Delta1trader Technology - Daily Market Report

Market Report Monday 27th of April 2020

There is more Central Bank action this week and the Bank of Japan already started Last night the BOJ increased purchases of corporate debt and removed caps on sovereign debt. The ECB and FED meet this week as well and is expected to issue more whatever it takes to support the economy. On another note, we have earnings from Google tomorrow, which should be very important for the Nasdaq, if the markets really care about earnings at all at the moment? The equities market is up big overnight and most of the gains in the US markets have actually come overnight for the whole month. This month’s market action is very unusual and most days have been one sided days, with a gap up overnight and trading on that side of the unchanged for the rest of the day.

Gold went above 1760 Friday morning and has since retraced back to 1730, good support at 1720 for today. Still favor buying dips in Gold for a move above 2000 in the next 4-6 weeks. I expect weakening USD as a result of huge QE, which should lead to higher prices of hard assets like gold.

Crude oil is down below 15.65 key support this morning and I expect more pressure to the downside towards the key support around 10.30 over the next few days and this should also put pressure on Canadian dollar in the next few sessions.
 
Market Report Tuesday 28th of April 2020



We have turn around Tuesday today and I expect to see some reversal movements in US equities. Equities is higher this morning and the small caps outperformed FANG stocks yesterday as funds were flowing out of FANG into anything else basically. The economy is starting to open up several places and it looks like things are getting back to order slowly. However we also had another oil company filing for bankruptcy yesterday, Diamond Offshore. So, I think we still see more bumpy market moves for quite some time. Focus is turning to the FED and the ECB this week and I think it will be focus to keep providing liquidity and do whatever it takes to support the economy. I said max 4 weeks to avoid major fall outs, there is no way the US can afford paying people to stay at home for long. We have 2,5 weeks left to get things back towards a bit normality to avoid further fall outs.

The gold is lower over the last few sessions and tested 1705 support this morning and it looks like month end balancing causing the selling. I think it could provide a nice buying opportunity for a move back to 1730 to 1750 later this week.

Nasdaq testing the overhead 8950 resistance again this morning and given the economic uncertainty US stocks are very expensive looking at next year’s earning projections. I also think the earnings projections are too high and have to come down as well. So, logically it should move lower from here the next few weeks and more and more analysts downgrade earnings.

Crude did test that 10.30 support level that I outlined as the downside target for the down move and bounced nicely back to above 12.50 and we could well rally all the way towards 15.64 key resistance. Looks like the crude June to August contracts are trading purely on inventory data and storage capacity.

US dollar is weaker across the board on more QE coming from the Fed, however I think this will reverse a bit later in the week, especially USDCAD looks like it should be higher with the current oil prices.
 
Market Report Wednesday 29th of April 2020

The focus will be on the FED meeting tonight and it is the first meeting for a while following the emergency cuts over the last few months. Expectations are low for any further moves on rates by the Fed for the next year or so. The press conference following today’s announcement will be important and Fed’s Powell can get the market moving substantially as he will stress the key points, he wants the market to focus at. The guidance will be key tonight regarding the future economic and rate outlook. The FED could have a 12Trillion balance sheet next year. The concept of unlimited QE is likely to remain the key theme and it looks like the equity markets have been front running this outcome and I would not be surprised to see a buy the rumor and sell the fact type of concept. Meaning, I am looking for a spike higher to sell into on the announcement.

The unlimited QE should be supportive for Gold and stocks, while it should be bearish for the US dollar.

The crude oil is looking better this morning as we are back above 14.20 resistance and we have scope for a move towards 15.64 key resistance. A break above 15.64 resistance would be opening for a move towards 16.80 area, where there is prior high volume traded and this should hold further advances for now.

Another thing I noted this morning is that the USDCAD has broken lower and now below 1.3950 and is outperforming the USD even though the Crude oil prices have been very weak. I am thinking this should reverse once we get past the FED tonight and could be back above 1.40 towards the end of the week.
 
