E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Tech Up as Investors Buy Semiconductors

June E-mini NASDAQ-100 Index futures are trading higher shortly before the cash market close on Friday after President Trump’s China actions kept the trade deal intact.

During his news conference late in the session, Trump said he would take action to eliminate special treatment towards Hong Kong, however, he did not indicate the U.S. would pull out of the phase one trade agreement reached with China earlier this year. The news greenlit the late session rally as it eased trader concerns for the time being.

Technology sector investors celebrated the news by buying up semiconductor stocks. The iShares PHLX Semiconductor ETF (SOXX) jumped to its session high following the news conference, trading more than 2% higher.

Nvidia and Micron Technology shares advanced more than 2% each. However, among the biggest gainers in the ETF were Marvell Technologies and Lam Research, rising 6.7% and 2.9%, respectively.

At 19:46 GMT, June E-mini NASDAQ-100 Index futures are at 9537.00, up 76.75 or +0.81%.

Daily June E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through 9604.00 will signal a resumption of the uptrend. The main trend will change to down on a move through the last main bottom at 8847.00.

The minor trend is down. This is controlling the short-term momentum. A trade through 9604.00 will change momentum to the upside, while a trade through 9172.50 will reaffirm the downtrend.

The first minor range is 9604.00 to 9172.50. Its 50% level at 9388.25 is support.

The second minor range is 8847.00 to 9604.00. Its 50% level at 9225.50 is additional support.

The short-term range is 8556.25 to 9604.00. Its retracement zone at 9080.00 to 8956.50 is a support zone.

Daily Swing Chart Technical Forecast

Into the close on Friday the key level that must hold is the first minor pivot at 9388.25.

A close near 9604.00 will put the index in a position to continue the rally early next week. If there is enough buying behind the move then look for the rally to possibly extend into the February 20 main top at 9780.50.

E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Trading Near Highs after ‘Trump Bump’

June E-mini Dow Jones Industrial Average futures are trading nearly flat during the last hour of cash market trading after clawing back earlier losses. Blue chips stocks fell earlier in the session ahead of a U.S. response to China’s national security law on Hong Kong that threatens to take the shine off another month of strong gains for the stock market.

At 19:09 GMT, June E-mini Dow Jones Industrial Average futures are trading 25418, down 39 or -0.15%. This is up from a low of 24991.

Traders breathed a sigh of relief after President Donald Trump’s much-awaited news conference on China Friday afternoon. During the news conference, Trump said he would take action to eliminate special treatment towards Hong Kong. However, he did not indicate the U.S. would pull out of the phase one trade agreement reached with China earlier this year, easing trader concerns for the time being. Investors celebrated this news with a late session rally.

In other news, the iShares PHLX Semiconductor ETF (SOXX) jumped to its session high following the news conference, trading more than 2% higher. Marvell Technologies and Lam Research were among the biggest gainers in the ETF, rising 6.7% and 2.9%, respectively. Nvidia and Micron Technology also advanced more than 2% each.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum shifted to the downside on Thursday with the formation of a closing price reversal top and its subsequent confirmation on Friday.

A trade through 25794 will negate the closing price reversal top and signal a resumption of the uptrend. A move through the last main bottom at 22704 will change the main trend to down.

The minor trend is also up. A trade through 24076 will change the minor trend to down. This will also confirm the shift in momentum.

The main range is 29506 to 18086. Its retracement zone at 25144 to 23796 is controlling the longer-term direction of the major average. Its Fibonacci level at 25144 is major support.

The minor range is 24076 to 25794. Its 50% level at 24935 is controlling the longer-term direction of the Dow.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the June E-mini Dow Jones Industrial Average futures contract into the close on Friday is likely to be determined by trader reaction to the major Fib level at 25144 and the minor 50% level at 24935.

Bullish Scenario

A sustained move over 25144 will indicate the presence of buyers. If they can create enough upside momentum then look for the Dow to make a run at 25794.

Bearish Scenario

A sustained move under 24935 will signal the presence of sellers. This is a potential trigger point for an acceleration to the downside with the next major target a price cluster at 24076, 23796 and 23571.

For a look at all of today’s economic events, check out our economic calendar.

E-mini S&P 500 Index (ES) Futures Technical Analysis – Pivot into Close is 2984.50; Seeing Trump Bounce

June E-mini S&P 500 Index futures are edging lower late in the session on Friday, but clawing back earlier losses as traders braced for an upcoming news conference on U.S.-China relations from President Donald Trump.

