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$SPX (S&P 500) vs $RSP (S&P 500 Equal Weight) Market Technicals (Rally Cycle Count: Day 4 of 25) $SPX (S&P 500) vs $RSP (S&P 500 Equal Weight) – (Net High/Low +70) $SPX posted a solid gain of +2.28% (+105.13 points), erasing the losses experienced in the earlier week. With $SPX closing at 4,725 level, it remains below its all time high level that have tested four times over the past 8 weeks. $RSP broke out of its downtrend line with a pop on the last trading session, minimising the divergence reflected in both the indexes that was highlighted in the previous week. With both $SPX and $RSP also breaking out of its Anchored VWAP (AVWAP) resistance at 4,640 level, below average trading volume is observed on the subsequent two trading session during the course of the week; as market activity thinned towards the Christmas Holiday. The immediate support to watch for $SPX this week remains at 4,600 level, creating a box range support beneath the confluence of major Moving Averages (10D, 20D and 50D).
AMEX:RSPLong
by jfsrevg
The Big Picture: Renewed pandemic fear, S&P 500, Oil demand outlThe big story on the emergence of a new strain of COVID-19 in South Africa caused Wall Street’s three main indices ($SPX, $NDX, $RUT) to tumbled on Friday as they re-opened after Thursday’s Thanksgiving holiday with energy, financial and travel-related stocks bearing the brunt of the selloff. The renewal or pandemic fear has outlined as the biggest risk to today’s market, and it is likely to inject volatility to the market for the remaining of the year. Major indices dropped more than 2.0% on Friday, as investors sold risk assets. The $SPX fell 2.3%, the $NDX fell 2.2%, and the $DJI fell 2.5%. The $RUT 2000 underperformed with a 3.7% decline. WTI Crude Futures also fell -12.3% on Friday on worries of a supply glut. With Equal-Weighted $RSP sitting at its 50DMA confluence with resistance turned support at $156 range, there is a significant representation of $SPX stalling its sell off for this week. Last week’s leading sectors: $XLU (Utilities) +3.76% $XLP (Consumer Staples) +2.39% $XLV (Healthcare) +0.98% $SPX -2.20% This week’s watchlist: $MF, $PXD, $AA, $AMD and 55 more names. The new variant strain may also raise doubts over how quickly the Federal Reserve can move to unwind stimulus to tackle spiraling inflation. Eyes will be turned to the US jobs report due Friday, which will probably point to a continued recovery in the labor market. Elsewhere, Federal Reserve Chair Powell testifies before Congress, while a highly anticipated OPEC+ meeting is expected to offer guidance into the coalition’s crude output plans. Here’s what you need to know to start your week. Market Technicals $SPX (S&P 500) vs $RSP (S&P 500 Equal Weight) $SPX declined -2.20% (-103.34 points). Similarly, Equal Weighted $RSP declined -2.00% (-3.19 points). As the week’s Omicron driven selloff happened on a shortened trading session on Friday, it is worth to note that the transactional volume of that shortened session have far exceeded an recent full average day’s trading volume (50D Average Volume) in all major indexes. With $RSP sitting at its 50DMA confluence with resistance turned support at $156 range, there is a significant representation of $SPX stalling its current sell off for the week. The key index and level to watch for the week will be $RSP at $155.75 for further confirmation of market weakness. The immediate support to watch for $SPX this week is at 4,585 level, a further break of the low of Friday’s lowest price action. New pandemic wave? Wall Street’s three main indices tumbled on Friday as they re-opened after Thursday’s Thanksgiving holiday with energy, financial and travel-related stocks bearing the brunt of the selloff, sparked by the discovery of the new coronavirus strain. While little is yet known of the new variant first detected in South Africa, scientists said it has a high number of mutations that may make it vaccine-resistant and more easily transmissible than the Delta variant. Before Friday, investors had been upbeat about the strength of the economic recovery amid broad vaccine availability and advances in treatments, despite fears over steadily rising inflation. Jobs report A robust November jobs report could underline the case for the Fed to speed up unwinding its $120 billion-a-month stimulus program at its next meeting in mid-December. But a fresh wave of the pandemic could throw those plans into doubt. Concerns over spiraling inflation, coupled with signs of an accelerating economic recovery had prompted investors to begin pricing in a faster taper and earlier interest rate hikes. Friday’s non-farm payrolls report for November is expected to show that the economy added 550,000 jobs, bringing the unemployment rate down slightly to 4.5%. Powell and Yellen testimony Fed Chairman Jerome Powell, fresh from his nomination for a second term by President Joe Biden, is due to testify on the CARES Act, the central bank’s pandemic-era stimulus program, before the Senate Banking Committee in Washington on Tuesday. Treasury Secretary Janet Yellen is also due to testify. A similar hearing will be held before the House Financial Committee on Wednesday. Investors will be looking for fresh insights on the outlook for the economic recovery amid renewed pandemic uncertainty. Oil demand outlook Oil prices plunged $10 a barrel on Friday, their largest one-day decline since April 2020, as news of the new Omicron variant saw countries rush to restrict travel, adding to concerns that a supply glut could swell in the first quarter. The Organization of the Petroleum Exporting Countries and its allies (OPEC+) is due to meet on Thursday, after last week’s decision by the U.S. and other governments to release oil from strategic reserves in a bid to lower gasoline prices. For its part, OPEC+ has stuck to monthly output increases of 400,000 barrels per day (bpd) since August, despite calls to increase output to drive down oil prices.
