Wall St Up on Stimulus Hopes; VIX Indicating Near-Term Market Turbulence

The major U.S. stock indexes rose on Thursday in a choppy, two-sided trade, as investors remained optimistic that U.S. policymakers would reach a deal on more fiscal stimulus to support a pandemic-damaged U.S. economy before the November 3 elections.

The intraday rally was impressive because investors were facing an early setback after President Trump said Democrats were holding out for too much, suggesting he was preparing to blame them for the demise of a deal.

Despite the President’s negative tone, House speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin continued negotiating a relief bill near the $2 trillion mark, a sum opposed by Senate Republicans who have expressed concerns about the federal deficit.

In the cash market on Thursday, the benchmark S&P 500 Index settled at 3453.49, up 17.93 or 0.53%. The blue chip Dow Jones Industrial Average finished at 28363.66, up 152.84 or +0.55% and the tech-driven NASDAQ Composite closed at 11506.11, up 21.32 or +0.19%.

Volatility Remains at Heightened Levels

The CBOE Market Volatility Index rose for the eighth time in nine sessions, and was last up 2% for the session. With the VIX still hovering around 30, option traders are still pricing in near-term market turbulence for U.S. markets.

Investors should be asking themselves, is the VIX rising because of the prospect of additional fiscal stimulus? Are investors pricing in the possibility of a stock market crash? I they worried about the election results? What about a potential third wave of the coronavirus.

Given all of these factors, a rising VIX, which is also known as a fear gauge, means investors are buying puts for protection against an unknown. They probably fell it is a cheap way to buy insurance rather than exist stock positions then try to re-enter later.

Sectors and Stocks

Energy and financials rose 2.6% and 1.6%, respectively, the steepest percentage gainers among the major S&P sectors.

Tesla Inc climbed 2.0% after the electric-car maker reported its fifth consecutive quarterly profit on record revenue of $8.8 billion.

Chipotle Mexican Grill Inc fell 4.7% as it posted a drop in quarterly profit, hurt by higher beef prices, delivery costs and coronavirus-related expenses.

Coca-Cola Co gained 1.3% as it beat quarterly result expectations, while chemicals maker Dow Inc fell 0.6% even as it surpassed quarterly profit estimates.

The Internals

About a fifth of S&P 500 companies have reported third-quarter results of which 84.1% beat earnings estimates, according to IBES Refinitiv data.

Advancing issues outnumbered declining ones on the NYSE by a 1.82-to-1 ratio; on NASDAQ, a 1.72-to-1 ratio favored advancers.

The S&P 500 posted 17 new 52-week highs and 1 new low; the NASDAQ Composite recorded 48 new highs and 27 new lows.

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

U.S Politics, Private Sector PMIs, and COVID-19 to Keep the Markets Busy

Earlier in the Day:

It’s was a busier start to the day on the economic calendar this morning. The Aussie Dollar, the Kiwi Dollar, and the Japanese Yen were in action in the early part of the day.

Away from the economic calendar, COVID-19 and U.S politics also provided direction early on.

The final live televised U.S Presidential debate is due to kick off shortly, which will also draw plenty of interest.

For the Kiwi Dollar

3rd quarter inflation figures were in focus in the early hours of this morning.

In the 3rd quarter, the annual rate of inflation softened from 1.5% to 1.4%. Economists had forecast a pickup to 1.7%. Quarter-on-quarter, consumer prices rose by 0.70%, reversing a 0.5% slide from the 2nd quarter. Economists had forecast a 0.9% rise.

The Kiwi Dollar moved from $0.66716 to $0.66666 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.10% to $0.6669.

For the Japanese Yen

Inflation figures for September and prelim private sector PMIs for October were in focus this morning.

In September, the annual rate of core inflation fell by 0.3%, picking up from a 0.4% decline in August. Economists had forecast a 0.4% fall.

The Japanese Yen moved from ¥104.892 to ¥104.913 upon release of the figures that preceded the private sector PMIs.

In October, the services PMI fell from 46.9 to 46.6, while the manufacturing PMI rose from 47.7 to 48.0.

According to the prelim October survey,

  • New orders fell at a weaker pace across both the services and manufacturing sectors.
  • Manufacturing companies reduced headcount at a faster pace, while the decline was softer across the services sector.
  • For the manufacturing sector, the deterioration in sector activity was the slowest since January.
  • Business sentiment rose to more than a 2-year high at the start of the 4th

The Japanese Yen moved from ¥104.799 to ¥104.805 upon release of the PMIs. At the time of writing, the Japanese Yen was up by 0.10% ¥104.76 against the U.S Dollar.

