US Market Technicals Ahead (20 September – 24 September 2021)This Wednesday’s Fed policy announcement will be the main directional driver for equity markets as investors will be expecting to hear if the central bank will begin withdrawing stimulus this year. Several policymakers have been calling for early tapering despite the recent slowdown in inflation numbers.
On the economic data front, notable publications include building permits and housing starts, the flash Markit PMI survey, new and existing home sales. Several other central banks will also hold meetings in the week ahead, including the Bank of Japan and the Bank of England.
Meanwhile, embattled Chinese property developer Evergrande (HK:3333) faces the prospect of defaulting on its debts, stoking fears of contagion that could spread to markets outside of China.
Here’s what you need to know to start your week.
S&P500 (US Market)
With stocks struggling in this seasonally weak month for the market, all three major averages are negative month to date , but still sit less than 3% below their all-time highs.
The benchmark index $SPX ended with week on consecutive losses, posting a further loss of -0.97% (-43.3 points). The Federal Reserve’s highly anticipated September meeting is set to occur this week. Fed Chair Jerome Powell will hold a press conference Wednesday at the conclusion of the two-day meeting. Investors are awaiting for more specifics about the Fed’s tapering of its easy monetary policy, particularly after mixed economic data released over the past weeks.
$SPX breached its 20DMA and 50DMA support, currently trading at the support zone of its medium term trend channel. This is the 7th occurrence since 25th March 2021, where $SPX would rebound in the immediate week and swing towards another all time high.
The immediate support to watch for $SPX this week is at 4,375 level; a significant 2ATR breakdown from its current up trend channel, a first sign of weakness in this mid-term rally.
Federal Reserve meeting
The Fed will begin its two-day policy meeting starting Tuesday ahead of its policy announcement on Wednesday afternoon and investors will be on the lookout for any details of the central bank’s plans to start paring back its $120 billion a month emergency stimulus program.
The Fed’s timeline for scaling back economic stimulus is important as it represents a first step towards eventual interest rate hikes.
Several Fed officials have said tapering should start this year, a view Fed Chair Jerome Powell may echo, while stressing a rate hike is still way off.
The Fed may stick to a cautious approach giving economic uncertainty due to rising COVID-19 cases and a weak jobs report for August.
Economic data
The U.S. data calendar for the week ahead is centered around housing figures, which are set to stabilize after a slight uptick in mortgage approvals for home purchases in recent weeks.
Data on housing starts and building permits data are due out on Tuesday, followed by figures on existing home sales on Wednesday and data on new home sales is due for release on Friday.
Market watchers will also be looking at Thursday’s report on initial jobless claims amid concerns over the hit to the economic recovery in the current quarter from the spread of the Delta coronavirus variant, especially among people who are hesitant to take vaccines.
Central bank meetings
Besides the Fed, several other major global central banks are also holding meetings in the coming days.
The Bank of Japan, which also meets on Tuesday and Wednesday, is widely expected to keep policy steady but may warn about growing risks to exports from supply disruptions.
On Thursday, Norway’s central bank is set to become the first from the developed world to hike rates since the pandemic, likely raising its main 0% rate to 0.25%.
The Bank of England is unlikely to change policy at its Thursday meeting but may indicate whether it still views inflation as transitory.
Crunch time for Evergrande
Indebted Chinese property developer Evergrande has a bond interest payment of $83.5 million due on Thursday, with investors pricing in a high likelihood of default.
That such a tiny amount could be the tipping point for a $355 billion behemoth with more than 1,300 developments across China and over $300 billion of liabilities shows how bad things are.
China’s second largest developer has been scrambling to raise cash, with fire sales on apartments and stake sales in its sprawling business network, but with little success.
Concerns that Evergrande could default on its debts is spilling over into China’s financial markets and even risks contagion that could spread to markets beyond China.
Jeffsun
US Market Technicals Ahead (13 September – 17 September 2021)It is a relatively busy week ahead in the US on the economic data front. This Tuesday’s U.S. inflation numbers could help dictate market direction in the coming week amid concerns that persistent rising inflation could prompt the Fed to roll back emergency stimulus measures. The timing of when central banks choose to scale back economic stimulus has been a key driver of market sentiment amid concerns over rising inflation.
Elsewhere on economic data, US retail sales and industrial production numbers for August are seen pointing to a decline in domestic trade and modest factory activity growth. Numbers will be out on Thursday.