The benchmark index began to cut its losses after a Bloomberg News report said Trump was not pulling the U.S. from the phase one trade deal with China. A reporter from PBS NewsHour also said the announcement would not include additional tariffs or changes to the existing trade agreement.

At 18:41 GMT, June E-mini S&P 500 Index futures are trading 3023.00, down 15.00 or -0.49%.

In other news, Bank of America and Wells Fargo led bank stocks lower, falling more than 1.6% each. Citigroup and JPMorgan Chase also dipped 1.9% and 1.7% respectively.

Daily June E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through yesterday’s high at 3065.50 will signal a resumption of the uptrend. A move through 2903.75 will change the main trend to down.

The minor trend is also up. Today’s price action turned 3065.50 into a new minor top.

The main range is 3397.75 to 2174.00. Its retracement zone at 2930.25 to 2785.75 is controlling the longer-term direction of the index. Holding above this zone will continue to give the market a solid upside bias. The nearest support is the main Fibonacci level at 2930.25.

Daily Swing Chart Technical Forecast

The new minor range is 2903.75 to 3065.50. Its 50% level at 2984.50 is controlling the direction of the index on Friday.

Bullish Scenario

A sustained move over 2984.50 will indicate the presence of buyers. If this creates enough upside momentum then look for a retest of yesterday’s high at 3065.50. This is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 2984.50 will signal the presence of sellers. This could trigger an acceleration to the downside with 2930.25 to 2903.75 the best downside target.

The main bottom at 2903.75 is a potential trigger point for an even stronger break with 2785.75 to 2765.50 the next target zone.

Natural Gas Price Prediction – Prices Hold Support as Rig Count Fales

Natural gas prices moved lower on Friday, despite a 2-rig drop during the current week. Prices pushed through support but rebounded to close above support levels. The weather is expected to be warmer than normal for the next 2-weeks throughout the middle of the United States. A weaker than expected Chicago PMI also weighed on natural gas prices.

Technical Analysis

Natural gas prices moved lower on Friday, initially breaking through support near an upward sloping trend line that comes in near 1.83. Resistance is seen near the 10-day moving average at 1.89. Short term support has turned positive as the fast stochastic generated a crossover buy signal in oversold territory. The current reading on the fast stochastic is 18, below the oversold trigger level of 20 which could foreshadow a correction. Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram prints in the red with a downward sloping trajectory which points to lower prices.

Rig Count Declines

Baker Hughes reported that the number of active U.S. rigs drilling for natural gas declined by 2 and oil declined by 15 to 222 this week. The oil-rig count has now fallen for 11 weeks in a row, suggesting further declines in domestic natural gas output. The total active U.S. rig count, meanwhile, also fell by 17 to 301, according to Baker Hughes.

Gold Price Prediction – Prices Rise on Weak Chicago PMI report

Gold prices rallied nearly 1% on Friday, following worse than expected personal spending and weak manufacturing figures. Concerns over the US and China’s locking heads are also helping to buoy the yellow metal. The dollar continued to move lower as yields edge slightly lower, which helped buoy the price of gold.

Technical Analysis

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Technical analysis

Gold prices moved higher recapturing resistance which is now support near the 5-day moving average at $1,720,  Target support is still an upward sloping trend line that comes in near $1,698. Below that level is support near the 50-day moving average at $1,684. Short-term momentum has turned positive as the fast stochastic recently generated a crossover buy signal. Medium-term momentum is negative but turning neutral as the MACD (moving average convergence divergence) histogram is printing in the red with a rising trajectory that points to consolidation.

The Institute of Supply Management reported that the May Chicago PMI came in at 32.3 versus expectations it would rise to 40.0. This compares to 35.4 in April. That’s the weakest since 1982. Among the main five indicators, order backlogs and supplier deliveries saw the largest declines.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Mid-Session Technical Analysis for May 29, 2020

The Euro is trading higher at the mid-session on Friday as traders await a key press conference from President on China in a move that could have a dramatic effect on investor sentiment.

On Friday, the greenback extended its slide against the surging Euro, hurt by month-end flows and as the common currency continued to enjoy a boost from the European Union’s recently announced plan to prop up the bloc’s coronavirus-hit economies with a 750 billion-Euro ($828 billion) recovery fund.