For the Aussie Dollar

October’s prelim private sector PMIs were also in focus.

The Manufacturing PMI fell from 55.4 to 54.2, while the services PMI rose from 50.8 to 53.8.

The Aussie Dollar moved from $0.71131 to $0.71178 upon release of the PMIs. At the time of writing, the Aussie Dollar was up by 0.01% to $0.7119.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Key stats include prelim October private sector PMI numbers for France, Germany, and the Eurozone.

With EU member states getting hit by a 2nd wave of the COVID-19 pandemic, the October numbers will garner plenty of interest.

Expect disappointing numbers to materially influence the EUR and sentiment towards economic recovery and monetary policy.

Away from the stats, expect Brexit and COVID-19 to continue to influence on the day.

At the time of writing, the EUR was down by 0.18% to $1.1797.

For the Pound

It’s a busy day ahead on the economic calendar. Key stats include September retail sales figures and October prelim private sector PMIs.

Expect the retail sales and service sector PMI to have the greatest influence on the Pound.

Away from the economic calendar, expect Brexit and any further updates on COVID-19 containment measures to also influence.

At the time of writing, the Pound was down by 0.13% to $1.3066.

Across the Pond

It’s a relatively busy day ahead for the U.S Dollar.

Key stats include October’s prelim private sector PMIs for October.

Barring particularly dire manufacturing numbers, the services PMI will be the key driver later today.

Away from the economic calendar, however, expect U.S politics to also influence on the day.

The final Presidential debate this morning and updates from Capitol Hill will influence on the day.

At the time of writing, the Dollar Spot Index was up by 0.09% to 93.0340.

For the Loonie

It’s another particularly quiet day ahead on the economic calendar. There are no material stats due out of Canada to provide the Loonie with direction.

The lack of stats will leave U.S politics, COVID-19, and the private sector PMIs from the U.S and the Eurozone in focus on the day.

At the time of writing, the Loonie was down by 0.14% to C$1.3155 against the U.S Dollar.

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

European Equities: Private Sector PMIs, COVID-19, and U.S Politics in Focus

Economic Calendar:

Friday, 23rd October

French Manufacturing PMI (Oct) Prelim

French Services PMI (Oct) Prelim

German Manufacturing PMI (Oct) Prelim

German Services PMI (Oct) Prelim

Eurozone Manufacturing PMI (Oct) Prelim

Eurozone Markit Composite PMI (Oct) Prelim

Eurozone Services PMI (Oct) Prelim

The Majors

It was another bearish day for the European majors on Thursday, with the DAX30 and EuroStoxx600 falling for a 4th consecutive day.

The losses were modest, however, with the DAX30 and EuroStoxx600 ending the day down by 0.12% and by 0.14% respectively. Relatively flat on the day was the CAC40, which slipped by 0.05%.

Weakening consumer confidence in Germany and the Eurozone weighed on the European majors, as Europe continued to suffer from a 2nd wave of the COVID-19 pandemic.

The Stats

It was a relatively busy day on the Eurozone economic calendar. Key stats included consumer confidence figures for Germany and the Eurozone.

Germany’s GfK Consumer Climate Index fell from -1.6 to -3.1 for November. Economists had forecast a decline to -2.8.

According to the GfK survey,

  • Concerns over COVID-19 weighed on consumer sentiment in October.
  • Both economic and income expectations and the propensity to buy sub-indexes took a hit, leading to the decline in the index for November.
  • Economic expectations took the biggest hit amongst the sentiment indicators, falling by 17 points to +7.1.
  • Income expectations also waned, with the indicator falling by 6.3 points to +9.8.
  • The propensity to buy indicator saw a more modest 1.4 point loss to +37.0.

From the Eurozone, the Flash Consumer Confidence Index fell from -13.9 to -15.5. Economists had forecast a fall to -15.0.

From the U.S

It was also a busier day on the economic calendar, with the weekly jobless claims and existing home sales figures in focus.

In the week ending 16th October, initial jobless claims came in at 787k, which was well below a forecasted 860k. In the week prior, claims had stood at 842k.

Housing sector data had a muted impact on the European majors late in the day.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Thursday. Volkswagen rose by 0.95%, with BMW and Daimler gaining 0.47% and by 0.56% respectively. Continental bucked the trend, however, falling by 0.64%.