The UK is also due to release what will be closely watched inflation data, along with updates on employment and retail sales. Appearances by European Central Bank officials may shed more light on last week’s decision to scale back bond purchases. Meanwhile, data from China is likely to underline that the pace of the recovery in the world’s number two economy is slowing.
Here’s what you need to know to start your week.
S&P500 (US Market)
The benchmark index $SPX ended the week off its longest daily losing streak since February (-1.58%), posting five straight days of losses. Fears over slowing economic growth and rising inflation have weighed on the market.
$SPX medium term trend channel remains intact, with no violation of its upper and lower bound trendline since the Bullish Reversal supported by its 50DMA highlighted in the earlier weeks. $SPX is now trading below its 20DMA after the failure of its Bullish Pennant consolidation, spiraling down towards its 50DMA that has pivoted the index since November 2020.
The immediate support to watch for $SPX this week is at 4,425 level; a break down of 50DMA along with its short term support level.
U.S. inflation
Tuesday’s data on consumer price inflation will be the highlight of the economic calendar amid an ongoing debate over whether the current spike in inflation is likely to fade as the imbalance between supply and demand causing price increases in recent months eventually eases.
In July, price increases slowed but remained at a 13-year high on a yearly basis amid tentative signs inflation has peaked.
Market watchers will also be looking at Thursday’s figures on retail sales, which are expected to decline for a second straight month.
UK data
Last week Bank of England governor Andrew Bailey warned that the economic rebound in the UK is slowing, so this week’s data on inflation, employment and retail sales will be closely watched, particularly ahead of the Bank of England’s upcoming policy meeting on Sept 23.
July data showed that inflation slowed to 2%, while retail sales fell 2.5% month-on-month.
Tuesday's jobs data will also be in focus amid labor shortages and a record 8.8% increase in wage growth in June. The end of furlough schemes may push people into the jobs market, but skills shortages risk fueling price pressures driven by supply bottlenecks and commodity prices.
ECB speakers
In the euro zone, ECB Chief Economist Philip Lane and Bank of Finland Governor Olli Rehn are both due to make appearances, with investors hoping for more insights into last week’s decision to pare back emergency bond purchases over the coming quarter.
The move is a small first step towards unwinding the emergency stimulus the ECB deployed to bolster the euro zone economy during the coronavirus pandemic.
ECB President Christine Lagarde was eager to stress that the move wasn’t the start of tapering.
The move by the ECB to trim bond purchases is expected to be followed by the Fed later this year, despite the disappointing August U.S. jobs report.
China data
China is to release data on industrial production, retail sales and fixed asset investment on Wednesday, which will show the economic impact of a widespread Covid outbreak in August, which saw Beijing partially close the world’s third-busiest container port and impose fresh restrictions across some areas of the country.
While the latest outbreaks have been largely contained the Chinese economy is still facing headwinds.
While exports have remained strong, boosted by robust global demand domestic demand has faltered amid virus containment measures, supply bottlenecks, tighter measures to tame property prices and a campaign to reduce carbon emissions.
US Market Technicals Ahead (7 September – 10 September 2021)This week is a holiday-shortened week as US Markets will be closed on Monday in observance of US Labor Day.
As Investors are weighing the impact of last Friday’s surprisingly soft August jobs report, Stocks are likely to look beyond the numbers and latch onto the latest data on labor and inflation in the coming week’s jobless claims and producer price index (PPI). Comments by Federal Reserve officials will also be in focus after the disappointing August employment report.
Stock markets are likely to remain supported after the jobs data undermined the argument for near-term tapering. Meanwhile, all eyes will be turning to the European Central Bank's debate over whether it should start reducing its massive PEPP asset purchase program amid brighter prospects for the bloc's economic outlook.
China is also set to release data on trade and inflation which is expected to underline that the recovery in the world’s number two economy is losing momentum.
Here’s what you need to know to start your week.
S&P500 (US Market)
The stock market rally had another solid week, with growth and small-cap stocks leading once again. The Nasdaq ($NDX) ended Friday at a new peak, with the two other main indexes S&P 500 ($SPX) and Dow Jones Industrial ($DJI) closed red on that day following the far weaker-than-expected jobs report which raised fears about the pace of economic recovery but weakened the argument for tapering this month.
The benchmark index $SPX ended the week with a modest gain of +0.53% (+24.1 points), inching up to another new record high.
