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US Market Technicals Ahead (29 Mar – 2 Apr 2021)Focus on the upcoming week will be on US employment report that due to release on Good Day (a market holiday), with forecast slated on signs of a further gradual job recovery. Market will also be watching on President Joe Biden’s infrastructure plan, which he is expected to unveil in Pittsburgh on Wednesday, along with OPEC+ meeting which could offer guidance into the coalition’s production plan from May. Continued push and pull of the market rotation that favors cyclicals over growth and tech stocks is expected to continue into the next quarter. Here’s what you need to know to start your week. S&P500 (US Market) The benchmark index ($SPX) maintained its resilience by closing +1.67% (+65.3 points) for the week. It is important to note that $SPX averted from further losses on Thursday, after a technical rebound at 3,860 level which was highlighted last week. With $SPX remaining above its 20DMA & 50DMA and at a higher low trend formation, there are substantial traction for the index to breach 4,000 all time high level this week. The immediate support to watch for $SPX remains at 3,860 level, a break on the pivoted level from recent Thursday. Resistance to watch for $SPX is at 3,989 level, a continuation to break its all time high level. US Employment Report (March) The March jobs report is scheduled for a morning when the stock market is closed for the Good Friday holiday, but bonds will trade half a day, ending at noon. The labor market is expected to show signs of recovery following the approval of President Biden’s relief package and as several states ease coronavirus-induced restrictions amid the rapid pace of vaccination. Infrastructure Plan President Joe Biden is expected to unveil details of his $3 trillion to $4 trillion infrastructure plan on Wednesday in Pittsburgh, but strategists say it is too soon to say what form the plan could take or how large it will be in its final form. The plan is expected to span multiple years, and Democrats are expected to seek tax hikes to pay for it. Rotation The rotation into cyclicals and value stocks is expected to continue into the next quarter. For the first quarter so far, energy and financials were the best performers, up about 33% and 16.5% respectively. Tech was up 1.7%, but it remains a better performer than utilities and consumer staples.
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by jfsrevg
US Market Technicals Ahead (22 Mar – 26 Mar 2021)For this upcoming week, Investors will be watching the scheduled testimony by Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen on Tuesday and Wednesday before Congress, as 10-year bond yield reached its highest in 14 months. Personal consumption expenditures inflation data will also be released at the end of the week. Before his joint testimony to Congress with Yellen, Jerome Powell is scheduled to speak Monday at the start of a four-day conference organized by the Bank for International Settlements on innovation in the digital age. Here’s what you need to know to start your week. S&P500 (US Market) The benchmark index ($SPX) traded the week to a all time high of 3,989, before returning all its gain with a weekly loss of -0.77% (-30.2 points) for the week. Optimism about the prospects for the economic recovery has accelerated a shift into bank and other value stocks, powering the $SPX to record levels during the week. With $SPX remaining above its 20DMA & 50DMA and at a higher low trend formation, the immediate support to watch for $SPX is at 3,860 level, a break on the convergence of both major moving averages. Resistance to watch for $SPX is at 3,989 level, a continuation to break its all time high level. Powell, Yellen testimony Powell and Yellen testify before the House Financial Services Committee on Tuesday and the Senate Banking Committee on Wednesday where they will discuss the health of the U.S. economy and the importance of fiscal and monetary stimulus in the recovery from the pandemic. Financial markets have diverged from the Fed on the possible future outlook for monetary policy, sending yields on U.S. Treasuries to their highest in more than a year. Investors are pricing in a first rate hike sooner than the Fed currently expects, amid fears that the economy could overheat as it recovers from the pandemic given President Joe Biden’s massive stimulus package combined with the Fed’s easy money policy. U.S. economic data On the data front, durable goods orders and the personal income and spending reports are set to be the highlights of the week, along with figures on new and existing home sales. The housing data together with the personal income and spending figures, which includes the PCE deflator, the Fed’s preferred inflation measure, will probably show weakness, due to the impact of severe winter storms on economic activity in February. However, economists expect the slump to be short-lived. The U.S. is also to publish the latest revision of fourth quarter 2020 GDP, which was last reported at an annualized 4.1%.
