Indices Updates by Solid ECN

[SOLIDECN]

US100 tests 13,000 pts ahead of GDP data​

Reading close to market estimates could be a positive for Wall Street and may help alleviate concerns around banking sectors. Simultaneously, it should be neutral for USD as it will be more reactive to Fed. A strong GDP reading could provide fuel for USD gains as it would boost odds for more hikes from Fed. This, in turn, could be negative for Wall Street. Weak GDP report may have mixed impact on Wall Street but would most likely be negative for USD.

US100 is trading in the 13,000 pts area. Yields resumed climb (drop on TNOTE) and suggest a pullback.​

 

[SOLIDECN]

DE 30​

• Friday marked the end of April trading and it ended with solid gains, sending DE30 to the highest level since January 2022 and US indices to back to resistance zones. For DE30 it was the fourth straight green monthly candle meaning that each month of 2023 has been positive so far.​
• Monday trading has been subdued as trading is halted on most markets due to the Labour Day holiday. US indices are trading close to Friday’s session highs and JAP225 is adding around 0.5%.​
• The Chinese PMIs were released over the weekend and they both were below expectations. The services index slid from 58.2 to 56.4 points but more worryingly the manufacturing one dropped from 51.9 to as low as 49.2 points, just around 4 months after the China reopening. It suggests that while domestic demand picked up on reopening, the global manufacturing keeps struggling.​
• Adding to those concerns, the Australian PMI dropped from 49.1 to 48 points. However, manufacturing PMI in India expanded from 56.4 to 57.2 points in a rare showing of manufacturing strength.​
• Investors were reminded of the US banking issues last week when the First Republic Bank kept suffering deposit flight and eventually the regulator announced that the Bank would be sold. The idea was to sell the Bank over the weekend, however, the process continues as of the Monday morning.​
• The markets did not seem overly concerned though, using strong earnings reports from Microsoft and Meta to catapult stocks towards the 2023 highs.​
• FX markets are bit mixed as of today with AUD being the strongest and the JPY the weakest currency. The JPY could be under pressure after the BoJ did not change the course of monetary policy with the new chairman at the helm.​
• Crypto markets are sliding after strong gains in recent weeks while the majority of the commodity markets are down as well.​
• The calendar for today is mostly focused on the US releases with the ISM (4pm CET) the key release.​
• The week has a chance to be very eventful with the FOMC (Wednesday) and the NFP report (Friday) the main points on the calendar.​

There’s a large divergence between the US500 that is at the resistance and AUDUSD just picking up off the support zone. The Fed meeting this week should clarify the picture for the markets.​

 

[SOLIDECN]

DE30​

On Wednesday, German Index DAX opened higher after a long weekend due to the Labor Day on Monday. Today's stock market session in Europe brought a continuation of the uptrend. The German DAX (DE30) started strongly after the opening bell and set new highs for this year. However, the momentum did not last long, and a few minutes after the session started, profit-taking occurred, resulting in the DE30 being traded in negative territory.

From the technical analysis point of view, on the chart a false breakout above the consolidation level occurred. After DE30 dropped below the zone around 16,060 points, the decline accelerated and the price touched the EMA100 moving average, where the bulls came into play. If the moving average is defended and a hammer formation appears on the H1 chart, there is a possibility of a retest of resistance levels around 16,060 points. On the other hand, if the formation is invalidated and the price drops below the moving average, a further decline towards last week's lows around 15,830 points cannot be ruled out.​

 

[SOLIDECN]

Jap225​

Economic Outlook

Japanese NIKKEI 225 is on the rise trading near an all-time high following positive GDP data and supportive comments from country leaders. The Japanese economy grew at a faster-than-expected rate of 1.6% in Q1, surpassing the projected 0.7% growth. This strong economic performance has boosted market optimism.

The recent earnings season has been a positive catalyst for Japanese equities, supported by Warren Buffett's endorsement and improvements in corporate governance. The projected operating profit growth in the fiscal year ending March 2024 is about 6% for Tokyo Price Index (Topix) companies. Additionally, Goldman Sachs sees a potential in the Japan market, attributing the gains to corporate reforms and easy monetary policy.