Market Report Thursday 30th of April 2020


The Fed announcement was dovish yesterday as expected and they will do whatever they can to support the economy. The ECB followed up today with a similar type indication and will also do whatever they can to make sure Europe does not fall apart. The Fed has now pumped over $10 trillion into the markets through fiscal and monetary actions, creating huge support for the equity markets over the last month to rally 20%. Even though there are 20 million. The price action in April have been very weird. As of yesterdays’ close, 85% of the gains have come from gap opening during the month.


The move above 9140 in Nasdaq 100 futures overnight looks way too much in my opinion. I think the next leg should now be lower as we have lots of gaps below us that are open. My first target would be for a move down towards the high-volume area around 8715. I still think that it will take time to resolve the COVID19 fall out and to me the equity markets is pricing in way too fast of a recovery. There is also a good amount of risk that the virus will pick up again when the economy is opening up again. Therefore I think it will be more bumps ahead of us and not smooth sailing like the US equities are pricing in right now.


Crude oil is looking bullish above 16.30 now and the next big target to the upside is 20.50


Gold was rejected towards 1738 overnight and looking a bit like month end flows is keeping it offered or could also be due to the fact the Venezuela is selling off their gold holdings to support the economy.


USDCAD tested 1.3850 this morning and it looks like it should be higher with weak oil priced should weaken the CAD. That correlation has not been that strong this week, but should resume next week I reckon.
 
Market Report Friday 1st of May 2020


European markets are closed today and the liquidity has been poor in the overnight and European sessions. Crude oil have been jumping around last 24 hours and there is lots of sudden spikes and drops, so the volatility to trade is certainly good, however the random volatility expansion makes it a bit hard to get volume through. We have big resistance at 21.64 and I expect this level to the be defended by the sellers and a normal move would be to test back toward the breakout level of 18.26 near term. Today is the first day the new OPEC agreement is effective.


Gold is looking good and it held 1676 support and a move back above 1700 would be bullish for a test of 1715. If 1715 is broken I favor a run higher towards 1780 short term. I still think Gold will be trading above 2000 level in the next 4-6 weeks.


Earnings out of Amazon and Apple were both decent last night, but with the current high pricing of the equity markets it was not enough to avoid a sell off. As I have outlined numerous times over the last week, that recent rally up above 9100 in the Nasdaq futures looks excessive compared to the actual risk of earnings underperforming massively this year. Therefore, I favor a move lower from here in Nasdaq, S&P 500 and Dow Jones indices over the next 2 months. I think sell in May and go away is going to be a factor this year.


USDCAD broke the downtrend yesterday and not is targeting 1.4050 followed by 1.4120. In risk off environment the CAD should underperform, especially with the Crude oil trading below 21.46 resistance.
 
Market Report Monday 4th of May 2020

News out over the weekend that Buffett sold out of all the airlines stocks made the US equities gap lower at the open in Asian session today. Buffett is likely to put those funds received from the sale, back to work in some other companies, which would be a large buy side transaction potentially.

European Equity markets are back in the April range after the rally on Wednesday to get out of that range failed and was reserved on the ECB meeting Thursday that didn’t really provide any strong support for Italy to help them out with the COVID19 fallout. So, I expect to see more sideways to lower trading this week.

Gold is looking good and it held 1676 support last week and a move back above 1715 would be bullish for a test of 1740. I favor a run higher towards 1780 short term. I still think Gold will be trading above 2000 level in the next 4-6 weeks.

Crude has key resistance at 21.46 and I expect sellers to step in if that level is tested this week. A break above 21.46 would target 25 area. If 18 support is broken it could roll over lower.

USDCAD held above 1.40 support end of last week and has key resistance at 1.4150 area. I expect CAD to be dominated by the risk on sentiment. So risk on should be bullish for CAD and risk off should be bullish for USD.
 
Market Report Wednesday 6th of May 2020


The markets are starting to look forward to the Friday’s US nonfarm payrolls report, which is going to be absolutely terrible. However, the markets have already priced that in I reckon, so I don’t expect it to move the markets that much.


We saw a strong rally yesterday in the US equities back to the key resistance levels that could be the level for another leg lower. The Bulls are fighting hard to get back to towards the highs from last week and for a break higher. The bears on the other hand is looking to break this market lower from these levels and take it another leg lower. Let’s see what happens over the next few days.