AMEX:RSP
by jfsrevg
2
US Market Technicals Ahead (22 November – 26 November 2021)US markets will be closed on Thursday and will close early on Friday for the Thanksgiving holiday. The market will be paying close attention to Wednesday’s FOMC meeting minutes for fresh insights into the impact of soaring inflation on the future path of interest rates. Markets may also reprice the timing of future rate hikes if President Joe Biden were to promote current Fed Governor Lael Brainard to the Fed Chairman position, while the prospects of lower interest rates for longer could see a sell-off in U.S. Treasuries prompted by expectations for higher inflation. With $SPX (S&P 500) gaining +0.32% for the week, the bearish Rising Wedge formation of $RSP (S&P 500 equal weight) played out with a -1.24% loss. The correction in $RSP have reflected signs of fatigue in this market rally. Similar behavior of divergence is also witnessed between $QQQ and $QQQE. Last week’s leading sectors: $XLY (Consumer Discretionary) +3.76% $XLK (Technology) +2.39% $XLU (Utilities) +0.98% $SPX +0.32% This week’s watchlist: $ABNB, $AMAT, $AVTR, $ZIP, $BBW, $KLIC and 42 more names. There will also be a flurry of U.S. economic data on Wednesday ahead of the holiday, while PMI data out of the euro zone, UK and the U.S. during the week will outline the impact of supply chain issues and inflation on business activity. Here’s what you need to know to start your week. Market Technicals $SPX (S&P 500) vs $RSP (S&P 500 Equal Weight) The benchmark index $SPX erased previous week losses, gaining +0.32% (+15.09 points). With $SPX trading just 0.43% away from its all time high, $RSP (S&P 500 Equal Weight) has played out the Bearish Wedge Formation that was highlighted last week, declining -1.24%. The correction in $RSP have reflected signs of fatigue, and downside potential of $SPX towards 4,640 level in near term. The immediate support to watch for $SPX this week is at 4,670 level, a break of its short term uptrend line and 10DMA. Fed minutes On Wednesday, the Fed will publish the minutes of its November meeting, in which policymakers decided the U.S. economy was strong enough to start scaling back its pandemic-era asset purchase program, put in place to bolster the recovery. Since then, the economic recovery has continued to accelerate, with job gains picking up and inflation continuing to soar, leading Fed Vice Chair Richard Clarida to call last week for a discussion on a quicker taper to position the Fed to hike rates sooner. Last Thursday, Chicago Fed President Charles Evans, known as a policy dove, said he is “more open-minded” to raising interest rates next year than he was six months ago. Separately, Atlanta Federal Reserve President Raphael Bostic has signaled his support for a mid-2022 rate hike. The Fed is due to publish fresh quarterly forecasts following its next meeting in mid-December and these may give a better read on how much policymakers’ views have altered. Biden’s Fed pick The White House said last week that President Joe Biden will likely decide before Thanksgiving whether to keep incumbent Fed Chair Jerome Powell in place for another term or promote current Fed Governor Lael Brainard to the position. Analysts expect some stock market volatility around the announcement, particularly if Brainard is chosen. Powell, whose term is due to end in February next year, was appointed in 2018 by then-President Donald Trump. Brainard, who has been on the Fed board since 2014 is favored by progressive Democrats and is seen as more dovish than Powell. If Brainard is appointed markets may reprice the timing of future rate hikes, while the prospects of lower interest rates for longer could see a sell-off in U.S. Treasuries prompted by expectations for higher inflation. U.S. data dump The U.S. is to release a string of economic data on Wednesday before markets close for Thursday’s holiday. The highlight will be figures on personal income and spending, which includes the core PCE price index, rumored to be the Fed’s favored inflation gauge. The economic calendar also features a revised data on third-quarter GDP, initial jobless claims, durable goods orders, new home sales and consumer sentiment. Reports on existing home sales and November PMI data, which is expected to show only a modest improvement will be released on Monday and Tuesday, respectively. PMIs While November PMI data out of the U.S. is expected to show a modest uptick in business activity, similar surveys from the euro zone and the UK are expected to show activity in the manufacturing and services sectors is slowing. Rising infection numbers are leading to renewed restrictions in some parts of Europe, while spiking gas prices are fueling inflation, compounded by a global supply chain crunch. The European Central Bank is coming under increasing pressure to tighten its ultra-loose monetary policy to offset the hit to households spending power, but ECB President Christine Lagarde has pushed back, arguing that tightening policy now could choke off the economic recovery. Meanwhile, the Bank of England looks set to become the first of the world’s big central banks to raise rates since the onset of the pandemic, with investors and economists expecting a rate hike at its upcoming December 16 meeting.