$SPX medium term trend channel remains intact, with no violation of its upper and lower bound trendline since the Bullish Reversal supported by its 50DMA highlighted in the previous week. $SPX remains trading neatly above its 20DMA over the past 14 consecutive trading session. At the current junction, $SPX is consolidating within a bullish pennant pattern, signifying trading activity could remain subdued as traders return after the long weekend.
The immediate support to watch for $SPX this week is revised upward towards 4,500 level; a break down of its current consolidated pennant pattern.
U.S. data
Friday’s PPI data for August will show how inflation pressures are shaping up after July data showed the largest annual increase in over a decade, as the swift economic recovery caused a mismatch between supply and demand.
While the Fed has indicated that higher prices will likely prove transitory some worry that persistent price pressures could prompt the Fed to roll back easy money faster than expected.
Weekly jobless claims data Thursday will also be closely watched after the Labor Department reported Friday that the economy added just 235,000 jobs in August, falling far short of economists' estimate of 750,000.
Hiring in the leisure and hospitality sector stalled amid a resurgence in COVID-19 infections. But the unemployment rate fell to 5.2% from 5.4% in July and July job growth was revised sharply higher, pointing to underlying strength in the economy.
Fed speakers
Market participants will be watching out for any fresh clues on tapering from Fed officials in the wake of Friday’s disappointing jobs report.
The labor market remains the key touchstone for the Fed, with Chair Jerome Powell indicating last week that reaching full employment was a pre-requisite for the central bank to start paring back its asset purchases.
New York Fed President John Williams, who is viewed as close to Powell, is to speak about the economic outlook at an event on Wednesday.
Gamestop $GME
Investors will be watching out for quarterly results from video game retailer GameStop ($GME), whose wild ride this year put a spotlight on retail investors' mania for so-called meme stocks that some say is one sign of irrational exuberance in markets.
ECB meeting
The ECB meets on Thursday against a background of calls from several hawkish policymakers to begin slowing its pandemic-era asset purchase stimulus program given a recent spike in inflation.
Inflation in the euro area has surged to a 10-year high of 3%. The ECB has indicated that any increase in inflation is likely to be temporary, but some hawkish officials have recently diverged from this view.
Markets are starting to react to the potential for more sustained euro zone inflation and reduced stimulus from the ECB.
China data
On Monday China releases August trade data which will be followed on Wednesday by figures on both consumer and producer inflation, also for last month.
The reports come after a recent run of weak economic data which showed that the recovery in the world’s second largest economy is running out of steam amid restrictions to curb the spread of the Delta variant.
Activity in China's services sector slumped into sharp contraction in August, a private survey showed on Friday and a similar survey of the manufacturing sector showed that factory activity contracted for the first time in almost one-and-a-half years last month.
The slowdown has fueled expectations Beijing will roll out more support measures to revitalize growth.
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.
US Market Technicals Ahead (9 August – 13 August 2021)With U.S. CDC (Centers for Disease Control and Prevention) reversing its stance on mask for vaccinated people amid the resurgence of the coronavirus pandemic, Investors will be watching closely on the main U.S. economic data reports on consumer and producer price inflation for any potential scale back of stimulus by the Federal Reserve.
Several Fed officials are slated to speak during the week and their comments could help clarify the Fed’s position on tapering. Earnings will continue but will be fewer in number as earnings season winds down.
Here’s what you need to know to start your week.
S&P500 (US Market)
The US market ended at all time highs on Friday, after monthly U.S. jobs report came in better than expected, as the economy continues to navigate out from the COVID-19 pandemic. The benchmark index $SPX ended the week gaining +0.79% (+34.9 points), closing at 4,438 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 $SPX this week is revised up to 4,370 level; a breakdown of two weeks price support.
Inflation numbers
The U.S. consumer price index and the producer price index released Wednesday and Thursday, respectively will provide an insight into the current pace of inflation, one of the key factors along with the labor market, that the Fed looks at when making its monetary policy decisions.
CPI is expected to moderate slightly after last month’s jump of 0.9%, the strongest gain since June 2008. The Fed has said the current surge in inflation is just temporary, but market sentiment has been hit by fears of higher inflation resulting in a sudden tapering.
Friday’s stronger-than-expected nonfarm payrolls report was the last before the Fed gathers for its annual meeting in Jackson Hole, Wyoming, at the end of the month to discuss policy and decide future stimulus strategy.