The Bank of Japan (BoJ) may consider revising its Yield Curve Control (YCC) policy in the upcoming June meeting, supported by the robust GDP outcome. However, the BoJ is likely to remain patient in taking any policy actions and may wait until next year to make rate hikes, as they review recent developments in inflation and other macroeconomic data. Current interest rate is maintained at -0.1% level and has remained unchanged since 2016. The argument for the YCC policy to remain unchanged is the government's approval of an electricity bill rise, which likely will support inflation to stay above 2% for a longer period.

JAP225 (Nikkei 225) index is trading at 30,100 points, which is near its all-time high of 30,500. The price is also approaching the upper line of an uptrend channel (marked with blue line) that started in early March. The next significant resistance level should be expected at 30,500, indicating a potential target for further price gains. On the other hand, the support levels are identified at 29,300 and 28,300, which can act as price floors in case of a downward movement.

The MACD indicator, a momentum oscillator, indicates a strong bullish momentum without any signs of divergence at the moment. This suggests that the upward trend may continue, supporting the bullish outlook for the Nikkei 225 index. Traders and investors will be closely monitoring the resistance and support levels for potential trading opportunities.​

 

[SOLIDECN]

DE30 Closes in on all-time highs​

European indices rally, DE30 closes in on all-time highs

European indices are rallying at the beginning of today's cash trading session on the Old Continent. This comes after a stellar Wall Street session yesterday that saw major US indices gain over 1%, with small-cap Russell 2000 jumping over 2%. Optimism on Wall Street yesterday was triggered by upbeat comments on US debt ceiling negotiations - US president Biden said that talks are progressing and he will have more news on the matter on Sunday, when he returns from G7 summit, while US House Speaker McCarthy said that default is off the table and reaching a deal this week is doable.

Major blue chips indices from Europe are trading over 0.5% higher on the day. German DAX deserves a special mention as the index outperforms regional peers with 1.5% gain. Taking a look at DAX futures (DE30) we can see that price broke above a recent trading range and reached a fresh 1-year high today. Moreover, the index is currently trading just 0.4% below all-time highs from November 2021.​

 

[SOLIDECN]

DE 30​

German DAX rallied over the past two days, adding almost 2% over Wednesday and Thursday combined. The upward move was being continued on the futures market during the Asian session today as optimism over possible agreement on US debt ceiling drove equities higher. As a result, DAX futures (DE30) briefly traded above 16,300 pts mark at fresh all-time highs.

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Taking a look at DE30 chart at H1 interval, we can see that the upward move on the German index accelerated after breaking above the 15,810-16,085 pts range. While the index pulled back a bit after reaching a fresh ATH, there is still some room for gains from a technical point of view. A textbook range of the upside breakout from the aforementioned 15,810-16,085 pts trading range suggests a possibility of the upward move to as high as 16,355 pts - or around 0.6% higher from current market price.

 

[SOLIDECN]

US100​

A new week has begun and there is still no agreement on the US debt ceiling. Moreover, comments made by Democrats and Republicans suggest that two sides grew more apart in their positions over the weekend. Nevertheless, talks are still ongoing and US president Biden is set to meet with House Speaker McCarthy today to look for solutions. US Treasury once again warned that deadline to reach the agreement is June 1, 2023 and failure to do so by then could risk US defaulting on its obligations. Goldman Sachs assesses that US default would happen on June 8-9, 2023 without an agreement.

Deadline to reach the deal is looming large but, interestingly, markets barely reacted to the latest setbacks and launched new week's trading little changed. This shows that there is a strong belief in the markets that the deal will eventually be reached and sides to the negotiations are just trying to win as many concessions from the other as possible. Nevertheless, failure to reach a deal this week could see markets start to get nervous.

Taking a look at Nasdaq-100 futures chart (US100) at D1 interval, we can see that the index reached a 13-month high last week. While a small pullback occurred last week, price remains close to recent high. While markets seem to ignore negative news on debt ceiling negotiations, it does not mean that positive news will be similarly ignored. Headlines suggesting that definite agreement was reached would likely trigger a positive reaction on indices with US100 possibly moving above 14,000 pts. Apart from debt ceiling talks, US tech index may also move on FOMC minutes (Wednesday, 7:00 pm BST) this week or Nvidia earnings (Wednesday, after market close).​

 

[SOLIDECN]

Russel 2000 rallies 2.5% as banks outperform​

Wall Street indices managed to recover from early losses and are posting small gains at press time. Russell 2000 is an exception as the index is not posting a small gain but a massive one. The index is trading 2.5% higher at press time with all 11 sector groups trading higher. Biggest gains, however, can be spotted on Financials subindex. The move high in financials is driven by banks, with regional banking shares rallying today. The move is somewhat puzzling as there was no news that could justify outperformance of the sector. It looks like a relief rally following struggles of regional banks in recent months.