SP:SPX
by jfsrevg
2
US Market Technicals Ahead (15 November – 19 November 2021)As U.S. inflation has surged to the highest level in over thirty years, inflation is likely to remain in focus in the coming week with investors looking ahead to the latest U.S. monthly retail sales figures along with earnings results from major retailers, including $WMT (Walmart). With $SPX (S&P 500) erasing its weekly losses from Friday’s late week rally, the bearish Rising Wedge formation of $RSP (S&P 500 equal weight) remains in play. Attention has being turned towards small-cap companies after a nine month consolidation breakout on $IWM (Russell 2000), setting a potential new leg of multi month long market rally leading by this companies. It is worth to note that $GLD (Gold) have also broken out of a multi month long trendline resistance, gaining +2.71% as the leading asset class of the week. China will provide an update on the economic recovery via industrial production and retail sales and wide there are expectation for a slowdown in its economic recovery, just as Europe is experiencing a fresh surge in Covid-19 infections. Here’s what you need to know to start your week. Market Technicals $SPX (S&P 500) vs $RSP (S&P 500 Equal Weight) The benchmark index $SPX retraced with a weekly loss of -0.31% (-14.68 points) confirming last week’s highlight on the over-extension of this rally which was 200% ATR away from its short term moving average, the first time since September 2020. With $SPX reducing its intraweek losses with Friday’s +0.72% gain, it is worth to note that $RSP (S&P 500 Equal Weight) has yet to break its Bearish Wedge Formation, which was has already played out in $SPX. The upwards consolidation of $RSP may be reflecting signs of fatigue, signaling downside potential of $SPX in near term. The immediate support to watch for $SPX this week is at 4,645 level, a break of its short term pivotal level. U.S. retail sales The highlight of the week’s economic calendar will be October retail sales data, due out on Tuesday, with economists expecting an increase of 1.1%, after a 0.7% rise in September. U.S. inflation has surged to the highest level in over thirty years amid a global supply chain crunch and data on Friday showed that consumer sentiment fell to its lowest in a decade this month, as higher prices eroded living standards. Investors are betting that the Federal Reserve will have to raise interest rates sooner than currently indicated to stop inflation spiraling upward. Retail earnings Third quarter earnings season is continuing to wind down, but investors will get an additional update on the strength of consumer spending this week with results from major retailers, including Home Depot ($HD), Walmart ($WMT), Target ($TGT), and Macy’s ($M). The earnings reports will face extra scrutiny ahead of the start of the holiday shopping season, with investors looking at guidance from retailers to determine whether inflation will eat into profits or be passed on to consumers. Third quarter earnings season has largely been upbeat. 459 of the companies in the S&P 500 have reported with 80% of earnings results beating analysts’ forecasts. China slowdown The recovery in the world’s number two economy is weakening and data on Monday, which includes reports on retail sales, fixed asset investment and industrial production is expected to confirm this. The loss of momentum in China, a key driver of global growth, is casting a shadow over the uneven global economic recovery from the pandemic. The recovery in China has been hit by an aggressive approach to containing Covid-19 outbreaks, a massive debt crisis in the country’s real estate sector and an energy crunch that has weighed on manufacturing activity. Analysts think the country’s central bank is likely to take a cautious approach to loosening monetary policy to bolster the economy as slowing growth combined with soaring inflation fuel concerns over stagflation. Meanwhile, U.S. President Joe Biden is to hold a virtual meeting with Chinese leader Xi Jinping on Monday, amid rising tensions between the world’s two largest economies. Pandemic resurgence hits Europe Europe is seeing a resurgence of the Covid-19 pandemic, adding to headwinds for the region’s already fragile economic recovery. Europe accounts for more than half of the average 7-day infections globally and about half of latest deaths, according to data compiled by Reuters, the highest levels since April last year when the virus was at its initial peak in Italy. Several countries, including the Netherlands, Germany, Austria and the Czech Republic are implementing restrictions or planning fresh measures to slow the spread. Holland entered a three-week partial lockdown on Saturday, the first in Western Europe since the summer. Germany reintroduced free Covid-19 tests on Saturday and Austria is to decide on Sunday whether to impose a lockdown on people who are not vaccinated.