The upbeat jobs numbers coupled with uncomfortably hot inflation data could prompt Fed officials to announce plans to begin tapering bond purchases as soon as September, the first step down the road to eventual interest rate hikes.
Earnings wind down
Earnings will continue in the coming week, but the number of companies reporting will tail off as earnings season continues to wind down.
Some of the names reporting include AMC Entertainment ($AMC), Coinbase Global Inc ($COIN), Sysco ($SYY), Chesapeake Energy ($CHK), eBay ($EBAY), Wendy’s ($WEN), Lordstown Motors ($RIDE), Walt Disney ($DIS) and Airbnb ($ABNB).
It has been a stellar earnings season – out of the 427 companies in the S&P 500 that have reported earnings so far, 87.6% beat analyst expectations, the highest on record.
Bitcoin higher as sentiment recovers
Bitcoin rose to its highest level in two months on Sunday as market sentiment recovered but remined fragile. The digital currency hit $45,284, its highest since mid-June.
One area of uncertainty for crypto investors is the U.S. infrastructure bill currently making its way through Congress, which contains a cryptocurrency tax provision, tacked on at the last minute.
US Market Technicals Ahead (2 August – 6 August 2021All eyes turn to the US July jobs report due this Friday, with investors on the watch for any catalysts that could encourage the Federal Reserve to tighten monetary policy sooner.
Earnings will continue to dominate headlines, with more than a quarter of S&P 500 companies set to report this week. Berkshire Hathaway ($BRK.A), General Motors ($GM) and Uber ($UBER) are the headlining companies due to report their quarterly result.
The crackdown by Chinese market regulators could continue to be a major story and in the UK the Bank of England is to hold its latest policy meeting where it is likely to echo the Fed’s view that there is still some way to go before stimulus can be reduced.
Here is what you need to know to start your week.
S&P500 (US Market)
The benchmark index $SPX ended the week with a muted -0.10% (-4.3 points), closing near its peak at 4,400 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).
The immediate support to watch for $SPX this week is revised up to 4,310 level; the 50DMA short term support level, along with a 75% retracement within its trend channel.
July jobs report
Friday’s U.S. non-farm payrolls report will provide fresh clues on the strength of the economic recovery and inform the outlook for Fed policymakers.
Economists are expecting the economy to have added 900,000 jobs in July after a forecast-beating 850,000 in June.
Last week Fed Chair Jerome Powell said the job market still had “some ground to cover” before it would be time to start scaling back stimulus measures the central bank enacted in the spring of 2020 to combat the economic fallout from the coronavirus pandemic.
In June Fed officials began debating how to wind down bond purchases but there is no clear timetable yet for when it will begin pulling back emergency market support measures.
Earnings
Investors will get a fresh batch of earnings reports in the week ahead from companies such as Eli Lilly ($LLY), CVS Health ($CVS) and General Motors ($GM).
Expectations of strong future earnings have been the key driver of the S&P 500’s gains this year, according to a Credit Suisse analysis of the index’s year-to-date performance that compared change in stock valuations with changes in expected earnings.
U.S. stocks fell on Friday and registered losses for the week as Amazon ($AMZN) shares dropped after the company forecast lower sales growth, but the S&P 500 still notched a sixth straight month of gains.
China crackdown
China’s recent regulatory crackdown has frightened investors away from Chinese stocks and left tech companies operating in an uncertain environment.
China has been tightening its regulatory grip on overseas share issuance after it launched a probe of ride-hailing giant Didi Global last month, just days after its listing in New York.
Following a sharp selloff authorities moved to calm market jitters which put a floor under stocks and the yuan, for now.
In the coming week investors will be looking to Chinese PMI data amid growing concerns over a slowdown in the world’s second largest economy, which could be the next test for markets.
Bank of England meeting
The Bank of England is expected to keep stimulus running at its current pace when it meets on Thursday, despite some disagreement among policymakers over the size of its bond-buying program against a background of rising inflation and an improving economy.
Officials are likely to raise their inflation forecast for this year, but the outlook for growth remains uncertain amid concerns over the delta variant.
US Market Technicals Ahead (26 July – 30 July 2021)The earnings season is gathering pace as it enters into the busiest phase this week. Investors will be closely watching earnings from tech heavyweights with Apple ($APPL), Facebook ($FB), Microsoft ($MSFT), Alphabet ($GOOGL) and Amazon ($AMZN) are reporting quarterly results.
