US Market Technicals Ahead (14 June – 18 June 2021)
The Federal Reserve two-day policy meeting is the main event event for the markets this week, although the central bank is not expected to take any action but maintain an ultra-loose monetary stimulus. All eyes will turn to comments from Fed Chair Jerome Powell for clues about the central bank's latest view on inflation.
While the outcome of the Fed meeting will take the limelight, investors will also be looking closely at economic data on U.S. retail sales and producer prices for an update on the strength of the economic recovery.
Here is what you need to know to start your week.
S&P500 (US Market)
$SPX rose +0.41% (+17.4 points) for its third straight positive week, closing at a all time high level of 4,250. Investors are giving growth stocks another chance as bond yields come down. The 10-year Treasury went below 1.43% on Friday, a three-month low.
Stock markets are likely to tread water, with investors reluctant to take new positions ahead of Wednesday’s Fed statement which will be scrutinized for clues regarding its timetable for raising interest rates. $SPX continues to reflect a minor bearish divergence as highlighted last week.
The immediate support to watch for $SPX is now at 4,165, a breakdown of its classical support, along with 20D and 50D major moving averages.
Fed meeting
Investors will be zeroing in on the Fed's statement at the conclusion of its two-day policy meeting on Wednesday against a background of persistent concerns over whether inflation spikes could pressure the central bank to start tapering its stimulus sooner than expected.
The Fed has repeatedly said that near-term price spikes will not translate into lasting inflation and Chairman Jerome Powell is expected to stick to this stance and reassure markets the Fed’s policy will remain accommodative.
While inflation numbers are rising, the recovery in the labor market remain sluggish. The economy added 559,000 jobs last month after gains of just 278,000 in April. That left employment about 7.6 million jobs below its peak in February 2020.
Most analysts are not expecting the Fed to begin discussing scaling back its asset purchase program before its annual conference in Jackson Hole, Wyoming, in late August.
Economic data
Away from Fed meeting, the U.S. is to release May data on retail sales and producer price inflation on Tuesday.
Also out on Tuesday is industrial production data which will be closely watched amid issues over supply constraints and labor market shortages. This could translate into increases in producer price inflation.
The economic calendar also features reports on housing starts and initial jobless claims. Data on Thursday showed the number of Americans filing new claims for unemployment benefits fell last week to the lowest level in nearly 15 months as the reopening continues.
Meme Stocks Mania
Meme stocks could also remain in the headlines after a volatile ride last week. GameStop ($GME) hit a high of $344.66 Tuesday and dropped as low as $206.13 Friday before closing at $233.34 per share.
Besides meme stocks, Treasuries could also be in focus after an unexpected slide in yields. There was a major move in the rate of the benchmark 10-year, watched most closely by investors, as it influences mortgages and other important lending rates.
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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 Stock In Play: $SUP (Superior Industries International Inc)$SUP share price surged by +34.94% parabolically in a short span of 4 trading days, breaking out of its mid-term trend channel that was established since December 2020. The latest closing price of $9.25 is a new 52 weeks high closing for $SUP.
With implied volatility still remaining almost 25% away from its March peak of $0.60/day ATR-14 range, the highlighted Bearish Shooting Star reversal signal along with diminishing trading volume over its consecutive up-days may imply an imminent heavy profit session within the week. Further upside for $SUP requires immediate trading sessions to recapture this week’s high of $9.65 to negate the highlighted bearish signs.
$SUP designs, manufactures, and sells aluminum wheels to the original equipment manufacturers and aftermarket distributors in North America and Europe. The company supplies aluminum wheels to the automobile and light truck manufacturers. It offers its products under the ATS, RIAL, ALUTEC, and ANZIO brand names.
US Market Technicals Ahead (7 June – 11 June 2021)Investors will keep a close eye on Thursday’s U.S. consumer price data amid concerns that rising inflation could prompt the Federal Reserve to begin pulling back on stimulus. The consumer price report for May will probably show the inflation rate rising to 4.6 percent, the highest since September 2008 and well above the Federal Reserve’s target of about 2 percent.
Meme stocks look likely to continue to grip investors’ attention after a wild ride last week. Markets will also be monitoring the progress of President Joe Biden’s proposed $1.7 trillion infrastructure plan, which has already boosted the industrials and materials sectors this year, leaving many industrials and materials stocks vulnerable to a selloff if a large spending bill in Washington fails to materialize.
Elsewhere, the European Central Bank (ECB) is to meet on Thursday and may discuss tapering stimulus.
Here’s what you need to know to start your week.
S&P500 (US Market)
The benchmark index ($SPX) kicked off the 2nd half of 2021 on a positive note, gaining +0.55% (+23 points) during the week.
$SPX remains less than a percentage point away from recapturing its all time high level of 4,245 level. The past two weeks of low market volatility have seen $SPX trading in a range less than 36 points, the lowest since April 2021.
In the meanwhile, $SPX continues to reflect a minor bearish divergence within its falling price volatility along with daily trading volume on its up-days as highlighted since last week. The immediate support to watch for $SPX is now at 4,150, a breakdown to the lowest price level traded over the past two weeks.