At 18:17 GMT, the EUR/USD is trading at 1.1093, up 0.0014 or -0.12%. This is down from an intraday high of $1.1145.

An early session gain by the Euro was driven by optimism generated by the European Commission’s stimulus plan announced earlier this week, as well as investors’ improved appetite for risk-taking as global economies gradually move to reopen after coronavirus-linked shutdowns, analysts said.

However, prices fell after the U.S. Dollar found support as traders awaited U.S. President Donald Trump’s response to China’s tightening control over Hong Kong, which could worsen tensions between the two powers over the financial hub.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend continued earlier today when buyers took out yesterday’s high. A trade through the main top at 1.1147 will reaffirm the uptrend. The main trend will change to down on a trade through the last main bottom at 1.0871.

The main range is 1.1496 to 1.0636. The EUR/USD is currently testing its retracement zone at 1.1066 to 1.1167. This zone is controlling the longer-term direction of the Forex pair.

The short-term range is 1.0636 to 1.1147. Its retracement zone at 1.0987 to 1.0937 is the nearest support zone.

Daily Swing Chart Technical Forecast

Based on the early price action and current price at 1.1093, the direction of the EUR/USD the rest of the session on Friday is likely to be determined by trader reaction to the main 50% level at 1.1066.

Bullish Scenario

A sustained move over 1.1066 will indicate the presence of buyers. If this creates enough upside momentum then we could see a surge into the main top at 1.1147, followed by the main Fibonacci level at 1.1167.

Bearish Scenario

A sustained move under 1.1066 will signal the presence of sellers. This is a potential trigger point for an acceleration to the downside with the short-term retracement zone at 1.0987 to 1.0937 the next likely downside target zone.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Forecast – Silver Markets Break Major Handle

Silver markets have broken above the $18 level during early trading on Friday, which of course is a very bullish sign. At this point I think that the silver markets are going to go looking towards the $19 level beyond that, which is also a major resistance barrier. At this point, we are likely to continue seeing quite a bit of noise in this market, as silver is volatile under the best of circumstances. If we can break above the $19 level, then it opens up a move to the $20 level. The silver markets do tend to move in one dollar increments, so this makes perfect sense.

SILVER Video 01.06.20

At this point, the $18 level should step in and start to offer support on pullbacks, and most certainly the $17 level will. Keep in mind that silver is an industrial metal, so although it is bullish it also has that working against it. Gold is still the purest play when it comes to fear and is most certainly outperforming silver. Regardless, you cannot sell this market, and if you are looking at the industrial demand as something that will be picking up, then silver makes quite a bit of sense.

It is bullish regardless, and if we can break above the $19 level, we should see a significant surge higher. Obviously, the $20 level is extraordinarily important from a psychological standpoint, so that will probably come into play as well. With this, the market is likely to see a lot of volatility, but I look at pullbacks as an opportunity to pick up silver with value.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 Price Forecast – Stock Markets Continue to See Resistance in Current Area

The S&P 500 has fallen a bit during the trading session on Friday, testing the 3000 level for support. Ultimately, this is a market that is overdone, so I think a little bit of a pullback would make quite a bit of sense. There is significant resistance between the 3000 level and the 3100 level, so to think that we will simply shoot through the top is probably asking quite a bit. Furthermore, we continue to get extremely poor economic figures so one would have to think sooner, or later Wall Street will realize that the customer does not have a job.

S&P 500 Video 01.06.20

In the meantime, it looks as if it is a “buy on the dips” type of situation, and therefore it is not until we break down below the 200 day EMA that you can change your overall attitude. If we do get that, then it is time to start reevaluating the entire situation. If we break above the top of the shooting star from the Thursday candlestick, then we could go looking towards the 3100 level but that is not going to be easy to do due to the fact that there is so much noise between here and there.

That being said, it is likely that we will pull back a bit in the meantime, thereby offering opportunities for both sides of the equation. Quite frankly, I would not risk too much in this market right now because it is doing a lot of “whistling past the graveyard.”

For a look at all of today’s economic events, check out our economic calendar.