However, it should be said that banks have been underperformers on Wall Street yesterday and this underperformance was a result of WSJ report suggesting that US regulators are considering raising capital requirements for banks by 20%. This story has been neither confirmed, nor denied by US authorities but it looks like shares in regional banks are trying to erase part of recent weakness today.

Russell 2000 futures (US2000) rally today and has managed to climb above 1,845 pts resistance zone earlier during the session. The index is trading at a 3-month high. The next resistance zone to watch can be found in the 1,885 pts area.​

 

[Solid ECN]

US500 - Trade of the day​

Facts:​

• US500 has broken out of the downward trend channel​
• Currently, there is consolidation around the resistance zone​
• The end of the hike cycle is near​

Recommendation:​

• Position: long on US500​
• Target Price: 4384, 4437​
• Stop Loss: 4230​

Justification:

The US500 index has broken out of the downward trend that has been ongoing since the end of 2021. The index's breakout occurred at a price of 4200 points. After overcoming resistance, the index price gained up to the level of 4250 points, after which it retested support at the level of 4200 points. The following days brought a decisive rebound, and the previous week the US500 index ended on a solid plus. The price clearly broke above the support line, indicating a strong move. It is currently in consolidation around 4300 points, increasing the chances of a possible further breakout.

Next week, investors are awaiting key inflation data and the FED's decision on interest rates. Currently, the market estimates no hikes and hopes for a signal of the end of the cycle. The lack of a hike at this meeting may lead to euphoria on the indices in the hope of ending the cycle and a "soft landing". Although such a scenario is rather unlikely, it may lead to increases in the valuations of risky assets in the short term. This may be a sufficient reason for the US500 to continue the strong upward trend and break above 4300 points in the short term. However, if the price does not break above 4300 points, we recommend setting a stop loss close enough to minimize losses.​

 

[SOLIDECN]

US100​

Wall Street futures are expected to open higher at the beginning of the new week, with investors eagerly awaiting important Consumer Price Index (CPI) data and the Federal Open Market Committee (FOMC) decision on interest rates later in the week. The US500 index futures rise a 0.3% increase, reaching 4320 points, while the US100 (NASDAQ 100) trades 0.5% higher at 14630 points, which is close to this year's all-time high of 14680 points.

The financial markets are currently dominated by a positive sentiment, as investors anticipate the Federal Reserve to announce a pause in their cycle of interest rate hikes after a string of 10 consecutive increases. This sentiment has led to an appreciation of higher-risk equities, while the performance of major currencies has caused the dollar index to decline. The US100 (NASDAQ 100) has experienced modest gains, indicating a potential continuation of the bull market trend.

The US100 index, currently priced at 14630 points, is displaying a strong upward trend, suggesting a robust bullish momentum. This is supported by the bullish signal from the Moving Average Convergence Divergence (MACD) indicator, with higher highs indicating a strong upward movement. The next potential resistance zone for the US100 index may be around 15000 points. However, if the price fails to reach this level a retracement to around 14300 points or even further down to 14000 points is possible.​

 

[SOLIDECN]

JAP225​

Japan's Nikkei stock index closed yesterday's session at 33-year highs last seen in 1989, above 33,000 points, and today contracts on the index (JAP225) extend gains, ahead of the Fed decision. The index is being driven by a weakening yen and rallies in the stocks of Japan's largest companies, - yesterday Toyota (TM.US) shares in particular added to the gains. The rally of Japan's Nikkei was fueled by the US S&P 500 and Nasdaq indices, which yesterday recorded their highest closes in 14 months.