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by jfsrevg
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US Market Technicals Ahead (15 Mar – 19 Mar 2021)We have officially mark the start of daylight saving time (DST), as North America have moved ahead an hour on Sunday 14th March. US and Canadian markets will trade one hour earlier than usual in Asia time. The Federal Reserve’s highly anticipated monetary policy meeting will be the big deal for global financial markets in the week ahead. Last week, Fed Chairman Jerome Powell said that the economic reopening could boost inflation temporarily and that the US economy was going to start to see stronger employment in the next few months. Still, the Fed chief also said that the central bank was still a long way from its inflation and employment targets. Investors would be eager to hear if the central bank will take any measures to bring bond yields down, which saw the 10-year yield surge above 1.60% to the highest in a year on Friday. Besides the Fed meeting, U.S. retail sales data will be in focus for further indications on the strength of the reopening rebound. Meanwhile, in earnings, there are just a few big names set to report their latest financial results, with global economic bellwether FedEx ($FDX) and athletic apparel giant Nike ($NKE) likely to draw the most attention. Here’s what you need to know to start your week. S&P500 (US Market) The benchmark index ($SPX) continued its recovery to end up +2.63% (+100.8 points) for the week, gaining traction to recapture its all time high at 3,965 points, a mere 20 points (0.5%) away. At the current junction, $SPX have managed to trade back above its 20DMA & 50DDMA, along with a negation of its short term trendline resistance highlighted last week. Immediate resistance for $SPX is currently at 3,965, a continuation to break its all time high level. Federal Reserve Policy Meeting The Federal Reserve is expected to leave its benchmark interest rate unchanged at the conclusion of its two-day policy meeting at 2:00PM ET (18:00 GMT) on Wednesday, keeping it in a range between 0.0%-0.25%. Perhaps of greater importance, Fed Chair Jerome Powell will hold what will be a closely watched press conference 30 minutes after the release of the Fed’s statement. Investors will be looking for clear signs that Powell and fellow policymakers are concerned about the current spike in yields amid mounting inflation expectations. U.S. Retail Sales The Commerce Department will release data on retail sales for February on Tuesday at 8:30AM ET (12:30 GMT). The consensus forecast is that the report will show retail sales fell 0.6% last month, following January’s surge of 5.3%. Excluding the automobile sector, core retail sales are expected to drop 0.1%, after climbing 5.9% in the preceding month. Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy. Consumer spending accounts for as much as 70% of U.S. economic growth. FedEx, Nike Earnings The fourth-quarter earnings season has all but wound down, however results are expected from a number of big names in the week ahead, with most of the focus falling on FedEx, and Nike, which both report Thursday after the close. Other notable companies reporting this week include Dollar General ($DG), Crowdstrike ($CRWD), Coupa Software ($COUP), PagerDuty ($PD), and Sundial Growers ($SNDL).
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by jfsrevg
US Market Technicals Ahead (08 Mar – 12 Mar 2021)President Biden’s $1.9 trillion coronavirus aid bill was passed by the Senate on Saturday and sent back to the House for approval which will take place on Tuesday. Investors will be closely watching the progress of this aid bill through Congress this week against a backdrop of concern over what such a large stimulus package could do to inflation and interest rates. Market participants will also be focusing on U.S. inflation figures with a report on the consumer price index due out on Wednesday and the producer price index scheduled for Friday. In Europe, the European Central Bank will hold its latest policy meeting on Thursday. Here’s what you need to know to start your week. S&P500 (US Market) The benchmark index ($SPX) reversed most of its losses in late Friday to end up +0.83% in a sign some bargain-hunters may have already swooped in after a bumpy week. This comes after $SPX decline over -3.55% in three consecutive session. At the current development (since last week’s highlight on the structural breakdown of $SPX) Price Action remains below 20DMA Price Action remains below 50DMA Price Action is resisted at lower band of 4 Months uptrend channel Further increase of implied volatility since 16th Feburary 2021 $SPX has a short term establishment of Lower Highs and Lower Lowers for a short term consolidated downtrend channel of 100 points range At the current junction, $SPX remains bullish at a mid-term higher low. Further signs of weakness in this correction will require $SPX to breach its immediate support level at 3,720. Immediate resistance for $SPX is currently at 3,915, a breakout of its short term downtrend channel. Stimulus: a double-edged sword? The pandemic relief package will give a powerful boost to the economic recovery and to the stock market, but optimism has been offset by fears over rising inflation and interest rates. Investors have taken the recent run-up in bond yields – which has propelled the benchmark 10-year Treasury yield to levels not seen since before the pandemic – as a sign of potentially damaging inflation expectations. But U.S. Treasury Secretary Janet Yellen indicated Friday that higher long-term Treasury yields were a sign of expectations for a stronger recovery, not of increased inflation concerns. U.S. inflation figures Investors will be closely watching U.S. inflation figures on Wednesday and Friday amid worries over the potential implications of rising price pressures. Last week Fed Chairman Jerome Powell said that even if prices jump as anticipated this spring, “I expect that we will be patient,” and not change monetary policies that need to remain supportive until the economy is “very far along the road to recovery”. ECB meeting Thursday’s ECB meeting is the main event for the euro zone after extended lockdowns in the first quarter. Policymakers will assess the damage to economic growth against a background of a vaccination rollout that is struggling to gain traction, particularly compared with similar efforts in the UK and the U.S. ECB head Christine Lagarde will also announce the bank’s new quarterly forecasts at the post policy meeting press conference. Besides the ECB meeting, the euro zone will release figures for January industrial production on Friday, which are expected to contract.
