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In Search of the Elusive Bottom
By
PristineTrading, in The Markets
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By AdrianaLowe
The theme over this last trading week has been one of remarkable resilience. After breaking down from key resistance levels, it seemed that a period of consolidation would follow. But, globally, markets instead rallied with conviction to retest their highs.
I have been sceptical about the sustainability of the rally this year. But one of the most fundamental axioms of surviving the markets is to trade what you see, not what you believe. And what I am seeing is markets that seem to want to push higher across the board, with individual stocks holding up well even when faced with bearish news.
S&P 500
(credit: chart from Sigma by Hydra X)
The S&P closed the week strongly at 2,822.48, up 0.5% on high volume, and on the back of its biggest weekly gain since November 2018. US markets seem insistent on forging a path higher despite the overhang of earnings, macro economy news, North Korea, and ongoing China trade talks. I still wait for price to break and close clear of the congestion zone around 2,800 before entering longs, but this looks increasingly like a environment where the only rational positions to take are either to be flat or long.
MICROSOFT
(credit: chart from Sigma by Hydra X)
Gains this week were led by tech, with the sector surging 4.9%, and also becoming the best performing sector of 2019. I find MSFT interesting, having completed a bullish inverse head and shoulders pattern, rallying in a tight rising channel, and strongly testing resistance (and also its all-time highs) on high volume. But a spinning top candlestick in the midst of overhead resistance, and a bearish stochastic crossover which in overbought territory could translate into a pullback, which could provide interesting entries for longs.
TESLA
(credit: chart from Sigma by Hydra X)
A good litmus test for market sentiment is how stocks behave on news. Tesla has held on to $275 support despite its Model Y unveiling event underwhelming analysts; BAML, CFRA Research and Canaccord Genuity all issued cautionary notes. If it gets there, $260 looks to be strong support for a countertrend rally.
BOEING
(credit: chart from Sigma by Hydra X)
Boeing continued to suffer the aftermath of the latest tragedy, ultimately having to suspend its entire fleet of 737 MAX planes when the FAA finally followed the lead of global aviation authorities in grounding the plane. Deliveries of the 737 MAX have also been paused. The beleaguered company faces an indeterminate outcome from investigations, bills from airlines affected by the grounding of the plane, as well as potential suits from the families of victims. On Thursday, the US Air Force joined the party. It launched a blistering attack on Boeing, saying that the company has a ‘severe situation’ after flawed inspections of their KC-46 air refuelling tanker aircraft, and questioning the company’s ‘culture of discipline for safety’. [https://www.cnn.com/2019/03/14/politics/air-force-boeing-refueling-plane/index.html] Despite all this, the stock has proven remarkably well supported at $370, repeatedly rallying from those levels on high volume.
FACEBOOK
(credit: chart from Sigma by Hydra X)
No company has had a worse week than FB, even within the context of its bad year. The week started with a proposal by Senator Elizabeth Warren to break up FB, was followed by a network outage affecting its Facebook, WhatsApp and Instagram services, and then announcements of a widening federal criminal probe into its data sharing practices. Two key executives, Chris Cox and Chris Daniels also announced their departures from the company. A nadir was reached when its Facebook application was used to livestream the hate-driven massacre of 49 people in New Zealand.
Technically, the stock has broken below the bottom of its ascending channel, and key overhead resistance in the $170-173 region looks daunting. There is also a huge gap from Feb 2019 waiting to be closed.
Yet in spite of the weak technical picture and the deluge of negative news, FB closed just 2.13% down for the week, and ended the trading session on Friday well above the lows of the day, forming a bullish hammer. While I have been waiting for a clear break in one direction or the other for a while, as rising channel met overhead resistance, I choose to stay as interested spectators for now.
EUR/USD
(credit: chart from Sigma by Hydra X)
Finally, last week I noted the technical breakdown of key support levels in the EURUSD, in conjunction with fundamentally bearish news in the form of Draghi’s dovish speech. However, I was keen to stay on the sidelines, given past experience of how crowded trades tend to turn out. EURUSD didn’t disappoint, as it promptly rose in a stop-hunting rally, which would have trapped any short entries in a very uncomfortable position.