After the release of US inflation data Wall Street is more sure that the Fed will not raise interest rates in June. Tachibana Securities pointed out, a significant improvement by global investors regarding the Japanese market - primarily large inflows into the stocks of Japan's largest companies and the automotive sector like Toyora, Honda Motor (HMC.US), Mazda. Toyota informed that it had overcome a technical hurldes (solid-state batteries) and will start produce more efficient, faster-charging versions of current batteries to improve EV driving range and cost;

Among all Tokyo sub-indexes, it was the automaker segment that gained the most strongly (over 4.2% growth). It is worth noting, however, that shares of this sub-index have behaved quite poorly in recent months and still have a considerable loss to the benchmark average - it seems that they are striving to close the gap;
The stocks of other companies related to the auto market (including manufacturers of EV batteries), industrial conglomerates like Kobe Steel, and shares of technology investment fund SoftBank also performed well. Slightly weaker on the Japanese trading floor were chipmakers linked to the still-weakening Chinese market like Advantest and Screen Holdings.

Contracts on the Nikkei (JAP225) rose euphorically and are trading near 33,600 points. In case of a correction, the main support could be set by the previous peaks of February and September 2020, at 30,500 points.​

 

[SOLIDECN]

US100​

US100 index, currently trading at 15354 points, has shown strong bullish momentum by breaking a significant resistance level at 15220 points seamlessly. This upward movement also led to a break above the upward trending channel, indicating a potential continuation of the bullish trend. The next significant resistance level is around 15654 points. However, traders should be cautious as the recent rally may trigger profit-taking activities. In that case the index may decline to the last consolidation zone between 14500-14600 points.

 

[SOLIDECN]

US500​

• Wall Street trades slightly lower on the opening​
• Investors eagerly await the results of Powell's testimony​
• FedEx declined due to lower-than-expected forecasts for the year 2024​

Investors remained cautious after a pause in interest-rate hikes, as Federal Reserve Chair Jerome Powell's remarks indicated the expectation of higher interest rates to control inflation and reduce US growth. The second-quarter stock rally appeared to be fizzling out due to factors such as crowded bullish positioning, high valuations and a growth outlook.

Wall Street opened with losses as investors showed concern over signs of rampant inflation in major economies, indicating that central banks may not be close to winding down their tightening cycles. The S&P 500 and Nasdaq 100 both fell 0.4%, while the Dow Jones Industrial Average declined 0.5%.
A surge in US housing starts in May indicated strong demand outstripping supply, potentially fueling economic growth. Citigroup analysts believe core inflation is unlikely to return to target in such an environment.

The S&P 500 (US500), with the current price at 4,415 points, has experienced a 0.4% decline today. The price retraced from a resistance level of 4,500 points, which was approximately 6.5% below the all-time high. As the market undergoes a correction, the next level to monitor is at 4,400 points. If this level is broken, the subsequent support level to watch is at 4,300 points.

The recent strong gains in the market suggest that it may be overheated, as indicated by the Relative Strength Index (RSI) around 70. Therefore, a period of consolidation and correction is deemed reasonable under these circumstances.​

 

[SOLIDECN]

DE30

Risk-on moods can be spotted on the markets today. Equities in Europe and China traded higher earlier today and now solid gains can be spotted on Wall Street as well. Upbeat comments from the Chinese Prime Minister on additional stimulus measures being implemented starting from July as well as solid US data earlier today are supporting upbeat sentiment on the markets.

German DAX futures (DE30) found their way back above the 16,000 pts mark this afternoon. Index tested 15,850 pts support zone yesterday but failed to break below. Bulls managed to hold the index above the upper limit of the upward channel. Bullish candlestick patterns suggest that a recovery move may be on the cards now. In such a scenario, 16,090 pts area will be the first near-term resistance to watch.

US indices are trading higher today with S&P 500 futures (US500) breaking above 4,400 pts area. Taking a look at the index at H1 interval, we can see that price broke above the upper limit of the bearish channel and 50-period moving average (green line). Advance continued and bulls managed to break above the 4,400 pts resistance zone, where the upper limit of market geometry was located, flashing another sign that a short-term bullish trend reversal occurred. The next resistance zone to watch can be found in the 4,427 pts area and is marked with previous price reactions.​

 

[SOLIDECN]