Crude Oil Price Forecast – Crude Oil Markets Continue to Press Gap

WTI Crude Oil

The West Texas Intermediate Crude Oil market initially fell during the trading session on Friday but turned around to show signs of strength again. The gap is sitting just above here and therefore it is likely that technical traders will trying to find a reason to push into this area. Filling the gap is a common trade, and clearly the fact that we continue to find buyers on dips suggests that we are going to eventually find the momentum necessary. The top of the gap is near $41, and I think that is about as far as this market can go.

Crude Oil Video 01.06.20

Brent

Brent looks similar, but it has not reached the exact bottom of the gap, so it may have a little bit more of a fight ahead of it. Ultimately though, I do think that the market will make a decision and try to take off to the upside. I like buying dips, lease for the short term and until we get some type of major change in attitude what I consider shorting. Going into the weekend, it looks like we are still trying to find plenty of buyers to finally push higher, but ultimately this is a lot of back and forth, simply waiting for the next catalyst to get things going. I do believe that the 50 day EMA comes into play in both of these markets, at least for dynamic support. Expect volatility, so keep your position size relatively small until we get some type of clarity in these markets.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – Canadian Dollar Loses Ground Ahead Of The Weekend

USD/CAD Video 29.05.20.

U.S. Dollar Gains Ground As Canada Reports Grim GDP Numbers

USD/CAD tested the support level at 1.3730 but reversed course and climbed back to 1.3800 as the U.S. Dollar Index rebounded from the 98 level while Canada provided a disappointing GDP Growth Rate report.

Canada’s GDP Growth Rate in the first quarter was -2.1% quarter-on-quarter. GDP Growth Rate Annualized was -8.2% in the first quarter as the Canadian economy received a double hit from coronavirus and low energy prices. Canada expects that GDP growth declined by 11% in April.

The U.S. also reported grim economic data as Personal Spending was down by 13.6% as virus containment measures put significant pressure on consumer activity.

The U.S. Dollar Index has recently breached the low end of the previous 99 – 101 range and tested the 98 level but started to rebound, providing additional boost to USD/CAD.

The equity markets are worried about an additional increase in U.S. – China tensions but the U.S. dollar has not received too much support despite its role of a safe haven asset.

Technical Analysis

usd cad may 29 2020

USD/CAD has once again tested the nearest support level at 1.3730 but this attempt was unsuccessful. Instead of getting below 1.3730, USD/CAD gained significant near-term upside momentum and headed towards 1.3800.

Currently, USD/CAD is trading in the range between the support level at 1.3730 and the resistance level at 1.3850. The 20 EMA has recently crossed the 50 EMA to the downside, suggesting the increase in downside momentum, but USD/CAD will have to stay below 1.3850 to have material chances for additional downside.

In case USD/CAD manages to settle below 1.3730, it will head towards the next support level at 1.3650.

On the upside, USD/CAD will have to deal with the major resistance at 1.3850 which has previously served as the support level in a two-month trading range between 1.3850 and 1.4250.

In case USD/CAD gets above 1.3850, it will gain additional upside momentum and head towards the 20 EMA level at 1.3935. The 50 EMA is located close to the 20 EMA so this resistance level may be very significant.

If USD/CAD settles above both the 20 EMA and the 50 EMA, the next resistance will likely be seen closer to 1.4000.

For a look at all of today’s economic events, check out our economic calendar.

 

Natural Gas Price Forecast – Natural Gas Markets Soften Into the Weekend

Natural gas markets initially tried to rally during the day on Friday, but you can see that we have pulled back a bit, reaching below the $1.80 level. There is a significant amount of support to the downside extending all the way to the $1.60 level though, so it is likely that we will continue to see buyers given enough time. With that in mind, I like the idea of looking for some type of bounce that I can take advantage of, but right now I do not see it. That is okay, we are heading into the weekend so it is difficult to imagine a scenario where traders would be willing to get overly bullish anyway. Ultimately, given enough time I do expect that we will see buyers coming back in but that is probably a story for next week.

NATGAS Video 01.06.20

At this point in time, a little bit of patience is probably needed. Ultimately, I do think that we are trying to form some type of “rounded bottom”, which is always an exceptionally long term and messy affair. Because of this, I think that the market is still very noisy, so therefore small position sizing will be crucial, but I do think that we will have a little bit more clarity somewhere during the week next week. In the short term, simply waiting for the setup is probably the best way going forward. Ultimately, there is not much to do rather than wait.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Forecast – Gold Markets Continue to Grind Higher

Gold markets have rallied a bit during the trading session on Friday as we continue to see a lot of concerns around the world. Furthermore, central banks continue to have the printing presses running at full tilt. Ultimately, this suggests that we should continue to see fiat currencies get devalued. The gold market as the natural place to go looking to protect yourself from falling value of currency, so I think we continue to see that factor into the buying to say the least. Furthermore, you have the concerns about the multitude of potential global headlines that could cause issues, and therefore it makes sense that people are using this as a way to protect themselves.