US Federal Reserve will also be meeting this week, and more details will likely emerge on the tapering discussions that started in June. On the economic data front, the US is releasing the first estimate of Q2 GDP which is expected to be the peak of the post-pandemic recovery. Other data includes durable goods orders, and personal income and outlays.
Here is what you need to know to start your week.
S&P500 (US Market)
All three of the major averages finished at record closing highs last week after the markets tumbled at the start of the week on concerns about the spread of the delta variant of Covid and how it would potentially hinder the economic recovery. The uncertainty briefly sent bond yields lower, and investors jumped into tech stocks. Both bonds and equities rebounded quickly by the end of the week.
The benchmark index $SPX rallied +1.84% (+79.5 points), including an intraweek move of +4.18% from its week low during the week. $SPX is currently back trading 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).
The immediate support to watch for $SPX this week remains at 4,285 level; the 20DMA short term support level.
Fed taper talk
The Fed wraps up its two-day meeting on Wednesday and its statement will be scrutinized for any mention of the timeframe for tapering its asset purchase program, although Chairman Jerome Powell made it clear in his recent testimony to Congress that the U.S. economy still needs the central bank’s full support.
In June, policymakers began debating when to start cutting monthly purchases of $120 billion of Treasuries and mortgage-backed securities.
Powell may indicate that while a discussion on tapering has started, there is still time before officials reach a conclusion on what they will do. Policymakers are expected to highlight the risk from the rapidly spreading Delta variant, which investors worry could derail the economic recovery.
Most analysts expect the Fed to give a clearer indication of its plans for scaling back its quantitative easing program at its annual conference in Jackson Hole, Wyoming, in late August, before a formal announcement on tapering later in the year.
Data dump
Aside from the Fed meeting, investors will get an update on the strength of the U.S. economy with an end-of-month data dump.
Monday sees figures on new home sales, which are expected to hit new highs, followed by durable goods orders and consumer confidence on Tuesday.
The highlight is on Thursday with a first look at second quarter GDP and while expectations have been trimmed back in recent weeks, growth is still expected to be strong at 8.6% annualized. This would mark the recovery of all the lost output caused by the pandemic and could be the peak of the post-pandemic recovery.
Figures on personal income and spending are due Friday, which include the Fed’s rumored favorite measure of inflation – the core personal consumer expenditure price index.
Earnings deluge
U.S. earnings are kicking into high gear and investors will be watching the largest tech names to gauge whether a recent shift away from reflation trade and into growth stocks that led markets for the last decade will continue.
Earnings from Apple ($AAPL) and Alphabet ($GOOGL) on Tuesday, Facebook ($FB) on Wednesday and Amazon ($AMZN) on Thursday could accelerate a shift back into growth.
FAANG stocks – Facebook, Amazon, Apple, Netflix ($NFLX), and Google parent Alphabet – are usually known for delivering stellar stock market returns. But only Facebook and Alphabet have beaten the S&P 500 so far this year as investors piled into financials, energy firms and other companies that should benefit from the post pandemic economic rebound.
US Market Technicals Ahead (19 July – 23 July 2021)Despite solid results last week as earnings season ramped up, investors have been shifting their focus to data releases with global economic growth beginning to show signs of fatigue while many countries, particularly in Asia that are struggling to curb the highly contagious Delta variant of the coronavirus. The spectre of elevated inflation, which the market has long feared, is also haunting investors. Treasury yields were plunging, signaling fearful investors are padding their portfolios with Treasuries.
The second-quarter earnings continues this week, with companies such as IBM ($IBM), Netflix ($NFLX), Intel ($INTC), Johnson & Johnson ($JNJ) and Twitter ($TWTR) reporting their results.
Other key data to follow include: US building permits and housing starts.
Here is what you need to know to start your week.
S&P500 (US Market)
The benchmark index $SPX corrected -0.99% (-43.2 points) to close at 4,328 level during the week, and perceived safe haven assets, including the yen and gold, edged higher amid fears of rising inflation and a surge in coronavirus cases, while oil prices fell on oversupply worries.
The initial break out of $SPX trend channel resistance is met with rejection for its 3rd time as cautioned in the previous week. The channel support is currently priced at 4,240 level, -2% away from existing level.
The immediate support to watch for $SPX this week is at 4,285 level; an immediate break of support level established this month.