US100​

• US indices rallied today, led by tech stocks. S&P 500 gains 1.1%, Dow Jones adds 0.7% and Nasdaq jumps 1.6%. Russell 2000 rallies 1.8%​
• European stock market indices traded higher today. German DAX added 0.2%, UK FTSE 100 moved 0.1% higher while French CAC40 and Dutch AEX gained 0.4%. Polish WIG20 was a laggard with 1.4% drop​
• Hopes for new Chinese stimulus sparked by comments by Chinese Primer triggered gains on industrial metals markets​
• ECB President Lagarde hinted that recent data supports a rate hike in July​
• Reuters reported that majority of ECB members expect rates to be raised at July and September meetings as inflation remains an issue​
• Goldman Sachs increased its US Q2 GDP forecast from 1.8 to 2.2% QoQ​
• HSBC warns that US will fall into recession this year while Europe will follow in 2024​
• OPEC denied media reports saying that it has invited Guyana to join the group​
• Cryptocurrencies traded higher following reports that Fidelity is preparing to file for the Bitcoin ETF​
• US durable goods order surprised to the upside in May. Headline orders increased 1.7% MoM (exp. -1.1% MoM) while core orders were 0.6% MoM higher (exp. -0.1% MoM)​
• Headline Canadian CPI inflation slowed from 4.4 to 3.4% YoY in May, in-line with market expectations. However, core CPI slowed more-than-expected, from 4.1 to 3.7% YoY (exp. 3.9% YoY)​
• Conference Board consumer sentiment index jump from 102.3 to 109.7 in June (exp. 103.6). Present Situation subindex moved from 148.6 to 155.3 while Expectations subindex jumped from 71.5 to 79.3​
• US new home sales 12.2% MoM in May to 763k (exp. 670k)​
• Energy commodities trade lower - oil drops 1.9% while US natural gas prices decline 0.9%​
• Precious metals trade mixed - gold drops 0.6%, silver gains 0.2% and platinum trades flat​
• EUR and GBP are the best performing G10 currencies while JPY and CAD lag the most​

Nasdaq-100 (US100) broke above the 50-hour moving average (green line), 15,000 pts resistance zone and bearish trendline today. The index is closing in on the 15,140 pts resistance zone, marked with previous price reactions and the upper limit of market geometry.​

 

[SOLIDECN]

SPA 35 Loses 1.5% after election​

Lack of a clear winner in Spain's snap election could lead to a prolonged period of uncertainty on the stock market

The center-right People's Party (PP) won Sunday's snap general election in Spain, winning 136 seats in the 350-seat parliament. PP leader Alberto Nunez Feijoo announced his readiness to form a new government and called on the other parties to help him with this mission. On the other hand, polls from just a few weeks ago gave him a decidedly higher number of seats, which can be considered a slight disappointment for the PP party that was predicted to form a new government.

Second place went to the leftist Spanish Socialist Workers' Party - the incumbent leader in parliament (PSOE), whose leader is current Prime Minister Pedro Sanchez. The party won 122 seats, a marginally better result than before. In third place was the far-right Vox party with 33 seats, which could be a potential coalition partner for the PP. However, 176 seats are needed to form a government majority, which means that other scenarios are possible, such as a government of the left and separatists or another election. It is noteworthy that the Vox party, which is called an extremist far-right party, has the largest decline among all parties, but at the same time the number of seats it has won in parliament gives it the opportunity to enter into a coalition with the People's Party.

In an evening speech, Prime Minister Sanchez expressed satisfaction with "declining" support for right-wing parties, although at the same time, support for the PP party itself has increased. Some believe that Sanchez will try to block Feijoo's ability to form a government, which could mean another period of instability in Spain, as is currently being seen in the Spanish stock market.

SPA35 (IBEX) is losing heavily at the open due to uncertainty over the formation of a new government. SPA35 opens with a gap, the lowest since July 18.​

 

[SOLIDECN]

