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US Market Technicals Ahead (25 October – 29 October 2021)Investors will be preparing for the busiest week of earnings season, with focus turning to reports from several tech giants including Apple ($AAPL), Alphabet ($GOOGL), Amazon ($AMZN), Microsoft ($MSFT) and Facebook ($FB). There are also some key economic reports in the coming week, including a first look at U.S. third quarter GDP (Advance GDP) on Thursday. Optimism is growing that after some large concessions, Democrats will get Senators Manchin and Sinema on board with President Biden’s economic package. The US economic outlook next year is still looking bright as pent up demand and more stimulus will spur growth. The European Central Bank will be holding its latest meeting against a background of persistent inflation pressures. Evergrande has bought another week to deal with the looming debt crisis casting a shadow over the world’s second largest economy and the Bitcoin rollercoaster rolls on. Here’s what you need to know to start your week. $SPX (S&P 500) The benchmark index $SPX continued its recovery with a gain of +1.64% (+73.53 points), closing the week at 4,544 level, a new all time high closing. The immediate support to watch for $SPX this week is at 4,450 50DMA level. Big tech earnings Four out of the five FAANG stocks are set to report earnings during the week – Facebook ($FB) is set to report on Monday, followed by Google parent Alphabet ($GOOGL) on Tuesday, while Apple ($AAPL) and Amazon ($AMZN) are reporting on Thursday. FAANG’s stellar growth and heavy weighting in the S&P 500 has given them an outsized impact on the broader equities market, propelling markets higher for over than a decade. Strong earnings results could help tech stocks broaden the lead they have established over value stocks in a market tug of war, with stock investors caught between a strong economic recovery and surging commodity prices on one side, and rising Treasury yields and inflation on the other. U.S. GDP Data on Thursday is expected to show the extent of the headwinds that hit the U.S. economy in the third quarter. Economists are forecasting that GDP growth slowed to 2.8% from 6.7% in the previous three months. The impact of the delta variant, along with rising prices, supply chain strains and labor shortages contributed to the soft patch in growth, but those effects should dissipate in the fourth quarter. Other economic data to watch during the week includes reports on durable goods orders on Wednesday, initial jobless claims on Thursday and personal income and expenditures on Friday. Friday’s data includes the core PCE price index, rumored to be the Federal Reserve’s favorite inflation measure. Economic data will be closely watched as it is coming just before the Federal Reserve’s November meeting the following week, where the central bank is expected to announce plans to begin cutting back on asset purchases, an important first step towards eventual rate hikes. ECB meeting The ECB is to hold its next policy meeting on Thursday amid tensions between officials over how long an inflation surge in the euro area is likely to last and whether the bank should tweak monetary policy as a result. At its last meeting in September policymakers deferred a decision on bond purchases to December, but since then euro area inflation has surged to a 13-year high amid supply bottlenecks and soaring energy prices. The Fed is likely to start tapering in November and the Bank of England has indicated that interest rate hikes are coming soon so the question is, will the ECB follow? Thursday’s post policy meeting press conference with ECB head Christine Legarde will likely give investors a clue into December’s decision. Evergrande buys time Reuters reported Sunday that China’s Evergrande had resumed work on more than 10 projects in six cities, including Shenzhen. The report came after the company appeared to avert a default last week, when it made a last-minute bond coupon payment, but there have still been no reports on progress about a comprehensive restructuring of the company’s massive debt pile. China’s second-largest property developer is mired in a debt crisis, with more than $300 billion in liabilities. The crisis at Evergrande has spread across the broader Chinese property sector, which economists say makes up around 30% of the economy, leading to a string of default announcements, rating downgrades, and slumping corporate bonds. Bitcoin volatility Bitcoin hit an all-time high of $67,016 on Wednesday, rising above April’s record propelled by bets the first U.S. bitcoin futures exchange traded funds would pave the way for more money to pour into digital assets. The new ETFs track bitcoin futures rather than the cash price. The new peak came after the world’s largest digital currency had struggled in recent months, briefly dipping below $30,000 as China cracked down on digital currencies. Bitcoin advocates believe the onset of ETFs will support prices. Others tout the digital currency as a hedge against inflation and say that is a bigger factor in its rally, but sceptics say it is more of a symptom. Either way, bitcoin volatility looks set to continue.