US Stock In Play: $MDB (MongoDB Inc)$MDB broken out of a double bottom chart pattern from $325, general trend resumption price action behavior, rallying +17.36% within a week. $MDB is currently close at $380, its 3 months high.
With $MDB current implied volatility remaining 40% away from its peak of $26/day that was set in March 2021, $MDB remains in traction to recapture its all time high of $428 at its current price action momentum that is defying general market weaknesses.
$MDB provides general purpose database platform worldwide. The company offers MongoDB Enterprise Advanced, a commercial database server for enterprise customers to run in the cloud, on-premise, or in a hybrid environment; MongoDB Atlas, a hosted multi-cloud database-as-a-service solution; and Community Server, a free-to-download version of its database, which includes the functionality that developers need to get started with MongoDB. It also provides professional services, such as consulting and training.
US Market Technicals Ahead (21 June – 25 June 2021)The Federal Reserve sent ripples across financial markets after its Wednesday meeting, when it signaled that interest rate hikes could come sooner than expected. US Dollar jumped, indices fell and bond yields moved to imply higher short-term interest rates in the future.
An appearance by Fed Chair Jerome Powell before Congress on this Tuesday will be in focus as are expectation for the tapering in bond-buying program to remain as a dominant trading theme this week and likely for the rest of the summer; as market participants digest the hawkish shift in policy guidance.
Investors in the US will also turn their attention to the June flash Markit PMI survey, with forecasts suggesting growth rates in both manufacturing and services sectors remained close to May’s all-time highs due to broader economic reopening and a labor market recovery
Here is what you need to know to start your week.
S&P500 (US Market)
Major US Indices ended sharply lower last week, with the $DJI (-3.71%) and $SPX (-2.19%) recording their worst weekly performances since late October and late February, respectively. The tech-heavy $NDX index closed with slight positive (+0.26%).
The declines were marked by a slide in value stocks, a pullback in some commodity prices as well as a rally in the dollar and U.S. government bonds. This decline was also signaled previously on the bearish divergence highlighted last week. $SPX have now currently breached its 20D and 50D Moving Averages on its third consecutive session for the first time since October 2020.
With $SPX now currently trading back on its mid-term trendline support, the immediate support to watch for $SPX this week is at 4,110 level; a high volume volatile price support zone set in May 2021.
Hawkish Fed shift
The Fed surprised markets last week when it projected two potential rate hikes in 2023, sooner than markets had anticipated and signaled that it was also reaching the point where it could begin talking about tapering its $120 billion a month stimulus program.
The shift in guidance was underlined when St. Louis Fed President James Bullard said on Friday that a move towards faster tightening of monetary policy was a “natural” response to economic growth and rising inflation as the economy reopens in the wake of the coronavirus pandemic.
The question of whether stronger than expected inflation would prompt the Fed to act sooner had already been hanging over financial markets in the run up to the policy meeting.
Powell testimony
Market participants will be closely watching comments by Fed Chair Jay Powell on Tuesday when he is due to testify, via satellite link, on the Fed’s emergency lending programs and current policies before the House Select Subcommittee on the Coronavirus Crisis.
In addition, several other Fed officials are due to make appearances during the week and their comments will also receive a lot of attention as markets look for fresh cues on the future direction of monetary policy.
Economic data
Investors will be paying close attention to the week’s upcoming economic data for clues on whether the recent surge in inflation – which saw consumer prices accelerate in May at the fastest rate in almost 13 years – is continuing.
Data on personal income and spending for May is due out on Friday, which contains the core PCE price index, supposedly the Fed’s favorite inflation gauge.
The economic calendar also features reports on new and existing home sales, durable goods orders, manufacturing and service sector activity and the weekly report on initial jobless claims, which is given close attention, given the uneven recovery in the labor market.
US Stock In Play: $OOMA (Ooma Inc)$OOMA presented a solid price increase over a period of 11 days, reflecting investors’ continued willingness to pay more for the potential upside in a stock. In the latest bullish flag breakout, $OOMA gained +22.2% over the last 6 trading days and successfully established a new all time high at $24.10.
The negative free cash flow of $OOMA may make it a less-desirable investment, however the stock price currently still remains significantly undervalued relative to its peers. It should be well-positioned to capitalize on the seismic tailwind due to the stay-at-home mandate in US.