US100 - Morning Wrap​

• US indices ended yesterday's session with solid gains. The Nasdaq 100 Index gained 1.60%, while the S&P 500 was up 1.10%. The Dow Jones was the day's worst performer, rising only 0.54%.​
• Asian equities and US futures rallied, driven by rising US tech shares and signs that the Federal Reserve's rate-hiking campaign is coming to an end. Stocks in Japan, Australia, and South Korea climbed, with Hong Kong's tech-led surge marking its best performance in a month.​
• The upbeat mood in the Asia-Pacific markets followed the Wall Street session, with the Nikkei rising by 0.92%, the Kospi by 1.12%, the Nifty 50 by 0.39%, and the S&P/ASX 200 by 0.21%.​
• Chinese indices performed exceptionally well after a prolonged period of being strongly oversold. The Hang Seng gained 2.30%.​
• Regarding a potential Australia-EU trade deal, Trade Minister Dan Tehan shared optimism about forthcoming discussions with the EU trade commissioner, emphasizing enhanced access to essential minerals for Europe as one of the strongest positives.​
• The CEO of National Australia Bank, one of Australia's 'big four', believes the country won't face a recession, highlighting the resilience of the housing market despite interest rate hikes by the Reserve Bank of Australia.​
• Nvidia (NVDA.US) shares rose over 6.50% in pre-market trading after surpassing analyst earnings estimates and offering a positive future outlook.​
• Nvidia reported revenues of $13.51 billion versus a $11.04 billion forecast, a 101% year-on-year growth. Earnings per share (EPS) stood at $2.7, compared to a forecast of $2.07 and $0.51 in Q2 2022. Data center revenues reached $10.32 billion against a $7.99 billion forecast, marking a 171% year-on-year surge.​
• The Japanese Yen underperformed today, with USDJPY rising to 145.1. Conversely, after a period of lagging, the EUR emerged as the top performer, with EURUSD advancing 0.12% to 1.0815.​

After strong increases yesterday, the US100 has once again broken above the support line of the upward trend that was recently breached. Good results from Nvidia will likely support the index today, and further increases may continue.​

 

[SOLIDECN]

Apple One Step Closer to iPhone 15 Debut​

Apple's stock (AAPL.US) has gone up this year. However, the company hasn't shared its plans for artificial intelligence (AI) technology yet. Also, their second-quarter results showed that device sales are not growing, even though they're still making record profits and increasing their profit margins. Today, Apple is going to show off the new iPhone 15, which is always big news in the tech world. If they give any hints about future developments for their AI system, Siri, during this event, it could affect their stock price.

Looking at the chart of Apple (AAPL.US), we see that the price has settled below the SMA50 and SMA100, and the last time it traded below both of them was at the beginning of the year. The main resistance level is set by the 23.6 Fibonacci retracement of the upward wave from January. A potential lower oversold range is at $170, where we see the 38.2 Fibo, and just below at $165 runs the long-term trendsetting SMA200 (red line).​

 

[SOLIDECN]

USD 100 - Chart of the day​

With the BoJ's decision, the cycle of publishing monetary decisions of major central banks this week comes to an end. The markets reacted volatile to them, but overall the indices recorded losses on a weekly basis. The relatively hawkish Fed and its published new dot-plot indicated the possibility of one more hike this year and the postponement of the first rate cuts. The overtones of this conference broadly affected sentiment around the US100 index and TNOTE.

The US100 index has been recording declines, which have reached, from the perspective of technical analysis, important support zones set by the 100-day exponential moving average (purple curve), which, it is worth mentioning, have not been tested for nearly 6 months. Moreover, the declines themselves are directly driven by the sell-offs observed in the debt market, which has historically shown a correlation with the listings of technology companies.

 

[SOLIDECN]

Tesla​

Wall Street is expected to open lower, with futures indices erasing earlier gains. Investors are shifting towards lower-risk positions as US 10-year bond yields surge and the dollar strengthens.

Final PMI data indicates a contraction phase in major economies despite better-than-expected results from Europe. US Manufacturing PMI improved due to increased employment and better supply availability, but inflation concerns persist due to rising producers' costs.

US ISM Manufacturing PMI shows contraction for the 11th month in a row, despite some recovery signs. While demand remains soft, production improved, and suppliers retained capacity. Discrepancies between ISM and PMI prices underscore the rapidly changing environment.

Goldman warns of the impact of rising rates on US corporate profits. Kevin McCarthy faces pressure from Joe Biden to fund Ukraine and from Matt Gaetz to cut government spending. Bill Ackman plans to pursue a deal with Elon Musk's X through Pershing Square's SPARC.

The US500 index is trading at 4320 points, down 0.20%, with selling pressure preventing recovery. It's set to retest the critical 4300 support zone.

Tesla's shares fell 4.0% as Q3 deliveries and production fell short of estimates. The company delivered 435,059 vehicles and produced 430,488, attributing the decline to planned factory upgrades. However, Tesla's 2023 volume target of 1.8 million vehicles remains unchanged.

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