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by jfsrevg
US Market Technicals Ahead (01 Mar – 05 Mar 2021)Even after President Biden’s $1.9 trillion pandemic aid bill narrowly passed the House in the early hours of Saturday, the shakeup in stocks prompted by the rapid run up in Treasury yields looks set to continue to be a major focus for markets in the coming week. Investors will be focusing on Friday’s employment report, which is expected to show that virus restrictions kept a lid on jobs growth in February. Appearances by several Federal Reserve speakers, including Chairman Jerome Powell will also be closely watched. Meanwhile, earnings season is wrapping up, but retailers will still be reporting, with Target ($TGT), Kohl’s ($KSS) and Nordstrom ($JWN) due to publish figures on Tuesday, followed by Costco ($COST) on Thursday. Here’s what you need to know to start your week. S&P500 (US Market) The S&P 500 Index ($SPX) remains in red for the week, furthering its correction by -2.37%. The selling of individual equities was most felt on two separate occasion; on Monday 22nd February ($SPX: -0.56%), and Thursday 25th February ($SPX: -2.60%). It is important to note there were several technical structure being broken on the highlighted Thursday itself; Price Action breakdown on 20DMA (3rd Attempt in last 3 months) Price Action breakdown on 50DMA (2nd Attempt in last 2 months) Price Action breakdown on 4 months Trend Channel (2nd Attempt in last 4 months) Breakdown of immediate support at 3,870 with volume exceeding past 50 trading sessions average by +87%. Increasing implied volatility on the week of selloff. On the flip side, every attempted breakdown on the confluence of above technical structure is accompanied with an immediate, and substantial recovery on $SPX (ie. 1st February to 5th February $SPX: +5.35%). At the current junction, $SPX remains bullish at a higher low. Further signs of weakness in this correction will require $SPX to breach its next classical support level at 3,700, for the first significant lower low to be established since September 2020. It remains wise to capitalize on the potential investment opportunities with a prudent risk level. Immediate resistance for $SPX is currently at 3,830, a support turned resistance level. Tug of war between stocks, rising bond yields The shift into energy, financial and other stocks set to benefit from the economic reopening has accelerated, while rapidly climbing Treasury yields are pressuring tech stocks that have led market gains for years. Tech stocks are particularly sensitive to rising yields because their value rests heavily on future earnings, which are discounted more deeply when interest rates go up. A dovish sounding Fed together with expectations for more stimulus have propelled yields higher and fueled concerns about inflation and the two-track market looks set to continue, at least in the short team. February jobs report With President Joe Biden’s $1.9 trillion coronavirus relief package advancing to the Senate Friday’s nonfarm payrolls report for February will show how the recovery in the labor market is faring. Government data late last week showed that initial jobless claims unexpectedly declined to their lowest in three months, indicating that the slowing infection rate is allowing the labor market to gain some traction. Retail sales also rebounded in January. Economists are expecting the U.S. economy to have created 165,000 new jobs in February, after January’s 49,000 increase. But the winter storms that swept across the South may complicate the picture. Powell speech With the rapid climb in Treasury yields roiling the stock market investors may be hoping for Fed officials to address the selloff in Treasuries. Fed Chair Jerome Powell is set to speak about the economy at an online event hosted by the Wall Street Journal on Thursday. So far there has been little sign of anxiety among Fed officials about higher Treasury yields. Last week Powell said the move higher was the result of a stronger economy but added that the rate of economic recovery has slowed in recent months and reiterated that monetary policy will remain easy for some time to come.