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By Stocks4life · Posted
AXGN Axogen stock, nice top of range breakout, from Stocks to Watch at https://stockconsultant.com/?AXGN -
By Stocks4life · Posted
PTCT PTC Therapeutics stock watch, trending with a pull back to 45.17 support area at https://stockconsultant.com/?PTCT -
By Stocks4life · Posted
APPS Digital Turbine stock, nice rally off the 1.47 triple+ support area, from Stocks to Watch at https://stockconsultant.com/?APPS -
By HFblogNews · Posted
Date: 20th December 2024. BOE Sees More Support For Rate Cuts As USD Strengthens! The US Dollar continues to rise in value after obtaining further support from positive economic and employment data. However, the hawkish Federal Reserve continues to support the currency. On the other hand, the Great British Pound comes under significant strain. Why is the GBPUSD declining? GBPUSD - Why is the GBPUSD Declining? The GBPUSD is witnessing bullish price movement for three primary reasons. The first is the Federal Reserve’s Monetary Policy, the second is the positive US news releases from yesterday and the third is the votes from the Bank of England’s Monetary Policy Committee. Even though the Bank of England chose to keep interest rates unchanged at 4.75%, the number of votes to cut indicates dovishness in the upcoming months. Previously, traders were expecting the BoE to remain cautious due to inflation rising to 2.6% and positive employment data. In addition to this, the Retail Sales data from earlier this morning only rose 0.2%, lower than expectations adding pressure to GBP. Investors also should note that the two currencies did not conflict and price action was driven by both an increasing USD and a declining GBP. The US Dollar rose in value against all currencies, except for the Swiss Franc, against which it saw a slight decline. The GBP fell against all currencies, except for the GBPJPY, which ended higher solely due to earlier gains. US Monetary Policy and Macroeconomics The bullish price movement seen within the US Dollar Index continues to partially be due to its hawkish monetary policy. Particularly, indications from Jerome Powell that the Fed will only cut on two occasions and the first cut will take place in May. However, in addition to this the economic data from yesterday continues to illustrate a resilient and growing economy. This also supports the Fed’s approach to monetary policy and its efforts to push inflation back to the 2% target. The US GDP rose 3.1% over the past quarter beating expectations of 2.8%. The GDP rate of 3.1% is also higher than the first two quarters of 2024 (1.4% & 3.0%). In addition to this, the US Weekly Unemployment Claims fell from 242,000 to 220,000 and existing home sales rose to 4.15 million. Home sales in the latest month rose to an 8-month high. For this reason, the US Dollar rose in value against most currencies throughout the day. Analysts believe the US Dollar will continue to perform well due to less frequent rate cuts and tariffs. The US Dollar Index trades 1.65% higher this week. Bank of England Sees Increased Support for Rate Cuts! The Bank of England kept interest rates unchanged as per market’s previous expectations. The decision is determined by a committee of nine members and at least five of them must vote for a cut for the central bank to proceed. Analysts anticipated only two members voting for a cut, but three did. This signals a dovish tone and increases the likelihood of earlier rate cuts in 2025. The three members that voted for a rate cut were Dave Ramsden, Swati Dhingra, and Alan Taylor. Advocates for lower rates believe the current policy is too restrictive and risks pushing inflation well below the 2.0% target in the medium term. Meanwhile, supporters of keeping the current monetary policy argue that it's unclear if rising business costs will increase consumer prices, reduce jobs, or slow wage growth. However, if markets continue to expect a more dovish Bank of England in 2025, the GBP could come under further pressure. In 2024, the GBP was the best performing currency after the US Dollar and outperformed the Euro, Yen and Swiss Franc. This was due to the Bank of England’s reluctance to adjust rates at a similar pace to other central banks. GBPUSD - Technical Analysis In terms of the price of the exchange, most analysts believe the GBPUSD will continue to decline so long as the Federal Reserve retains their hawkish tone. The exchange rate continues to form lower swing lows and lower highs. The price trades below most moving averages on the 2-hour timeframe and below the neutral level on oscillators. On the 5-minute timeframe, the price moves back towards the 200-bar SMA, but sell signals may materialise if the price falls back below 1.24894. Key Takeaways: The US Dollar increases in value for a third consecutive day and increases its monthly rise to 2.32%. The US Dollar Index was the best performing currency of Thursday’s session, along with the Swiss Franc. US Gross Domestic Product rises to 3.1% beating economist’s expectations of 2.8%. US Weekly Unemployment Claims read 220,000, 22,000 less than the previous week and lower than expectations. The NASDAQ declines further and trades 5.00% lower than the previous lows. The GBPUSD ends the day 0.56% lower and falls more than 1% after the Bank of England’s rate decision. Three Members of the BoE vote to cut interest rates. The GBP was the worst performing currency of the day along with the Japanese Yen. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HFM Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Michalis Efthymiou HFMarkets Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission. -