Gold is struggling to get above the 1720 resistance level so far this week. We need to see a daily close above 1720, which would be bullish for a test of 1740. I favor a run higher towards 1780 short term. I still think Gold will be trading above 2000 level in the next 4-6 weeks.


Crude had a huge rally late last night to trade above the 26 level, however that rally looks overdone and I expect the crude to trade back into the support area of 22.70. A break of 22.70 would be a major stop loss festival trigger for a move towards 20.50 area.


USDCAD held above 1.40 support end of last week and has key resistance at 1.4150 area. I expect CAD to be dominated by the risk on sentiment. So, risk on should be bullish for CAD and risk off should be bearish for USD.
 
Market Report Thursday 7th of May 2020


The US weekly jobless claims came out at +3.17M vs the estimate of 3.0M today and that indicates the tomorrow’s nonfarm payrolls number will be pretty bad. The market expectation is for 21M lost jobs in April. I think we could see some selling in US equities if the number comes in worse, but I also see limited upside from here given that we are into the highs’ from last week. Don’t believe the news is that great to support much further upside in the short term until we see some clarity on the COVID 19 situation. The comment from Trump regarding making China responsible for the COVID19 losses is not helping either the trade deal between China and the US. The price action yesterday was quite bearish, so it is rather surprising to see US equities this much up overnight. It might well be that we are just setting up for a range trading environment over the summer.


Gold is looking much better this morning and has broken 1705 key resistance and we should have possibility to test 1715-1720 resistance next. We need to see a daily close above 1720, which would be bullish for a test of 1740. I favor a run higher towards 1780 short term. I still think Gold will be trading above 2000 level in the next 4-6 weeks.


Crude moved down to test 22.70 yesterday as expected and is back up slightly this morning. I do expect this rally to be capped around 26 level and I do favor a run lower to take out the 22.70 stops that have been placed there following the low yesterday.


USDCAD has broken the supporting trendline at 1.4070 and could move some way lower towards 1.3850 support. However, with the Crude looking to move lower over the next week’s and potentially the same with US equities, meaning risk off environment, we should have potential for a bounce back into the 1.4070 to 1.4180 prior range.


There is Bank Holiday in France and UK tomorrow, so I expect thin liquidity in the European session.
 
Market Report Friday 8th of May 2020

The US nonfarm payrolls data came out at 20m and the unemployment rate at 14.7%. The overnight moves vs. the US sessions moves continues to be very unbalanced with another heavy gap up at the start of today’s Nasdaq 100 trading vs. yesterday’s close. The economic data continues to be terrible and the equites keeps going up on absolutely nothing. We are approaching key resistance and next week will be important for direction. Right now, with regards to earnings, the S&P 500 is trading at fantasy valuations.

Gold failed towards the 1740 level again today and we moved back to test 1705 key support. I favor a run higher towards 1780 short term. I still think Gold will be trading above 2000 level in the next 4-6 weeks.

Crude holding up better than I expected and we are holding support level above 25 level so far on the day. Looks like we have a sideways consolidation pattern with 24.59 support and 27.30 resistance.

USDCAD has broken the supporting trendline at 1.4070 and could move some way lower towards 1.3850 support. However, with the Crude looking to move lower over the next week’s and potentially the same with US equities, meaning risk off environment, we should have potential for a bounce back into the 1.4070 to 1.4180 prior range.
 
Market Report Tuesday 12th of May 2020


The Nasdaq 100 futures have been trying to break higher over the last few days, but failed to do so yesterday. Some negative news out also today with regards to tougher rhetoric from Trump vs. China on the trade deal and COVID19 blame game. There seems to be more consensus around the market that the opening process could prove more challenging than what was the view one week ago. More news out that China is not likely to be able to meet the Phase1 trade target as imports from the US is much lower than the trade targets. Twitter Chief Jack Dorsey is suggesting that work from home could be the new norm going forward. I think more and more people will change their behavior patterns following the COVID19 as more people will look to avoid situations where they are in close contact with people. This will affect travel patterns and how people operate their businesses. To me it looks like people are likely to remain in lock down mode for some time and that should hurt spending, meaning equity prices should also adjust lower as earnings will be very weak for 2020.