SP:SPXLong
by jfsrevg
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US Market Technicals Ahead (16 August – 20 August 2021)Investors will be waiting for the FOMC minutes due Wednesday for further clarification on the next monetary policy steps to direct the market in the week ahead. At its July meeting, the Federal Reserve left monetary policy unchanged, but said asset purchases could start being reduced soon amid signs of a solid recovery in the US labor market and temporary inflationary pressure, and despite the lingering threat of the Delta variant. On the economic data front, latest U.S. retail sales data, along with a flurry of retail earnings will also keep the focus on consumer strength. Several large retailers including Walmart ($WMT), Target ($TGT), Macy’s ($M), Lowe's ($LOW) and Home Depot ($HD) will be reporting quarterly results. Chinese data will give a snapshot of how the economy is faring as the delta variant of the coronavirus bears down and New Zealand looks set to be one of the first of the world's advanced economies to raise interest rates in the pandemic era. Here’s what you need to know to start your week. S&P500 (US Market) The S&P 500 ($SPX) and Dow Jones Industrial Average ($DOW) hit fresh all-time highs during the week as both indexes capped off modest gains for the week. The benchmark index $SPX ended the week gaining a further +0.63% (+28 points), closing at 4,466 level. $SPX remains above its multi-month long trend channel that was earlier highlighted. Every break out of $SPX trend channel resistance has been met with a rejection (6 times since 2021). It is also important to note of the diminishing volume observed, reflecting a short term price-volume divergence in this run up. The immediate support to watch for $SPX this week is revised up to 4,400 level; a retracement towards its minor resistance-turned-support, and its current 20DMA level. Federal Reserve minutes On coming Wednesday the Fed will release the minutes of its July meeting, which will be scrutinized for policymakers’ views on when to start scaling back the Fed’s monthly bond purchases, as well as their outlook on the economy. Last month Fed officials declared the recovery intact despite the rise of the delta variant and since then the stronger-than-forecast July jobs report prompted several policymakers to suggest the tapering of asset purchases might start sooner rather than later. U.S. retail sales The U.S. economy is growing strongly but the spread of the delta variant remains a headwind so upcoming economic data will provide a fresh insight into consumer demand after a report on Friday showing that consumer confidence fell to its lowest level in a decade. Consumer spending accounts for around 70% of U.S. economic output. Investors will be eyeing Tuesday’s U.S. retail sales data to see whether the shift in spending from goods to travel, leisure and services, which aren’t reflected in retail sales, continued in July. Economists are forecasting a 0.2% fall, amid another expected steep decline in auto sales. Other reports on the slate include industrial production on Tuesday and initial jobless claims Thursday as well as the Fed’s Empire State manufacturing index on Monday and the Philadelphia Fed manufacturing survey on Thursday. China recovery China, which is dealing with its largest outbreak of Covid since the early days of the pandemic, has imposed mass testing and travel restrictions, crimping economic activity. Several Wall Street investment banks, including Goldman Sachs last week cut their China growth forecasts for the rest of the year. Data on retail sales, industrial production and fixed asset investment all due out on Monday will show how the economy fared in July. The numbers are expected to slow, adding to concerns that the recovery in the world’s second-largest economy is losing momentum. The recovery from the pandemic has been uneven in China, with export demand driving most economic growth, while domestic demand has returned more slowly. New Zealand rate hike The Reserve Bank of New Zealand bank meets on Wednesday and looks set to become the first major economy to raise interest rates since the pandemic hit as its red-hot economic recovery continues. Super-strong jobs data have cemented expectations of a hike, which would be New Zealand's first since mid-2014. This is in sharp contrast to 2020, when rates were slashed 75 basis points to 0.25% and a move below zero became a real possibility.
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by jfsrevg