By HFblogNews · Posted
Date: 19th December 2024. Federal Reserve Sparks NASDAQ’s Sharpest Selloff of 2024! The NASDAQ fell more than 3.60% after the Federal Reserve cut interest rates, but gave hawkish comments. The stock market saw its largest decline witnessed in 2024 so far, as investors opted to cash in profits and not risk in the short-medium term. What did Chairman Powell reveal, and how does it impact the NASDAQ? The NASDAQ Falls To December Lows After Fed Guidance! The NASDAQ and US stock market in general saw a considerable decline after the press conference of the Federal Reserve. The USA100 ended the day 3.60% lower and saw only 1 of its 100 stocks avoid a decline. Of the most influential stocks the worst performers were Tesla (-8.28%), Broadcom (-6.91%) and Amazon (-4.60%). When monitoring the broader stock market, similar conditions are seen confirming the investor sentiment is significantly lower and not solely related to the tech industry. The worst performing sectors are the housing and banking sectors. However, investors should also note that the decline was partially due to a build-up of profits over the past months. As a result, investors could easily sell and reduce exposure to cash in profits and lower their risk appetite. Analysts note that despite the Federal Reserve's hawkish stance, the Chairman provided a positive outlook. He highlighted optimism for the economy and the employment sector. Therefore, many analysts continue to believe that investors will buy the dip, even if it’s not imminent. A Hawkish Federal Reserve And Powell’s Guidance Even though traditional economics suggests a rate cut benefits the stock market, the market had already priced in the cut. As a result, the rate cut could no longer influence prices. Investors are now focusing on how the Federal Reserve plans to cut in 2025. This is what triggered the selloff and the decline. Investors were looking for indications of 3-4 rate cuts by the Federal Reserve in 2025 and for the first cut to be in March. However, analysts advise that the forward guidance by the Chairman, Jerome Powell, clearly indicates 2 rate adjustments. In addition to this, analysts believe the Fed will now cut next in May 2025. The average expectation now is that the Federal Reserve will cut 0.25% on two occasions in 2025. The Fed also advised that it is too early to know the effect of tariffs and “when the path is uncertain, you go slower”. This added to the hawkish tone of the central bank. However, surveys indicate that 15% of analysts believe the Federal Reserve will be forced into cutting rates at a faster pace. As a result, the US Dollar Index rose 1.25% and Bond Yields to a 7-month high. For investors, this makes other investment categories more attractive and stocks more expensive for foreign investors. However, the average decline the NASDAQ has seen before investors buy the dip is 13% ($19,320). This will also be a key level for investors if the NASDAQ continues to decline. NASDAQ - Technical Analysis Due to the bearish volatility, the price of the NASDAQ is trading below all major Moving Averages and Oscillators on the 2-Hour chart. After retracement the oscillators are no longer indicating an oversold price and continue to point to a bearish bias. Sell indications are likely to strengthen if the price declines below $21,222.60 in the short-term. Key Takeaways: A hawkish Federal Reserve cut interest rates by 0.25% and indicates only 2 rate cuts in 2025! The stock market witnesses its worst day of 2024 due to the Fed’s hawkish forward guidance. Economists do not expect a rate cut before May 2025. Housing and bank stocks fell more than 4%. Investors are cashing in their gains and not looking to risk while the Fed is unlikely to cut again until May 2025. The US Dollar Index rises close to its highest level since November 2022. US Bond Yields also rise to their highest since May 2024. The NASDAQ’s average decline in 2024 before investors opt to purchase the dip is 13%. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HFM Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Michalis Efthymiou HFMarkets Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
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