Investing.com | Jun 08, 2020 07:03
US futures for the S&P 500, Dow Jones, NASDAQ and Russell 2000 were all off session highs on Monday, while European shares opened lower. Asian indices had a mixed showing this morning as traders try to figure out if exhaustion had set in after last week's most exuberant rally in years.
Yields climbed, pulling the dollar up. At the same time, gold found its footing.
h2 Global Financial Affairs/h2Contracts on major US indices trimmed an earlier advance but remained slightly higher. Futures on the NASDAQ 100 are signaling that the underlying benchmark could see a record close during today's Wall Street session, following Friday’s all-time high. This optimism comes on the heels of improving economic data, including last week's nonfarm payrolls release which surprised significantly to the upside. It helped bolster the case for a quick economic recovery ahead of this week's Fed decision.
Markets are now focused on the Fed’s meeting this week as well as the Wednesday policy decision and statement, including the US central bank's first official economic projections this year. Investors will want to get feedback on Friday’s astounding data turnaround, which went from an expectation of an additional 9 million jobs lost to the shocking addition of 2.5 million jobs.
Will the Fed hint at a potential rate increase this year? That would put traders in the uncomfortable position of deciding whether to root for confirmation of the vaunted V-shaped recovery, hopes for which have spurred them to push stocks so hard and so high. Or, would it be preferable to wish for lower rates instead?
The challenge for the Fed: finding that ellusive balance between pitching the economy or its stimulus; wealth creation vs a Fed creation as it were.
“Markets have responded positively to falling infection rates in the major economies, and signs of increased consumption as countries emerge from lockdown,” Gavekal Research analysts wrote in a weekend note.
“But by buying at present valuations, investors appear to be pricing in a perfect Keynesian recovery in the second half of the year.”
This morning, technology and healthcare shares dragged the Stoxx Europe 600 Index into negative territory.
The huge NFP surprise on Friday—which also included a better-than-expected unemployment rate figure—created an upside gap for the S&P 500 Index
Will it prove the start of a new move toward the Feb. 19 record, which is 6% away, or will a downside gap complete an Island Reversal instead, as an overbought RSI might suggest?
Yields, including for the 10-year Treasury note, climbed for the sixth day, extending a selloff after Friday's BLS numbers.
From a technical perspective, rates escaped a range via its topside. However, the sustained technical significance of the breakout remains unclear even though it included support off the 50 DMA and penetration of the 100 DMA, when the prior move was both lower—to the 0.31 March low, and higher—to the March 20 high of 1.28. Note: the 200 DMA looms right above that high, backed up by the long-term downtrend since the November 2018 high.
The dollar slipped after two days of gains following a six-day selloff.
The USD’s chart shows the same sharp whipsaw before its recent jump, making any predictive statements suspect.
The unexpectedly good jobs report pushed gold below a key support formed by multiple patterns.
The MACD and the RSI reinforce the price patterns’ failure, but the ROC still gives it hope. We would consider $1,660 as our red line, the level where prices found resistance in March, but then later flipped to support with the development of the symmetrical triangle whose integrity is now in question, after prices fell below it on Friday.
WTI jumped at the open, moving above $40 as OPEC+ extended production cuts, with Iraq and Nigeria promising to make up for missing their targets.
Technically, oil is struggling from below the $40 mark, and if prices close at these levels, it will demonstrate the round number as a psychological resistance. Should this occur, trading will have formed a hanging man, bearish upon confirmation of a lower close—all below the resistance of the March 9 falling gap.
h2 Up Ahead/h2
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.