Gold Price Predictions Video 01.06.20

Looking at the chart, I do see a lot of resistance between the $1750 level and the $1760 level. If you can break above there, then the market is likely to go looking towards the $1800 level. Ultimately, the $1800 level is significant resistance, so if we do break above there then the market is free to go much higher over the longer term. That being said, it looks like we are still in the midst of trying to form some type of ascending triangle, and at this point even if we were to pull back from here, it is only going to end up being a buying opportunity. With all of the various concerns around the world when it comes to global trade and of course the pandemic, it is hard to imagine a scenario where gold does not rise over the longer term. The 50 day EMA underneath continues offer plenty of support as we have seen over the last couple of months.

For a look at all of today’s economic events, check out our economic calendar.

Oil Mixed As Traders Hope For Extension Of Current Production Cuts

Oil Video 29.05.20.

U.S. Domestic Oil Production Drops By 100,000 Barrels Per Day

Oil remains under some pressure as the EIA Weekly Petroleum Status Report showed that crude oil inventories increased by 7.9 million barrels per day (bpd).

Gasoline inventories decreased by 0.7 million bpd while distillate fuel inventories increased by 5.5 million bpd. In general, the report painted a picture of a rather weak demand for oil.

Meanwhile, the U.S. oil production declined from 11.5 million bpd to 11.4 million bpd. The pace of the domestic production decrease has slowed down but the downside trend is steady.

I’d note that the oil market did not experience any major sell-off after the inventory news because oil is trading at low levels, so bad news are already included in today’s prices.

The previous major downside move which brought the WTI May 2020 contract into the negative territory was caused by the fears of running out of oil storage. Now that such fears have been eliminated, oil will need serious downside catalysts to return back to sub-$30 levels.

Russia And Saudi Arabia Continue To Discuss The Extension Of Existing Oil Production Cuts

The potential extension of the existing oil production cuts is the main topic of this week.

According to earlier reports, Russian Energy Minister Alexander Novak discussed potential oil production cuts with Russian oil companies.

However, another report stated that Russia wanted to increase its oil production in July instead of sticking to existing production cuts.

A new Reuters report suggested that Saudi Arabia wants to keep existing oil production cuts until the end of the year.

The original OPEC+ deal called for production cuts of 9.7 million bpd in May – June, followed by production cuts of 7.7 million bpd until the end of the year.

If the existing production cuts are kept until the end of the year, the oil market will get significant support.

As usual in these discussions about production cuts, Russia’s position may be a problem.

A Reuters report stated that Russia’s leading oil company Rosneft had trouble with supplying its clients with oil due to production cuts and that it wanted to increase production after June.

The next OPEC+ meeting is scheduled for June 10 so we’ll soon learn whether Saudi Arabia and Russia reached consensus regarding production cuts.

For a look at all of today’s economic events, check out our economic calendar.

Daily Gold News: Friday, May 29 – Gold at Yesterday’s High

The gold futures contract gained 0.09% on Thursday, as it extended its consolidation following bouncing off $1,700 support level on Wednesday. Gold has been trading within a downward correction after reaching new monthly high of $1,775.80 on Monday almost two weeks ago. Wednesday’s price action was quite bullish, but gold keeps extending over month-long consolidation, as we can see on the daily chart:

Gold is 0.6% higher today, as it gets back to yesterday’s high. Financial markets remain in risk-on mode, as stocks hover along their new medium-term highs. What about the other precious metals?: Silver gained 1.18% on Thursday and today it is 2.6% higher, platinum lost 1.14% and today is trading 0.4% higher. Palladium lost 1.61% yesterday and today it is 1.6% lower again.