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by jfsrevg
US Market Technicals Ahead (22 Feb – 26 Feb 2021)The US is releasing the second estimate of Q4 GDP, alongside durable goods orders, personal income and outlays, and PCE price index. Elsewhere, the Eurozone business survey and the UK jobs report will be keenly watched Now, with rising yields, the chances the Fed will begin lowering its asset purchases, reducing liquidity, are starting to increase. Investors are beginning to worry that rising yields could provide competition to stocks. Here’s what you need to know to start your week. S&P500 (US Market) The S&P 500 Index ($SPX) was the only major US benchmark that closed in the red, (-0.2%) on Friday. It erased the earlier gain at the start of February with -0.94% for the week. The imminent correction is a technical play out of the Bearish Divergence pattern that was highlighted over the last two weeks. With current implied volatility of $SPX remaining low in the week of correction, the technical structure of $SPX uptrend channel remains intact. Any signs of further weakness in this rally will require the first break of immediate classical support at 3,870.
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by jfsrevg
US Market Technicals Ahead (16 Feb – 19 Feb 2021)U.S. stock markets will be closed on Monday for the Presidents Day holiday. Investors will be waiting for the FOMC minutes due Wednesday for further clarification on the next monetary policy steps in the holiday shortened week ahead and while earnings season is starting to wind down there are still some big names left to report. On the economic calendar, U.S. retail sales figures and industrial production for January will be the main events to watch. Market participants will also be closely following Thursday’s hearing before the House Financial Services Committee on the recent trading turmoil in GameStop ($GME) and other heavily shorted stocks and bitcoin is closing in on $50K. Here’s what you need to know to start your week. S&P500 (US Market) The benchmark index ($SPX) continues its February gain with +1.27% for the week. This rally further established a new all time high for $SPX at 3,941 level. At the current junction, $SPX exhibition of a Bearish Divergence pattern that was highlighted last week remains in play; as the daily rally of $SPX is accompanied with a volume exhaustion. The first signs of weakness in this rally will require a re-test of all-time high resistance turned support at 3,870. 1. Stimulus President Joe Biden’s $1.9 trillion Covid-19 relief package will move to the next stage during the week, with the House Budget Committee pulling all the components into a single piece of legislation. Biden’s proposed spending package, coming on top of $4 trillion enacted by his Republican predecessor, Donald Trump, would have important consequences for a global economy that is slowly and unevenly recovering after last year suffering its worst downturn since the Great Depression of the 1930s. On Friday, U.S. Treasury Secretary Janet Yellen urged G7 finance leaders to provide more fiscal support to promote a robust and lasting recovery, telling them “the time to go big is now.” 2. Earnings The S&P 500 ($SPX) and Nasdaq ($QQQ) closed at record highs on Friday as expectations for new fiscal aid from Washington to help the U.S. economy recover bolstered risk appetite. Investors will be looking ahead to earnings from Walmart ($WMT) on Thursday for insights on the strength of consumer spending. Investors will also be looking at earnings reports from hotels, cruise lines and other businesses that have been badly hit by the pandemic for indications of which could be the first to bounce back as it recedes. Hilton Worldwide Holdings ($HLT) and Hyatt Hotels ($H) are expected to release their results on Wednesday, followed by Marriott ($MAR), Norwegian Cruise Line ($NCLH) and TripAdvisor ($TRIP) on Thursday. 3. Economic data The highlights of the U.S. economic calendar will be data on retail sales and industrial production for January, which are expected to show that the economy got off to a strong start in 2021. Investors will also be watching Thursday’s figures on initial jobless claims with the recovery in the labor market remaining slow. Labor market woes strengthen the case for President Biden’s proposed $1.9 trillion recovery package, which is under consideration in the U.S. Congress. Meanwhile, minutes from the Federal Reserve’s January policy meeting are due out on Wednesday.