Gold had another good recovery from a successful test of the 1690 level yesterday and looking to test 1720 resistance next. I favor a run higher towards 1780 short term. I still think Gold will be trading above 2000 level in the next 4-6 weeks.


Crude is trading in a sideways range with sellers towards the 27 level and buyers around the 24.50 level over the last week or so.


USDCAD is higher last few days on lower crude and more risk off environment. Next key resistance is 1.4114 followed by 1.4180. Key support remains 1,3960.
 
Market Report Thursday 14th of May 2020

US equities is moving down lower again after failing to break above the key support levels earlier this week. The recent uptrend line is also broken, which could open for a deeper move lower back towards the breakout levels end of March, meaning 2634 in the S&P futures.

Gold had another good recovery from a successful test of the 1690 level earlier in the week and and took out 1720 yesterday. Next target is 1745, followed by 1760. I favor a run higher towards 1780 short term. I still think Gold will be trading above 2000 level in the next 4-6 weeks.

Crude is trading in a sideways range with sellers towards the 27 level and buyers around the 24.50 level over the last week or so. A daily close outside of this range could provide a nice base for the next directional move.

USDCAD key resistance at 1.4130 or so now and with higher crude prices CAD should have potential to strengthen.
 
Market Report Tuesday 19th of May 2020


Huge rebound in US equity indices last 3 sessions and we are now back to the highs seen after the COVID19 sell off. Everything is based on the FED and Central Bank support, which is great for avoiding a total fallout. However, keep in mind that there is still difference between liquidity and solvency. News out this morning from China that they have locked down the city of Shulan in similar fashion as they did with Wuhan. This shows you that COVID19 is just not suddenly totally gone, it can strike back. To me the recent optimism is a bit overdone and the current valuation is basically saying that all will be back to normal in the next month or so. I don’t think that will happen and we are likely to see more issues when the economy opens up and I expect the spending to be lower as people will not be back to earning the same amount of money as they did right before the crisis kicked in. International travel will remain subdued for quite some time. On top of that, I expect a wave of bankruptcies in the service sector as the demand for some services will be low for quite some time until we at least have a clear cure in place.


Gold hit solid resistance yesterday at 1775 and fall back very fast to 1730, so clearly some profit taking up there ahead of the yearly high at 1788. My short-term goal of 1780 was not totally met, but very close and I think we need to build up a base above 1720 now to make another run higher. I still think Gold will be trading above 2000 level in the next 4-6 weeks.


Crude broke out of the sideways pattern last week and pretty much moved right up to test the falling resistance line at 32.70. There is plenty of resistance between 32.70 and 35.00, so I expect that resistance area to be tough to break on the first test. It will be very interesting to see how the inventory data this week will turn out. That data could be very important for direction this week.


USDCAD is below 1.40 this morning on weaker USD and it has key support at 1.3850 that should hold on the first test. Overall, I think there is scope for some profit taking in Crude this week and this could be a trigger for some CAD selling.
 
Market Report Tuesday 21st of May 2020

The Nasdaq 100 futures is now only 4% off the all-time highs and the S&P 500 index was testing the 3000 level. Things look a bit better, however China has locked down another city and COVID19 problems are not all over yet. The slow opening process will lead to bankruptcies for many businesses around the globe. Earnings are not close to supporting these valuations. So, how can these stocks be trading at these multiples? The Central Banks are supporting the markets all they can, which is nice and they are creating a massive asset bubble in equities at the moment. There is no way the equity indexes would be at these levels without massive buying from the Central Banks. It remains to be seen if this can feed through the real economy. I think they support packages will go a long way, but debt will be monumental after this is all returned to normal and there are plenty of business that cannot be saved unfortunately. I personally see no reason jumping in like crazy to buy equities here because now the risk side of the equation is totally forgotten. I still see spending falling and economy will suffer until there is a clear cure for COVID19 or the virus goes away. Should the stocks be trading at all time high then? Maybe yes, because there is nothing else in the asset space to buy that is totally liquid. Bonds are paying nothing, so why would you buy that? Gold is interesting but has a storage cost that is negative for most and no dividend. There is still a large gap below us in the Nasdaq and S&P500 that is a potential target for a short trade.