It was also a mixed day for the banks. Deutsche Bank rose by 0.42%, while Commerzbank fell by 1.18%

From the CAC, it was a mixed day for the banks. BNP Paribas fell by 0.15%, while Credit Agricole and Soc Gen rose by 0.74% and by 0.94% respectively.

It was a bullish day for the French auto sector, however. Peugeot and Renault ended the day with gains of 2.19% and 2.03% respectively.

Air France-KLM rallied by 3.13%, with Airbus SE rising by 0.61%.

On the VIX Index

It was a 2nd consecutive day in the red for the VIX on Thursday. Following a 2.39% slide on Wednesday, the VIX fell by 1.88% to end the day at 28.11.

Continued talks to deliver a pre-Election stimulus package left the U.S majors relatively flat on the day.

While failure to deliver on the stimulus package was negative, economic data from the U.S provided support to the U.S markets on the day.

VIX 23/10/20 Daily Chart

The Day Ahead

It’s a particularly busy day on the Eurozone economic calendar. Key stats include French, German, and Eurozone private sector PMI figures for October.

We would expect plenty of influence from the numbers following the disappointment in September.

From the U.S, the private sector PMIs and U.S politics will also influence later in the day.

Going into the European open, expect market reaction to the final U.S Presidential debate to set the tone.

The Futures

In the futures markets, at the time of writing, the Dow was down by 16 points, while the DAX was up by 21.5 points.

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

The Crypto Daily – Movers and Shakers – October 23rd, 2020

Bitcoin, BTC to USD, rose by 1.38% on Thursday. Following on from a 7.43% rally on Wednesday, Bitcoin ended the day at $12,988.0.

It was a mixed start to the day. Bitcoin fell to an early morning intraday low $12,710.0 before making a move.

Steering clear of the first major support level at $12,073, Bitcoin rallied to a late intraday high $13,188.0.

Falling short of the first major resistance level at $13,383, Bitcoin fell back to end the day at sub-$13,000 levels.

The near-term bullish trend remained intact, supported by the latest move through to $13,000 levels. For the bears, Bitcoin would need to slide through the 62% FIB of $6,400 to form a near-term bearish trend.

The Rest of the Pack

Across the rest of the majors, it was a mixed day on Thursday.

Crypto.com Coin fell by 4.30% to buck the trend on the day.

It was a bullish day for the rest of the majors.

Chainlink rallied by 10.76% to lead the way.

Cardano’s ADA (+4.62%), and Ethereum (+5.96%) also found strong support on the day.

Binance Coin (+3.02%), Bitcoin Cash ABC (+1.87%), Bitcoin Cash SV (+2.51%), Litecoin (+2.54%), Polkadot (+1.86%), and Ripple’s XRP (+2.39%) trailed the front runners on the day.

In the current week, the crypto total fell to a Tuesday low $347.77bn before surging to a Thursday high $397.58bn. At the time of writing, the total market cap stood at $386.25bn.

Bitcoin’s dominance fell to a Wednesday low 57.52% before rising to a Thursday high 62.46%. At the time of writing, Bitcoin’s dominance stood at 61.84%.

This Morning

At the time of writing, Bitcoin was down by 0.59% to $12,911.6. A mixed start to the day saw Bitcoin rise to an early morning high $12,986.9 before falling to a low $12,887.0.

Bitcoin left the major support and resistance levels untested early on.

Elsewhere, it was also a bearish start to the day for the broader market.

At the time of writing, Crypto.com Coin was down by 2.45% to lead the way down.

BTC/USD 23/10/20 Hourly Chart

For the Bitcoin Day Ahead

Bitcoin would need to move back through the pivot level at $12,962 to bring the first major resistance level at $13,214 into play.

Support from the broader market would be needed, however, for Bitcoin to break out from Thursday’s high $13,188.0.

Barring an extended crypto rally, the first major resistance level would likely cap any upside.

In the event of another crypto breakout, Bitcoin could test resistance at $13,500 before any pullback. The second major resistance level sits at $13,440.

Failure to move back through the $12,962 pivot would bring the first major support level at $12,736 into play.

Barring an extended crypto sell-off, Bitcoin should steer well clear of sub-$12,500 levels. The second major support level sits at $12,484.