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by jfsrevg
US Market Technicals Ahead (1 Feb – 5 Feb 2021)A big week for earnings, including reports from Amazon ($AMZN), Alphabet ($GOOGL), Exxon Mobil ($XOM) and Pfizer ($PFE). Stimulus negotiations in Washington and the first jobs report of 2021 (January) will all be major events to watch in the coming week, but they are likely to be overshadowed by the standoff between retail investors and Wall Street hedge funds. Investors will be watching closely to see if the short squeezes driven by retail investors continue in what could be a bumpy week for stocks. Here’s what you need to know to start your week. S&P500 (US Market) The benchmark index ($SPX) ended the January flat, with a weekly loss of -3.47%. The correction have breached the multi-month long Trend Channel, along with 20SMA support convincingly, with the month’s highest transactional volume witnessed on 28th January. Additionally 50SMA was also breached on Friday session. This pullback affirms the technical Bearish Divergence between price rally and volume decline highlighted last week. At the current junction, $SPX remains trading above 3,660 level, a classical support level established at the start of 2021. The breach of this support will see S&P500 trades at a cumulative loss for 2021. 1. The big squeeze Last week saw retail investors using Robinhood and other apps drive a frenzied rally in shares of GameStop ($GME), AMC ($AMC) and other companies championed on social media platforms including Reddit’s WallStreetBets, that had been heavily shorted by hedge funds. U.S. stock indexes suffered their biggest weekly fall since late October as the short squeezes saw hedge funds sell stocks to cover their losses, despite positive earnings results from market heavyweights like Apple ($AAPL) and Microsoft ($MSFT). Some market watchers are concerned that the wild rally may be a fresh sign of overexuberance that could foreshadow volatility for the broader stock market, while others believe it is more of a sideshow. 2. Earnings With quarterly earnings season in full swing, market participants are looking at whether companies can justify high valuations. “By and large the surprises have been positive, even more so than typical and by and large companies are showing positive operating leverage where they are able to grow earnings a little bit faster than they are able to grow revenue,” said Ellen Hazen, portfolio manager at F.L.Putnam Investment Management in Wellesley, Massachusetts. Tech giants Alphabet ($GOOGL) and Amazon ($AMZN) are both due to report after the market close on Tuesday, followed by Qualcomm ($QCOM), Snap ($SNAP) and Pinterest ($PINS) later in the week. Some big names in the closely watched healthcare sector are also to report, including Pfizer ($PFE), GlaxoSmithKline ($GSK), AbbVie ($ABBV), Biogen ($BIIB), Gilead Sciences ($GILD), Merck ($MRK) and Bristol-Myers Squibb ($BMY). 3. January jobs report The January nonfarm payrolls report will give markets the first look at the health of the labor market inherited by U.S. President Joe Biden. The report is expected to show a slight uptick in hiring after the economy shed 140,000 jobs in December (mostly from restaurants and bars), but more substantial improvements are unlikely to come until there is a broader re-opening of the economy. The unemployment rate is expected to remain unchanged at 6.7% – almost twice the level that it was just prior to the pandemic. Federal Reserve Chairman Jerome Powell last week said that the economic recovery hinges on the progress of the vaccination rollout. “There’s nothing more important to the economy than people getting vaccinated,” Powell said.
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by jfsrevg
US Market Technicals Ahead (25 Jan – 29 Jan 2021)As we enter into the last market week of January, investors will have lots to focus on in the week ahead with a series of major U.S. companies including Apple ($AAPL), Microsoft ($MSFT), Facebook ($FB), and Tesla ($TSLA) all reporting earnings. The Federal Reserve is to meet, and markets will get their first look at fresh GDP growth figures in the final quarter of pandemic ravaged 2020. Elsewhere, the IMF is set to release its World Economic Outlook and growth figures from Germany, Mexico and Hong Kong will also be in the spotlight. Here’s what you need to know to start your week. S&P500 (US Market) The benchmark index ($SPX) recovered from the earlier week of losses, posting a weekly gain of +2.23%. The rebound have reaffirm the significance of 20DMA supporting the rally since 4th November 2020. The significance of 20DMA towards $SPX daily current price action is also observed in the various rebound highlighted in the chart (arrow), particularly thrice in December 2020 and once in January 2021. As $SPX continues to creep up with a higher high at every bi-weekly swing, it is observed that volume is diminishing at every of this top establishment – essentially plotting out a technical bearish divergence between price rally with volume decline. At the current junction, the $SPX remains firmly within the congested 3 months trend channel. The immediate support to watch for any further weaknesses is at 3,660 level. This level would see $SPX breaking down the highlighted trend channel convincingly, along with the first break of a minor classical support established on the opening week of 2021. 1. Earnings heat up After leading markets higher for most of 2020, tech stocks took a backseat late last year amid a rotation into value stocks which were boosted by hopes for the economic recovery promised by vaccines. That shift has stalled in recent days as investors weighed lackluster outlooks from big banks and a blockbuster quarterly report from Netflix ($NFLX) that saw shares climb 17%. Microsoft ($MSFT) reports after the close on Tuesday, followed by Apple ($AAPL), Facebook ($FB) and Tesla ($TSLA), which recently joined the S&P 500, a day later. The results could push the combined market cap of the FAANGs – Facebook, Amazon ($AMZN), Apple, Netflix and Google-parent Alphabet ($GOOGL)- back above their all-time peak of $6.16 trillion. 