by more than 10,700% against this currency

The rates with which Venezuelan bolivar falls against the US dollar are dizzying. Only in the past month the US currency has appreciated 135% against the bolivar. Since the beginning of the year, the appreciation is 2 958% or more than 30 times.
If we expand, however, the time horizon of up to two years, things seem quite startling. The US dollar has risen by 10,768%. To realize the appreciation, we can only say that the popular amongst the bankers cryptocurrency bitcoin has risen by only 2 500% over the same period.
The problems for Venezuela are well known. The country is in one of the biggest crises in its history, and hyperinflation is a phenomenon lasting checked in by the intervention of the government of President Nicolas Maduro. The decision by the central bank to print money as much as it is needed greatly facilitates hyperinflation in the country.
Announced plans of the president earlier this month to restructure foreign debt, only added to the financial difficulties for the country and led to chaos in the capital Caracas.
The Bolivar was traded at 96.794 dollars by the end of last week after it started the week at 82.186 per dollar. For comparison, the officially announced dollar rate is 10 dollars.
The situation in Venezuela is so out of control that some converts to Maduro began to talk about something unthinkable until recently - the liberalization of market policies.

US indexes with new records

At the end of the week, US indices rose to new record highs. The Dow Index passed the 24,000 limit for the first time in its history on Thursday when the market was opened.
A new historical maximum of more than 2,650 points has marked the other major US index - the broad S&P 500. Apparently nothing can stop the US indices on their way up...
Now the question is whether the experts' forecasts for growth of the broad index to 2,800 points for the next year are not too conservative. This level appears to be getting closer and far from a distance of 10% from the current values ​​of the indicator.
It is entirely possible that the indicator growth will continue until the end of the year, especially when the tax reform is announced. Apparently, the strategy to delay the announcement of this reform has been positive, as investors wait to buy US stocks and indices while they wait.