Inflation threat
All eyes will be on the latest CPI data on Thursday, after a much stronger than expected inflation number sparked a selloff last month, as many worried rising price pressures could force the Fed to begin unwinding stimulus soon.
Friday’s jobs report indicated that while jobs growth picked up from the previous month wage growth also accelerated. This could bolster the argument that higher inflation may persist rather than being transitory, as is currently viewed by the Fed.
The inflation reading is one of the last major pieces of economic data ahead of the next Fed meeting on June 15-16 and Fed officials will be in their traditional blackout period during the coming week ahead of that meeting.
The economic calendar also features Thursday’s figures on initial jobless claims, which fell below 400,000 in last week’s release for the first time since the start of the pandemic.
Meme stock frenzy
The wild ride for meme stocks looks set to continue, after AMC ($AMC) shares ended last week with gains of more than 80% despite falling more than 6% on Friday.
AMC has been at the center of a fresh wave of buying by retail investors who hyped the stock in forums such as Reddit’s WallStreetBets, breathing new life into a phenomenon that began with January’s more than 1,600% gain in GameStop ($GME).
AMC, which was on the brink of bankruptcy not long ago, on Thursday completed its second share offering in three days, cashing in on a nearly 400% surge in its share price since mid-May.
But most analysts say that the scale of the rally is out of line with AMC’s fundamentals and high valuations on the meme stock names are unlikely to last.
There are no actively managed stock funds among AMC’S 20 largest shareholders, according to Refinitiv data, leaving open the risk that a shift in retail investor opinion could quickly sink its shares.
Infrastructure deal
Market participants will be closely following negotiations between Democrats and Republicans in Washington over President Joe Biden’s proposed $1.7 trillion infrastructure deal.
Transportation Secretary Pete Buttigieg had said the White House sees Monday – when Congress returns from a one-week break – as a critical date to see progress in talks.
Expectations of government spending on infrastructure have already boosted value stocks this year, particularly the industrials and materials sectors, which have both gained around 20% since the start of the year, against a 12.5% gain for the S&P 500.
Those large gains may leave many industrials and materials stocks vulnerable to a selloff if a large spending bill in Washington fails to materialize.
ECB dilemma
The ECB meets on Thursday and will release its updated growth forecasts for 2021 and 2022.
Policymakers will debate whether to prolong their support for the euro zone recovery through emergency stimulus, a decision that will hinge on how strong they believe the region’s economic recovery is.
Recent dovish comments by several ECB policymakers have highlighted the risks of premature tightening. Any indication from ECB head Christine Lagarde that the debate on tapering is getting underway could push euro zone bond yields still higher and undermine the economic recovery in the bloc.
US Stock In Play: $TEN (Tenneco Inc)$TEN share price surged by a further +14.96% since our last update this week. This totals up a gain of +42.34% in a short 9 days trading session. With $TEN continuing to outperform its sectorial competitors with increasing buying demand, trading at a new 52 weeks high on both share price and implied volatility, further upside will be imminent to test its 2019 resistance at $25 range.
$TEN is currently trading at its 52 weeks high, at a market capitalization exceeding $1 Billion USD for the first time since 2019.
$TEN designs, manufactures, and sells clean air, powertrain, and ride performance products and systems for light vehicle, commercial truck, off-highway, industrial, and aftermarket customers worldwide.
US Market Technicals Ahead (31 May – 4 June 2021)In a week shortened by Monday’s Memorial Day holiday, Investors' focus turns to the May's nonfarm payrolls report to see if the unexpectedly weak April employment report was just a one-time blip
Meanwhile, the ISM PMI surveys should signal solid manufacturing and service growth rates during May, on the back of the country's re-opening efforts, the ongoing government support. Energy traders will be eyeing Tuesday’s OPEC+ meeting and the euro zone is to release inflation data against a backdrop of concerns over what rising price pressures could mean for expansionary monetary policy.
Here is what you need to know to start your week
S&P500 (US Market)
The benchmark index ($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: $UONEK (Urban One Inc)$UONEK pivoted from its $3.50 support level, surging with a +17.73% intraday action which exceeded beyond its 3-months average implied volatility over 60%. Its price peak of the year was traded just two weeks ago, establishing a high of $5, and closing at $4.60.
52 weeks high of $UONEK was last traded at $6.84, on 17th June 2020. This price level is currently 61.15% away from the last closing price.
$UONEK together with its subsidiaries, operates as an urban-oriented multi-media company in the United States. The company operates through four segments: Radio Broadcasting, Cable Television, Reach Media, and Digital.
US Stock In Play: $ASO (Academy Sports and Outdoors Inc)$ASO navigated out of its consolidated price pattern with a resurgent of its uptrend coupled high sessional volume, rallying up +15% this month (April). $ASO was previously whipsawing along its 20DMA over the course of 7 weeks since the start of February. $ASO is currently trading at $32.70, merely a dollar away from its all time high.
At the current junction $ASO is displaying a congested price pattern with dried up volume, posing for an all time high breakout in the upcoming week.
$ASO through its subsidiaries, operates as a sporting goods and outdoor recreational products retailer in the United States.