2. Fed meeting Fed policymakers will hold their first meeting since Democrats last week took control of the Senate, which has increased the likelihood that new President Joe Biden’s proposed $1.9 trillion stimulus package could be passed. The Fed is not expected to make any policy changes at the conclusion of its two-day policy meeting on Wednesday and is likely to reiterate that the economy is still far from its goals of full employment and 2% inflation. There is some speculation among investors that increased government spending to boost the recovery could prompt the Fed to begin tapering its massive bond-buying program as soon as the end of this year. But Fed Chair Jerome Powell said earlier this month that “now is not the time to be talking about exit.” 3. U.S. GDP data Market participants will get their first look at how the U.S. economy performed in the fourth quarter from Thursday’s figures on gross domestic product after already weaker consumer spending numbers and falling employment in December. After a record 33.4% annualized rate of growth in the third quarter, economists are forecasting growth of 4.0% in the final three months of the year. The economy is expected to have contracted by 3.5% for the full year. The economic calendar also features data on durable goods orders on Wednesday, initial jobless claims numbers on Thursday and personal income and spending data on Friday.
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by jfsrevg
US Market Technicals Ahead (19 Jan – 22 Jan 2021)The holiday shortened week will see Joe Biden inauguration as the 46th president of the United States on Wednesday with investors waiting to see how his plans for stimulus relief and tackling the pandemic will roll out. Janet Yellen’s confirmation hearing as the U.S.’s first female Treasury secretary is set to take place on Tuesday. The fourth-quarter earnings season continues next week, with companies such as IBM ($IBM), Netflix ($NFLX), Intel ($INTC) and P&G ($PG) reporting their results. The European Central Bank is to hold its latest policy meeting against a background of renewed lockdowns to contain the pandemic. Meanwhile, a raft of PMI data from the U.S, Eurozone, Japan, and the UK on Friday will lay bare the state of the global economy at the start of 2021. Fourth quarter and full year GDP data out of China on Monday could show that it was the only major world economy to have expanded in 2020. Here’s what you need to know to start your week. S&P500 (US Market) The benchmark index ($SPX) underwent a correction of -1.98% (-76 points), with majority of the losses experienced on Friday after market missing the estimates of US. Retail Sales for December (-0.7% MoM vs 0%. MoM). With the above, the highlighted Bearish Hanging Man candlestick pattern last week is currently in play. At the current junction, the $SPX remains firmly within the congested 2 months trend channel, with 20DMA supporting the rally since 4th November 2020. The significance of 20DMA towards $SPX daily current price action is also observed in the various rebound highlighted in the chart (arrow), particularly thrice in December 2020 and once in January 2021. The immediate support to watch for any further weaknesses is at 3,660 level. This level would see $SPX breaking down the highlighted trend channel convincingly, along with the first break of a minor classical support established on the opening week of 2021. 1. Biden bump? Joe Biden will be inaugurated as the 46th U.S. president Wednesday, taking over the leadership of a country ravaged by the pandemic and facing deep socio-economic divisions. Biden has announced a $1.9 trillion stimulus package, which includes $1,400 stimulus checks but this may prove a double-edged sword for investors, bolstering optimism over the outlook for the economic recovery while raising worries over how the U.S. will afford it. The S&P 500 has risen in the first 100 calendar days of eight out of the last 10 presidential terms, but Biden’s first 100 days may be more fraught than those of his predecessors. He needs to stimulate the economy quickly, but the narrow Democrat majority in Congress means the size and timing of the package remain uncertain. 2. Earnings Investors will be anxious to see whether upcoming earnings results validate expectations for a strong rebound in 2021. U.S. stocks are at record highs, boosted largely by optimism that the vaccine rollout will allow for a recovery, while hopes of more fiscal stimulus have also underpinned gains. Earnings reports for the last quarter of 2020 will get underway in earnest with the release of results from companies including Bank of America ($BAC), Goldman Sachs ($GS), Netflix ($NFLX), Charles Schwab ($SCHW), Procter & Gamble ($PG), United Airlines ($UAL), Intel ($INTC) and IBM ($IBM). Earnings for S&P 500 companies are expected to decline 9.5% in the final quarter of 2020 from a year ago, but are expected to rebound in 2021, with a gain of 16.4% projected for the first quarter, according to IBES data from Refinitiv. 3. ECB meeting The ECB is to hold its first meeting of 2021 on Thursday. Policymakers announced extra stimulus in December, but the economic outlook has been clouded again by the discovery of new Covid-19 strains and the relatively slow pace of the vaccination rollout. Cause for concern? Not so, comments from Christine Lagarde suggest. The ECB chief predicts recovery as COVID subsides, seeing the glass as half-full, not half-empty. Germany’s economy too is cause for optimism, shrinking by a less-than-expected 5% in 2020. But prolonged lockdowns will hurt. Against this backdrop, markets will want the ECB to signal its commitment to using the full firepower of its 1.85 trillion-euro ($2.24 trillion) emergency bond-buying scheme – something on which policymakers appear to be split.