The recent economic data releases have been confirming negative coronavirus impact on global economies. Today’s Personal Spending number release came out worse than expected. However, the Personal Income data was better than expected. The market will await today’s Fed Chair Powell speech at 11:00 a.m. We will also have a speech from President Trump today. Investors are now waiting for the Chicago PMI release at 9:45 a.m. There will also be Michigan Sentiment number release at 10:00 a.m.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for today:

Friday, May 29

  • 5:00 a.m. Eurozone – CPI Flash Estimate y/y, Core CPI Flash Estimate y/y
  • 8:30 a.m. Canada – GDP m/m, RMPI m/m, IPPI m/m
  • 8:30 a.m. U.S. – Personal Spending m/m, Personal Income m/m, Core PCE Price Index m/m, Goods Trade Balance, Preliminary Wholesale Inventories m/m
  • 9:45 a.m. U.S. – Chicago PMI
  • 10:00 a.m. U.S. – Revised UoM Consumer Sentiment, Revised UoM Inflation Expectations
  • 11:00 a.m. U.S. – Fed Chair Powell Speech

Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Two Steps Forward, One Step Backward in the S&P 500, Right?

Stocks defended the opening bullish gap, and scored further gains intraday before the sellers took over in the session’s final 45 minutes. Have we seen a turning point?

In short, that’s unlikely, and let me tell you why exactly I think so.

S&P 500 in the Short-Run

Let’s start with the daily chart perspective (charts courtesy of http://stockcharts.com ):

The day looked like the bulls were firmly holding the reins, but another daily setback struck as we approached the closing bell. I say daily, because the volume didn’t really overcome its recent highs, and stock prices haven’t suffered a profound setback either. All that the bears were able to achieve, was pretty much reminiscent of the stock behavior during the unfolding breakout above the 61.8% Fibonacci retracement.

In other words, yesterday’s setback isn’t really a fly in the ointment for the bulls. The daily indicators keep supporting the bulls, with no imminent sell signals. The sky still remains clear for the buyers for now.

Yesterday’s intraday Stock Trading Alert captures the key reason why:

(…) Against the backdrop of strengthening high yield corporate bonds (HYG ETF), the S&P 500 upswing has been progressing nicely throughout the day, and a local top in either seems to be very far away indeed.

While the sellers might try to close the week and month on a bearish note, the above words ring true also today because we haven’t seen junk corporate bonds falling through the floor. Let’s see precisely what I mean by that.

The Credit Markets’ Point of View

High yield corporate bonds (HYG ETF) gave up all their gains since the market open, but the relatively low volume of the daily upswing rejection continues to favor the bulls. While it wouldn’t come as a surprise to see a sharper consolidation of recent sharp gains, a running consolidation with higher highs and higher lows is all we’ve been getting so far. And that’s a very bullish type of consolidation, boding well for the credit markets.

In short, the credit market uptrend is well established, and serves as a tailwind for stocks.

The chart of the high yield corporate bonds to short-term Treasuries ratio (HYG:SHY) with the overlaid S&P 500 prices (black line), also supports the view we haven’t seen a game-changer yesterday.

Key S&P 500 Sectors and Ratios in Focus

While technology (XLK ETF) gave up its intraday gains, the swing structure of higher highs and higher lows, remains intact. And that’s the definition of what an uptrend is. The sector simply appears to be trading sideways, consolidating recent sharp gains. Yesterday’s lower volume versus the preceding higher one, sends a bullish message as buyers appear in droves when prices get lower.

Just as the tech sector, healthcare (XLV ETF) also supports the prospect of more gains to come. It’s been knocking on the door of April and May highs, and an upside breakout of the recent trading range is only a matter of time in my opinion.

The price action in the financials (XLF ETF) also follows a bullish path. We’ve seen volume rise during last three sessions, and yesterday’s session gives an impression of verification of the breakout above the April highs as the sector is consolidating recent gains.

The volume differential that favors the bulls is even more pronounced in the consumer discretionaries (XLY ETF). Real estate (XLRE ETF) for example, just extended its recent gains yesterday, disregarding the move lower in the index.

It has been only the leading ratios that suffered pronounced setbacks yesterday, as consumer discretionaries to staples (XLY:XLP) challenged their Wednesday’s intraday lows, and financials to utilities (XLF:XLU) moved below them already. But we haven’t seen what mathematicians would call an inflection point yet. In other words, it’s likely we’ll see both ratios stabilize and support the move higher in stocks next.