SP:SPX
by jfsrevg
US Market Technicals Ahead (15 November – 19 November 2021)As U.S. inflation has surged to the highest level in over thirty years, inflation is likely to remain in focus in the coming week with investors looking ahead to the latest U.S. monthly retail sales figures along with earnings results from major retailers, including $WMT (Walmart). With $SPX (S&P 500) erasing its weekly losses from Friday’s late week rally, the bearish Rising Wedge formation of $RSP (S&P 500 equal weight) remains in play. Attention has being turned towards small-cap companies after a nine month consolidation breakout on $IWM (Russell 2000), setting a potential new leg of multi month long market rally leading by this companies. It is worth to note that $GLD (Gold) have also broken out of a multi month long trendline resistance, gaining +2.71% as the leading asset class of the week. China will provide an update on the economic recovery via industrial production and retail sales and wide there are expectation for a slowdown in its economic recovery, just as Europe is experiencing a fresh surge in Covid-19 infections. Here’s what you need to know to start your week. Market Technicals $SPX (S&P 500) vs $RSP (S&P 500 Equal Weight) The benchmark index $SPX retraced with a weekly loss of -0.31% (-14.68 points) confirming last week’s highlight on the over-extension of this rally which was 200% ATR away from its short term moving average, the first time since September 2020. With $SPX reducing its intraweek losses with Friday’s +0.72% gain, it is worth to note that $RSP (S&P 500 Equal Weight) has yet to break its Bearish Wedge Formation, which was has already played out in $SPX. The upwards consolidation of $RSP may be reflecting signs of fatigue, signaling downside potential of $SPX in near term. The immediate support to watch for $SPX this week is at 4,645 level, a break of its short term pivotal level. U.S. retail sales The highlight of the week’s economic calendar will be October retail sales data, due out on Tuesday, with economists expecting an increase of 1.1%, after a 0.7% rise in September. U.S. inflation has surged to the highest level in over thirty years amid a global supply chain crunch and data on Friday showed that consumer sentiment fell to its lowest in a decade this month, as higher prices eroded living standards. Investors are betting that the Federal Reserve will have to raise interest rates sooner than currently indicated to stop inflation spiraling upward. Retail earnings Third quarter earnings season is continuing to wind down, but investors will get an additional update on the strength of consumer spending this week with results from major retailers, including Home Depot ($HD), Walmart ($WMT), Target ($TGT), and Macy’s ($M). The earnings reports will face extra scrutiny ahead of the start of the holiday shopping season, with investors looking at guidance from retailers to determine whether inflation will eat into profits or be passed on to consumers. Third quarter earnings season has largely been upbeat. 459 of the companies in the S&P 500 have reported with 80% of earnings results beating analysts’ forecasts. China slowdown The recovery in the world’s number two economy is weakening and data on Monday, which includes reports on retail sales, fixed asset investment and industrial production is expected to confirm this. The loss of momentum in China, a key driver of global growth, is casting a shadow over the uneven global economic recovery from the pandemic. The recovery in China has been hit by an aggressive approach to containing Covid-19 outbreaks, a massive debt crisis in the country’s real estate sector and an energy crunch that has weighed on manufacturing activity. Analysts think the country’s central bank is likely to take a cautious approach to loosening monetary policy to bolster the economy as slowing growth combined with soaring inflation fuel concerns over stagflation. Meanwhile, U.S. President Joe Biden is to hold a virtual meeting with Chinese leader Xi Jinping on Monday, amid rising tensions between the world’s two largest economies. Pandemic resurgence hits Europe Europe is seeing a resurgence of the Covid-19 pandemic, adding to headwinds for the region’s already fragile economic recovery. Europe accounts for more than half of the average 7-day infections globally and about half of latest deaths, according to data compiled by Reuters, the highest levels since April last year when the virus was at its initial peak in Italy. Several countries, including the Netherlands, Germany, Austria and the Czech Republic are implementing restrictions or planning fresh measures to slow the spread. Holland entered a three-week partial lockdown on Saturday, the first in Western Europe since the summer. Germany reintroduced free Covid-19 tests on Saturday and Austria is to decide on Sunday whether to impose a lockdown on people who are not vaccinated.