Gold not able to get above the 1760 this morning and we have broken below 1725 support, which could argue for a double top in place, so longs needs to be a bit careful. However, there seems to be plenty of Central Bank selling gold to pay for the massive QE, which is blocking the rally to extend above 1800 for the moment. I still think Gold will be trading above 2000 level in the next 4-6 weeks.

Crude is looking very bid last few days and is now really approaching a key area of resistance from 34 to 35 USD per barrel. A move through 35.18 would open for extension to close the gap at 43.44 in the medium term. There is a low volume area at 31.20 that I would expect to be tested before we run massively higher.
USDCAD is below 1.40 this morning on weaker USD and it has key support at 1.3850 that should hold on the first test. Overall, I think there is scope for some profit taking in Crude this week and this could be a trigger for some CAD selling.
 
Market Report Friday 22nd of May 2020

The equities sold off overnight on tension between China and Hong Kong, but this sell off was short lived and we are right back into positive territory for the Nasdaq 100 and about unchanged for the S&P500. So, the market is basically saying the Trump is not going to do anything about a Chinese take over of Hong Kong. On the political side, you must give credit to China for using the pandemic to end the Hong Kong autonomy. Again, Trump talks a lot, but market does not really believe anything he is saying, otherwise the equities would be much lower. A China and USA conflict would be major bad news for the equity markets and it would be down 5% or more in heartbeat in my opinion. I am baffled by the strength in the equity markets over the last couple of weeks and it seems that analyst thinks all is good now and they calculate dividends yields from the 2019 and 2020 number unadjusted for the COVID19 fallout. Who is not understanding that 2020 earnings will be far below the expectations? It is awesome with free money from the Government, but who does not understand that taxpayers must ultimately cover those expenses and taxes will most likely have to be raised to pay for these extraordinary costs. Of course the QE from the Central Banks are good tool for providing liquidity for the markets and it will drive gains in the equity markets in the short term, but I am not sure that it will actually reflect into improved earnings in the short term in the way the market is pricing in now? Meaning that earnings for 2020 and possibly 2021 could be adjusted lower from the current expectations. That should lead to risk being priced higher and equities should trade lower. There is a clear shift of capital into the IT space, which is expected to emerge better from the current lockdown than traditional equities.

Some interesting arguments in the following article: https://seekingalpha.com/article/434...derstand-bulls

Gold held the key support at 1715 yesterday and is higher this morning, which is showing solid buying of gold on dips. However, there seems to be plenty of Central Bank selling gold to pay for the massive QE, which is blocking the rally to extend above 1800 for the moment. I still think Gold will be trading above 2000 level in the next 4-6 weeks.

From yesterday: Crude is looking very bid last few days and is now really approaching a key area of resistance from 34 to 35 USD per barrel. A move through 35.18 would open for extension to close the gap at 43.44 in the medium term. There is a low volume area at 31.20 that I would expect to be tested before we run massively higher. We got exactly this down move overnight and that 31.20 area was hit, even extending a bit lower to bottom out at 30.72.

USDCAD broke above 1.4000 this morning and moved up to test resistance at 1.4050, but could not hold onto gains as the crude oil started to go bid in the European session.

Monday is a Holiday in the US, so should I expect very low liquidity in the European markets Monday.
 
Market Report Wednesday 27th of May 2020

Equity futures are higher yet again and pointing to another day in positive territory for the companies listed on the major US indices. This despite the again loose cannon Donald Trump both threatening to shut down social media at the same time as he is continuing his stare down with China. If the markets really would be pricing in what the President of USA was doing, we would have been on a much lower level of pricing. So, let us face it; the markets do not consider what Donald Trump is twittering, saying or doing. He is a man of many and big words, but the markets know that is about it. All this China noise have we seen before anyway so until we actually have some movement on this USA-China trade war the markets will not react.
The markets are continuing their trending up with the boost of stimulus and positive COVID-19 numbers and will continue as is until those two factors changes. Or, we have a real negative development on the trade war.
 
 
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