As for the stealth bull market trio, materials (XLB ETF) outperformed both energy (XLE ETF) and industrials (XLI ETF) as the latter two closed down – but again, on lower volume than during the preceding up days. Overall, this bull market trio still favors the stock upswing to continue.

Summary

Summing up, yesterday’s late-day reversal didn’t likely mark a call to start selling lock, stock and barrel everything in sight. Conversely, it appears to be a part of the ongoing consolidation that keeps resulting in higher highs and higher lows. As today is the last trading day of the week and month, the closing prices are of key importance for the timing of the anticipated challenge of the early March highs. While the credit market and sectoral analysis favor the stock upswing to continue, yesterday’s weak performance of the Russell 2000 (IWM ETF) is a short-term watchout. The balance of risks is skewed to the upside over the coming weeks though.

I expect stocks to slowly grind higher overall despite the high likelihood of sideways-to-slightly-down trading over the summer – but we’re nowhere near the start thereof. Right now, the breakout above the three key resistances (the 61.8% Fibonacci retracement, the upper border of the early March gap, and the 200-day moving average) is still unfolding with the bears running for cover and FOMO (fear of missing out) back in vogue. In short, the ball remains in the bulls’ court to show us what they’re made of. Will the weekly and monthly closing prices later today still lean in the bulls’ favor on higher timeframes? I would cautiously say so.

Last but not least, we’ll hear Powell speak later today, and Trump will focus on China. When the latter has been announced, it marked the start of the heavy S&P 500 selling 45 minutes before the closing bell yesterday. As tensions have been rising, the short-term direction in stocks very much depends on the overall balance of President’s announcement as regards Hong Kong, the Uyghur bill, coronavirus, the China-India border and foremost the trade deal. We’ll monitor and act accordingly on the unfolding developments.

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For a look at all of today’s economic events, check out our economic calendar.

Thank you.

Monica Kingsley
Stock Trading Strategist
Sunshine Profits: Analysis. Care. Profits.

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All essays, research and information found above represent analyses and opinions of Monica Kingsley and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Monica Kingsley and her associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Ms. Kingsley is not a Registered Securities Advisor. By reading Monica Kingsley’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Monica Kingsley, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Silver Price Daily Forecast – Silver Gets To New Highs

Silver Video 29.05.20.

Silver Continues Its Upside Move

Silver managed to get above the resistance at $17.50 and gained upside momentum. The move is supported by gold price upside and weaker U.S. dollar.

Gold has managed to settle above $1700 per ounce as the increase in U.S. – China tensions drives demand for safe haven assets.

Gold/silver ratio has firmly settled below 100 and continues to decline. Before the coronavirus crisis, gold/silver ratio was below 90, so a possible return to pre-crisis levels could be very beneficial for silver.

The U.S. dollar continues to lose ground against a broad basket of currencies despite its safe haven status, and the U.S. Dollar Index has already tested the 98 level. Weaker U.S. dollar is bullish for silver as it makes it cheaper for buyers who have other currencies.

In the near term, silver’s price action will heavily depend on the global market reaction to the upcoming news conference of the U.S. President Donald Trump where he is set to unveil new measures against China.

If the markets will be in a bearish mood following the news conference, the precious metal segment may gain additional upside momentum as investors will increase purchases of safe haven assets.

Technical Analysis

silver may 29 2020

Silver managed to get above $17.50 and has good chances to develop significant upside momentum. The recent peak in RSI is yet to be reached, so silver should not have problems with momentum given the right catalysts.

If this upside move continues, the next resistance is located at $18.15. In case silver manages to settle above $18.15, it will gain additional upside momentum and head towards resistance at $19.00.

This level will likely serve as a material obstacle on silver’s way up since it’s the pre-crisis high of 2020. In fact, silver has tried to test the $19.00 level two times this year, and each such attempt failed. The last time silver traded above $19.00 was back in September 2019.

On the support side, silver will continue to get significant support near $17.00. The support at this level was so strong that a move below it may signal a change of a near-term trend for silver.

In case silver gets below $17.00, the next support area is located between pre-crisis levels at $16.50 and the 20 EMA at $16.60.

For a look at all of today’s economic events, check out our economic calendar.

USD/JPY Price Forecast – US Dollar Pulls Back Toward Support Against Yen

The US dollar has broken down significantly against the Japanese yen on Friday, dropping about 80 pips by the time New York started. While that is not a huge move, it is relatively big for the last couple of weeks. The market stopped just above the ¥107 level and hung about there, so I think at this point it is likely that the area could bring some buyers in this vicinity, but if we were to break down below the ¥107 level, it opens up the possibility of a move down to the ¥106 level where we had seen a bit of a bounce.