AMEX:RSP
by jfsrevg
US Market Technicals Ahead (8 November – 12 November 2021)Investors are to take note of the end of Daylight Saving Time (DST) that will effectively have the US exchanges open at an hour later, depending on your time zone starting today. $SPX is currently closed at 200% ATR(14) away from its 10 days moving average, the first time since September 2020. Data on inflation will be the highlight of the U.S. economic calendar in the week ahead as investors continue to digest the Fed’s decision to begin tapering stimulus measures, marking the beginning of less accommodative monetary policy. Earnings season is winding down, but there are still several companies set to report during the week. China’s Communist Party looks set to green-light a third term for President Xi Jinping. Here’s what you need to know in the coming week. Market Technicals The benchmark index $SPX continues its high octane rally with a fresh new high established at 4,718 level, gaining +2.00% (+92.15 points) during the week. $SPX is currently closed at 200% ATR away from its 10 days moving average, the first time since September 2020. The immediate support to watch for $SPX this week is at 4,660 level, a break of its short term uptrend momentum. Inflation data Data on producer price inflation for October is scheduled for release on Tuesday, followed a day later by figures on consumer price inflation. The CPI numbers are expected to hit their highest levels so far post-pandemic, with economists forecasting an increase of 0.6% month-on-month and 5.8% year-on-year. Core inflation, which excludes food and energy costs, is expected to rise by an annualized 4.3%. At its latest meeting the Fed stuck to the view that high inflation would prove “transitory” and is not likely to require a rapid increase in interest rates, prompting investors to call it a “dovish taper.” While the central bank has so far managed to communicate plans to begin scaling back its monthly bond purchases without triggering a taper tantrum, elevated inflation figures that fuel rate hike speculation could change that. Earnings Better-than-expected third-quarter earnings have boosted equities and Wall Street’s main indexes closed at record highs on Friday following a strong U.S. jobs report and positive data for Pfizer’s ($PFE) experimental antiviral pill for COVID-19. Companies reporting in the coming week include entertainment company Walt Disney ($DIS), drugmakers AstraZeneca ($AZN) and BioNTech ($BNTX) along with Softbank ($SFTBY), PayPal ($PYPL), Coinbase ($COIN) and AMC Entertainment ($AMC), China The top leaders of the Chinese Communist Party are set to meet in Beijing from Monday through Thursday, where the decision-making Central Committee could give the go-ahead for an unprecedented third term for President Xi Jinping. The meeting comes at a time when growth in the world’s second largest economy is faltering amid stringent measures to curb virus outbreaks, a clampdown on the property market, energy shortages and disrupted supply chains. Data on Sunday showed that Chinese exports slowed in October, but still beat forecasts while imports fell short of forecasts, pointing to continued weakness in domestic demand.