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by jfsrevg
US Market Technicals Ahead (11 Jan – 15 Jan 2021)Market will likely be focusing on the prospects for a bigger stimulus package after Friday’s employment report showed the U.S. economy shed jobs for the first time in eight months in December amid a resurgence of Covid-19 infections. A further snapshot of how the economy is performing will be presented with upcoming Friday’s release of data on inflation and retail sales. Additionally, earnings season will get underway with major US banks set to release fourth quarter earnings results on Friday. Here’s what you need to know to start your week. S&P500 (US Market) The benchmark index ($SPX) continued with a 3rd consecutive week of rally, closing with a modest gain of +1.83% (68.6 points) for the opening week of 2021. This rally have continued to establish a new all time high level at 3,826 points, also breaking out of a 9 weeks trend channel congestion that was highlighted over the weeks. With plenty of eutrophic moves in highly speculative themes over the past weeks (i.e. Electric Vehicles, Bitcoin, Alternative Energy and Biotechnology), there were observation that some of the previously market-leading mega cap companies are not in participation of the week’s rally. Several of the higher profile companies, particularly the FAANG, remain either in a consolidated triangle chart pattern, or a box ranged rectangular chart pattern. Additionally, $SPX traded lower on the first two days of the year, with the month long highest sessional volume observed on Tuesday alone. At the current junction, the 20DMA have been nicely supporting $SPX in rally since 4th November 2020. The significance of 20DMA towards $SPX daily current price action is also observed in the various rebound highlighted in the chart (arrow), particularly thrice in December 2020 and once in January 2021. There is also a significant pick up in trading volume since the start of 2021, and it is imminent for market volatility to further uptick towards a 50 points ATR14 range within the next two weeks. The immediate support to watch for any potential weaknesses is at 3,780 level, a confirmation retracement for Friday’s Bearish Hanging Man candlestick pattern. Top 3 things to watch this week: 1. Stimulus hopes Stocks closed at record highs on Friday, despite data showing the U.S. economy suffered its first net loss of jobs in eight months in December, after Biden said his economic relief package will be in the trillions of dollars. Biden said his administration’s economic package will also include unemployment insurance and rent forbearance. The package is due to be unveiled on Thursday. 2. Economic data, Fed speakers The U.S. is due to release data on consumer price inflation on Wednesday, while retail sales figures for December are due out on Friday. Inflation is expected to tick slightly higher, but remain subdued, while retail sales are expected to have been dampened by the surging virus. Fed Chair Jerome Powell is to speak on Thursday. The U.S. central bank has indicated that interest rates will remain on hold near zero through at least 2023 and said the path of the economy will depend significantly on the course of the virus. 3. Banks kick off earnings Big banks will kick off the U.S. corporate earnings season in earnest with JPMorgan (NYSE: $JPM), Citigroup (NYSE :$C) and Wells Fargo (NYSE: $WFC) posting fourth-quarter results on Friday – the first S&P 500 companies to report for the last quarter of coronavirus-stricken 2020. Some investors expect company earnings and economic data to play a greater role in moving stock prices this year.
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by jfsrevg
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