USD/JPY Video 01.06.20

To the upside, the 50 day EMA continues to hang above the ¥107.75. A break above there opens up the possibility of a move towards the 200 day EMA, which at this point I think that the sellers would be an influence as well. Ultimately, this is a pair that continues to chop around, and it should consider that both of these are considered to be “safety currencies.”

Ultimately, that causes a lot of noise here so looking at this chart it is obvious that the volatility is going to continue to be a major influence, so it is difficult to trade this market for a bigger move until we get some type of clarity. I do not have clarity at this point, so it is short-term back-and-forth, probably in increments of 20 or even 30 pips. I would not put huge positions on here either.

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Price Forecast – Euro Continues to Press Higher

The Euro exploded to the upside it over the last 48 hours, as the market has reached towards the 1.1150 level. This is an area where we have seen selling previously, but a lot of this is due to the European Union offering bonds that are backed by the entirety of the EU instead of the single countries. This should be stronger, and therefore people like the idea of the future of the Euro much more than they did just a few weeks ago.

EUR/USD Video 01.06.20

It is a remarkable move, but when you look at the last couple of months, we have seen massive moves in one direction or another. In other words, even though it is obviously bullish over the last several days, it is still difficult to get long of the Euro at this point, because we have seen this movie before, and have seen it recently. With that in mind I am a bit skeptical, and quite frankly will trade the Euro against other currencies.

I will use this currency pair as a bit of an indicator as to what I am doing with the Euro gets other currency such as the Canadian dollar, the Japanese yen, British pound, and so on. Obviously, the Euro is very strong in the short term, so buying the Euro gets is other currencies makes quite a bit more sense due to the fact that there is a lot of concern about negative headlines, so with that in the back of her mind, it is a bit difficult to be short the US dollar when you can short other currency such as the Canadian dollar that would take more of a hit in those scenarios.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD Price Forecast – British Pound Tests 50 Day EMA

The British pound initially pulled back a bit during the trading session on Friday before turning around and smashing into the 50 day EMA. As we got there, the market did pull back a bit, and it should be noted that we continue to see a lot of noisy behavior overall. If that is going to continue to be the case, then I think it is only a matter of time before we see massive selling pressure. However, if we break above the 50 day EMA, then it is likely that we will then go looking towards the 1.25 level. At that point, I would anticipate seeing even more resistance.

GBP/USD Video 01.06.20

The market will continue to be very noisy, as we have a whole plethora of problems in the UK that will continue to weigh upon Sterling. The Brexit is still a major issue, and we have talks going on this coming week that will of course cause a bit of volatility as well. Ultimately, I do think that we pull back, and start going lower but it is probably going to take some type of headline to make that happen. The question is not so much in my mind whether or not we pullback, but if we do it here, or if we do it at the 1.25 level. With the leverage in Forex, timing is crucial, so if you do decide to short in this general vicinity I would do so with a small position. You can always add to a trade that is working out in your favor.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Price Forecast – Australian Dollar Trying to Break Out

The Australian dollar has pulled back a bit to kick off the trading session on Friday, but then bounced as the 200 day EMA came into play. At this point, we are getting remarkably close to the 0.67 handle, an area that if we can break above, the market is likely to go much higher. At this point, it certainly looks as if the Aussie dollar is trying to take out the resistance and start a new trend higher, but one has to wonder what is going to happen between the United States and China? Clearly that is not going to be a good thing and with Donald Trump announcing a press conference late on Friday, we could see a sudden reversal. That being said, if the day closes above the 0.67 level, then it is likely that we continue to go much higher.

AUD/USD Video 01.06.20

This is a market that looks likely to have to make some type of significant decision, but at this juncture it is difficult to imagine that it is going to be easy. You need to be overly cautious when trading this pair, because once we make a move it is probably going to be rather drastic. Ultimately, I believe that the market will probably see some type of resolution, but clearly the market looks as if it is trying to break out to the upside. If this fails, it is right at where we had seen a major breakdown several months ago. In other words, it is decision time so therefore let the market decide and then simply follow.

For a look at all of today’s economic events, check out our economic calendar.