SP:SPXShort
by jfsrevg
US Market Technicals Ahead (1 November – 5 November 2021)With major U.S. indices – S&P 500 $SPX, NASDAQ Composite $NDX, and Dow Jones Industrial Average $DJI – all at all-time high closes, market optimism will be tested from all sides this week, as a slew of corporate earnings, non-farm payrolls, and a Fed meeting that is expected to signal the start of QE tapering. Here’s what you need to know to start your week. The benchmark index $SPX have established a fresh new high with a further gain of +1.33% (+60.48 points), closing the week at 4,605 level. The new high was printed only in the final ten minutes of Friday’s trading session, as market was trading within its high and low range from Monday to Thursday. It is worth to note that the % of stocks that are participating in the 2021 market rally has been in decline. There are currently 50.59% stocks trading above their 200-Day Moving Average (down from 85%); and 53.12% of stocks trading above their 50-Day Moving Average (down from 84%). The immediate support to watch for $SPX this week is at 4,545 level, a resistance turned support level from September 2021’s peak. Earnings Season Rolls On Earnings continue to be the main story in stock markets around the world. While many of the biggest names have already reported, with Microsoft $MSFT and Alphabet $GOOGL being top performers last week and Apple $AAPL, Amazon $AMZN, and Facebook $FB – soon to be Meta – lagging, a much wider swath of companies will update on Q3 this quarter. Supply chain issues and inflation will of course be on investors’ minds as they watch these reports, as well as how much the Q3 U.S. growth slowdown hit these companies, and what that means for their respective outlooks. As companies lap pandemic affected quarters, figuring out what is the new normal for companies that are either recovering or were big 2020 winners will also be on the docket. Non-farm payrolls After October’s disappointing jobs report and the muted GDP number, November’s nonfarm payrolls report will test the strength of the U.S. economic recovery. Expectations are for 385K new jobs, after the NFP missed expectations in each of the last two months. Whether that lull was temporary and due to either the summer delta variant surge or supply chain issues remains to be seen. The report may weigh on the speed of Fed tapering, and might also give added impetus to Democrats in Congress on their budget package negotiations. Fed Meeting The Fed Open Market Committee (FOMC) report will be released on Wednesday after a two-day meeting. Fed chair Jerome Powell has said in recent weeks that the plan to start tapering in November is still on, so the question is whether that will bear out. Also to watch in Powell’s comments and the press conference that follows is what his current view on inflation is, after the debates over whether it is transitory or persistent, and what that means for the pace of interest rate hikes in the months (years?) to come. Of note, the US Dollar popped on Friday after trading lower much of the month, and will be in focus if there are any surprises. Manufacturing PMI reports As we enter the holiday season to finish the year, the supply chain snarls and various growth slowdowns will be in the spotlight. A number of PMI reports come out this week. China already kicked off with a disappointing 49.2, marking reduced activity. The U.S., U.K., Germany and other Euro Zone countries will all report. Expectations are for expansion across the board – numbers above 50 on the index – and will give an additional indicator on how the global economy sets up to finish the year, and perhaps how long consumers will have to purchase their holiday presents in advance. Crypto: Another Bitcoin ETF, And Monetary Tightening Two weeks ago it was Bitcoin, and last week it was ETH/USD as a leading cryptocurrency to set a new all-time high. Meanwhile, smaller and less grounded coins such as Shiba Inu continue to grab headlines. There are two headline stories to watch for crypto impact this week. First, a third bitcoin ETF is expected to start trading, as the VanEck Bitcoin Strategy ETF $XBTF is expected to list by Wednesday. Excitement over the first ETF, ProShares Bitcoin Strategy ETF $BITO, may have propelled bitcoin to all-time highs, but the response to the second, Valkyrie Bitcoin Strategy ETF $BTF, was more muted. It’s also worth watching how the crypto complex reacts to a tightening environment. Much of the investment thesis for crypto is tied to inflation and the value of money; an increase in the cost of capital via central bank tightening could make traditional currencies and assets relatively more attractive. While in large part a coincidence, the tightening cycle in 2018 and the simultaneous off year in crypto may be worth keeping in mind even as optimism in the sector remains high.
SP:SPX
by jfsrevg
US Market Technicals Ahead (25 October – 29 October 2021)Investors will be preparing for the busiest week of earnings season, with focus turning to reports from several tech giants including Apple ($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 $30,000 as China cracked down on digital currencies. Bitcoin advocates believe the onset of ETFs will support prices. Others tout the digital currency as a hedge against inflation and say that is a bigger factor in its rally, but sceptics say it is more of a symptom. Either way, bitcoin volatility looks set to continue.