$OOMA creates connected experiences for businesses and consumers in the United States, Canada, and internationally. The company’s smart software-as-a-service and unified-communications-as-a-service (UCaaS) platforms serve as a communications hub, which offers cloud-based communications solutions, smart security, and other connected services.
US Stock In Play: $VRTV (Veritiv Corporation)A quick follow up on $VRTV since our last highlight two weeks ago. With $VRTV currently trading at $66.47, a +32.55% increment since the Ascending Triangle chart pattern breakout, $VRTV have now crossed $1 Billion USD market capitalization for the first time, trading at its all time high level in the stock market.
$VRTV is currently exhibiting a two weeks consolidated bullish pennant pattern, poising for a further breakout towards $70 mark.
$VRTV operates as a business-to-business provider of value-added packaging products and services, as well as facility solutions, print, and publishing products and services in the United States, Canada, Mexico, and internationally.
US Market Technicals Ahead (31 May – 4 June 2021)In a week shortened by Monday’s Memorial Day holiday, Investors' focus turns to the May's nonfarm payrolls report to see if the unexpectedly weak April employment report was just a one-time blip
Meanwhile, the ISM PMI surveys should signal solid manufacturing and service growth rates during May, on the back of the country's re-opening efforts, the ongoing government support. Energy traders will be eyeing Tuesday’s OPEC+ meeting and the euro zone is to release inflation data against a backdrop of concerns over what rising price pressures could mean for expansionary monetary policy.
Here is what you need to know to start your week
S&P500 (US Market)
The benchmark index ($SPX) erased all losses for the month of May, re-gaining +1.07% (+44.4 points) during the week.
$SPX have successfully broke out of its sideway box range channel that was highlighted last week, infusing clarity on its short term trading direction for the month of June. $SPX is currently just 20 points away (+1.00%) from its all time high level of 4,245 level.
In the meanwhile, $SPX is reflecting a minor two weeks bearish divergence within its falling price volatility along with daily trading volume on its up-days. The immediate support to watch for $SPX is remains at 4,110 level, a potential renewed test of both 20D and 50D moving averages.
May jobs report could echo April weakness
Friday’s May jobs report will indicate whether the unexpected weakness seen in the April jobs report was a one-off or the start of a more persistent slowdown the labor market recovery.
The economy is expected to have added 650,000 new jobs in May.
Just 266,000 jobs were created in April, far short of the nearly one million expected. The economy is still more than 8 million jobs short of where it was before the pandemic.
Economists generally are still expecting strong job growth in the months to come, as the economy reopens.
ISM PMIs, Fed speakers
ISM manufacturing data is scheduled for release on Tuesday, followed by ISM services data on Thursday. Both readings are expected to be strong, but to highlight supply chain issues that are leading to shortages and higher prices.
ADP nonfarm payrolls data is due on Thursday, one day later than usual due to Monday’s holiday, along with the weekly figures on initial jobless claims.
The Fed’s beige book on the economy is due out on Wednesday and several Federal Reserve officials are scheduled to speak during the week, including Chair Jerome Powell. The Fed Chair will participate in a panel at a climate change conference on Friday together with International Monetary Fund chief Kristalina Georgieva and European Central Bank President Christine Lagarde.
Wary stock market
Stock market investors will be closely watching economic data and comments from Fed officials amid ongoing concerns the central bank may begin to pull back on its massive stimulus measures as price pressures rise.
Inflation concerns have persisted for several weeks and weighed on growth names, pulling down the tech-heavy Nasdaq, which posted its first monthly decline since October.
Volatility has risen even as the S&P 500 has rebounded to less than 1% below its May 7 record high, and the index saw its smallest monthly gain in the past four in May.
The U.S. stock market will be closed on Monday for the Memorial Day holiday.
US Stock In Play: $DSKE (Daseke Inc)In a flat trading week after the Dow Jones Industrial Average slipped from its record level amid fears about rising interest rates, $DSKE rallied to its 52-weeks high after this week's gain of +9.65%. The week of price action have also allowed $DSKE to break out of its 9 months trend channel convincedly, with shares transaction exceeding 500% of its 50-day average traded on Monday alone.
The next immediate resistance level is at $10, approximately 19% away from its current closing price of $8.35. $DSKE last traded at $10 in June 2018.
$DSKE provides transportation and logistics solutions with a focus on flatbed and specialized freight in the United States, Canada, and Mexico.