SP:SPXLong
by jfsrevg
2
US Market Technicals Ahead (18 October – 22 October 2021)Better than expected Q3 earnings reports from major banks powered global stock indexes to a winning week with most banks beat significantly on the top and bottom line. The earnings season continues this week, with companies such as IBM ($IBM) , Netflix ($NFLX), Tesla ($TSLA), Intel ($INTC), Johnson & Johnson ($JNJ) and P&G ($PG) reporting their results. Elsewhere, figures on Q3 China economic growth (GDP) today will show the impact of multiple recent hits to the world’s second largest economy. The forecast is projected at 5 percent in the three months to September, slower than the second quarter’s 7.9 percent, amid pressures on factories from power shortages, supply bottlenecks and a resurgence of domestic COVID-19 cases. Meanwhile, the first bitcoin futures ETF is set to begin trading, propelling the digital currency closer to all-time highs. Here’s what you need to know to start your week. Market Technicals $SPX (S&P 500) U.S. stocks were higher as $SPX posted its largest weekly percentage gain since July, after major banks rounded out a strong start to Q3 earnings, though investors will stay on the lookout in the coming weeks for signs of impacts from supply chain disruptions and higher costs, especially for energy. The benchmark index $SPX rallied +1.82% (+80.03 points), closing the week at 4,471 level. $SPX have broken out of all major moving averages (notably its 20D and 50D MA) on the final day of the the week, a second follow through price action after an imminent intraday reversal on Wednesday session. The immediate support to watch for $SPX this week is at 4,320 higher low support level, potentially re-establishing its mid-term uptrend channel. Earnings Dozens of companies will be reporting in the coming week, including Tesla ($TSLA), Intel ($INTC) and Johnson & Johnson ($JNJ), as the first major wave of third quarter earnings results gets underway. On Thursday Netflix ($NFLX) kicks off third quarter reporting for the ‘FAANG’ group of U.S. tech giants Facebook ($FB), Apple ($AAPL), Amazon ($AMZN), Netflix and Google-parent Alphabet ($GOOGL). The video streaming company said “Squid Game” has become its biggest series launch ever and Bloomberg reported that the megahit will create almost $900 million in value for Netflix. Chinese GDP In recent months the Chinese economy has taken a series of blows from the Evergrande-induced property market crisis, outbreaks of the delta variant, an energy crunch, supply bottlenecks and soaring commodity prices. So, investors will be closely watching Monday’s Q3 GDP, which will be released alongside figures on factory production and retail sales. Economists are expecting growth in the world’s number two economy to have slowed to 5.2% year-on-year, the slowest in a year, from 7.9% in the previous quarter. China’s real estate sector, a key driver of growth, is reeling from rising defaults, with sales tumbling and construction slowing as Evergrande, once China’s top-selling developer, battles against default on more than $300 billion in debts. Bitcoin futures ETF The first U.S.-listed bitcoin futures ETFs are set to launch in the coming week, barring a last-minute objection from the Securities and Exchange Commission. The ProShares Bitcoin Exchange Traded Fund is scheduled to start trading on the New York Stock Exchange on Tuesday. A day later, the Invesco Bitcoin Strategy ETF, would also be allowed to launch unless the SEC blocks it. The ETFs will be based on bitcoin futures that already trade on the Chicago Mercantile Exchange rather than the cryptocurrency itself amid regulatory concerns over a potential lack of liquidity and the risk of price manipulation on spot exchanges. The launch of the ETFs could pave the way for a stream of similar products, potentially fueling a run higher for the world’s largest digital currency which hit peaks of $62,892 on Friday, not far from its all-time highs of $64,778
SP:SPXLong
by jfsrevg
US Market Technicals Ahead (11 October – 15 October 2021)Third-quarter earnings season gets underway with major banks; JPMorgan Chase ($JPM), Bank of America ($BAC), Wells Fargo ($WFC), Morgan Stanley ($MS) and Goldman Sachs ($GS) reporting later in the week. It is also a relatively busy week ahead on the economic data front with inflation driven US Consumer Price Index report (Wednesday) for September will will be closely watched while minutes from the last FOMC meeting (Thursday) is also set to be under Investors’ radar for further cues on the Fed’s tapering timeline. Here’s what you need to know to start your week. S&P500 (US Market) The benchmark index $SPX minimized its previously week loss with a technical rebound yielding at modest gain of +0.66% (+28.6 points), closing the week at 4,390 level. $SPX remains trading below its 20D and 50D Moving Averages. The past weeks of trading session have established several signs of fatigue in this tech driven rally; $SPX Short Term MA Crossover of 20 Days and 50 Days (technically known as ‘Death Cross’), last observed on 30th September 2020 $SPX multi-month long uptrend channel violation, observation of first lower high and lower low established below 20D and 50D MA over the period Up-Down Volume ratio is significantly much lesser than 1.0 over the past 30 days average (A ratio greater than 1.0 shows more volume on the upside than on the downside. A reading under 1.0 shows sellers have the upper hand.) With $SPX currently trading below its short term major MAs, it is important to remain risk adverse and diligent The immediate support to watch for $SPX this week remains at 4,270 immediate support level. A breakdown of 4,270 support level would point to further weakness for the month of October, which is considered to be a time when stocks historically decline, giving rise to the term the ‘October Effect.’ Bank earnings Some of the world’s biggest banks kick off U.S. earnings, with investors focused on global supply chain problems, labor shortages and the upcoming tapering of the Fed’s $120 billion monthly stimulus. Banks smashed profit estimates in the second quarter as the economy rebounded, with Wells Fargo ($WFC), Bank of America ($BAC), Citigroup ($C) and JPMorgan Chase ($JPM) posting a combined $33 billion in profits. That momentum likely slowed in the third quarter; earnings for financials are forecast to grow by 17.4%, versus nearly 160% in Q2, according to I/B/E/S data from Refinitiv. U.S. data The key U.S. economic report to watch this week is Wednesday’s data on consumer price inflation for September. While the rate of price increases has moderated inflation is still higher than it was pre-pandemic with the surge in demand after the economy reopened pushing up prices. Economists expect the consumer price index to match August’s 0.3% monthly increase and the 5.3% annual gain. Producer price inflation figures are due out on Thursday, followed by data on retail sales on Friday. Retail sales are expected to be pulled lower because of a plunge in vehicle sales amid supply chain bottlenecks, but excluding vehicles, retail sales are forecast to increase. Fed minutes The Fed is to publish its September meeting minutes on Wednesday amid expectations that it will begin tapering asset purchases before the end of this year, an important first step towards eventual rate hikes. Friday’s weaker-than-expected September jobs report did little to alter expectations the Fed could begin to scale back stimulus by the years end. Though the economy added just 194,000 jobs in September upward revisions to prior months’ data meant that all told the economy has now regained half of the jobs deficit it faced in December, compared with pre-pandemic employment levels. Fed Chair Jerome Powell said last month that he’d only need to see a “decent” September U.S. jobs report to be ready to begin to taper in November.
U
by jfsrevg
US Market Technicals Ahead (4 October – 8 October 2021)Data released last Friday reflects a faster pace of growth than expected in September for US Manufacturing and ISM Manufacturing PMIs. However, it’s likely that investor focus will return to worries about inflation, along with Federal Reserve tightening on the horizon. This Friday’s monthly US employment report will be adding to the potential market jitters, which will probably show job growth acceleration in September even with raised concerns about the rising COVID-19 cases. Although Fed Chair Powell has tried to distance policy from any single labor market metric in the past, he has clearly identified the incoming nonfarm payroll report as a key to the tapering decision at his press conference following the September meeting. Markets are also still contending with ongoing worries about China’s Evergrande Group (HK:3333), as the giant real estate developer continues to struggle with its massive debt overload. In short, there are a plethora of themes that could pressure markets as the first full week of October trading commences. Here is what you need to know to start your week. S&P500 (US Market) The benchmark index $SPX ended the final week of September with a weekly loss of -2.15% (-95.9 points), with its trading volume reaching a pinnacle that was last observed in early May this year. The past month of trading session have established several signs of fatigue in this tech driven rally; $SPX Short Term MA Crossover of 20 Days and 50 Days (technically known as ‘Death Cross’), last observed on 30th September 2020 $SPX multi-month long uptrend channel violation, observation of first lower high and lower low established below 20D and 50D MA over the period Up-Down Volume ratio is significantly much lesser than 1.0 over the past 30 days average (A ratio greater than 1.0 shows more volume on the upside than on the downside. A reading under 1.0 shows sellers have the upper hand.) With $SPX currently trading below its short term major MAs, it is important to remain risk adverse and diligent The immediate support to watch for $SPX this week is at 4,270 immediate support level. A breakdown of 4,270 support level would point to further weakness for the month of October, which is considered to be a time when stocks historically decline, giving rise to the term the ‘October Effect.’
UShort
by jfsrevg