Ethereum, Litecoin, and Ripple’s XRP – Daily Tech Analysis – October 23rd, 2020

Ethereum

Ethereum rallied by 5.96% on Thursday. Following on from a 6.16% gain on Wednesday, Ethereum ended the day at $414.7.

It was a bullish day, with Ethereum rallying from an early morning intraday low $391.33 to a late intraday high $421.47.

The rally saw Ethereum break through the first major resistance level at $406.75. Coming within range of the second major resistance level at $421.96, however, Ethereum slipped back to sub-$415 levels.

At the time of writing, Ethereum was down by 0.34% to $413.30. A mixed start to the day saw Ethereum rise to an early morning high $414.75 before falling to a low $412.50.

Ethereum left the major support and resistance levels untested early on.

ETH/USD 23/10/20 Hourly Chart

For the day ahead

Ethereum would need to avoid a fall through the $409.17 pivot to support a run at the first major resistance level at $427.00.

Support from the broader market would be needed, however, for Ethereum to break out from Thursday’s high $421.47.

Barring another extended crypto rally, the first major resistance level would likely cap any upside.

In the event of a breakout, Ethereum could test resistance at $430 before any pullback. The second major resistance level sits at $439.31.

Failure to avoid a fall through the $409.17 pivot would bring the first major support level at $396.86 into play.

Barring an extended sell-off, however, Ethereum should steer clear of sub-$380 levels. The second major support level sit at $379.03.

Looking at the Technical Indicators

First Major Support Level: $427.00

Pivot Level: $409.17

First Major Resistance Level: $396.86

23.6% FIB Retracement Level: $257

38.2% FIB Retracement Level: $367

62% FIB Retracement Level: $543

Litecoin

Litecoin rose by 2.54% on Thursday. Following on from a 13.14% jump on Wednesday, Litecoin ended the day at $54.44.

It was a bullish start to the day. Litecoin rallied from an early morning intraday low $53.09 to a mid-morning intraday high $56.32.

While falling short of the first major resistance level at $56.58, Litecoin broke through the 23.6% FIB of $54.0.

A bearish 2nd half of the day, however, saw Litecoin fall back to sub-$55 levels. Support at the 23.6% FIB limited the downside late in the day.

At the time of writing, Litecoin was down by 0.72% to $54.05. A bearish start to the day saw Litecoin fall from an early morning high $54.44 to a low $54.05.

Litecoin left the major support and resistance levels untested early on.

LTC/USD 23/10/20 Hourly Chart

For the day ahead

Litecoin would need to move through the $54.62 pivot to support a run at the first major resistance level at $56.14.

Support from the broader market would be needed, however, for Litecoin to break back through to $56 levels.

Barring another extended crypto rally, the first major resistance level and Thursday’s high $56.32 would likely cap any upside.

In the event of another breakout, Litecoin would likely test the second major resistance level at $57.85.

Failure to move through the $54.62 pivot level would bring the 23.6% FIB and the first major support level at $52.91 into play.

Barring an extended sell-off on the day, however, Litecoin should steer well clear of the second major support level at $51.39.

Looking at the Technical Indicators

First Major Support Level: $52.91

Pivot Level: $54.62

First Major Resistance Level: $56.14

23.6% FIB Retracement Level: $45.30

38.2% FIB Retracement Level: $71

62% FIB Retracement Level: $100

Ripple’s XRP

Ripple’s XRP rose by 2.39% on Thursday. Following on from a 3.26% rally on Wednesday, Ripple’s XRP ended the day at $0.25746.

Bullish through most of the day, Ripple’s XRP rallied to a late intraday high $0.26391 before hitting reverse.

Ripple’s XRP broke through the first major resistance level at $0.2566 and the second major resistance level at $0.2617.

A final hour pullback, however, saw Ripple’s XRP fall to an intraday low $0.25111 before finding support.

Ripple’s XRP broke back through the first major resistance level at $0.2566 to wrap up the day at $0.257 levels.

At the time of writing, Ripple’s XRP was down by 0.64% to $0.25580. A bearish start to the day saw Ripple’s XRP fall from an early morning high $0.25737 to a low $0.25580.

Ripple’s XRP left the major support and resistance levels untested early on.

XRP/USD 23/10/20 Hourly Chart

For the day ahead

Ripple’s XRP will need to move through the $0.2575 pivot to support a run at the first major resistance level at $0.2639.

Support from the broader market would be needed, however, for Ripple’s XRP to break back through to $0.2630 levels.

Barring another extended crypto rally, the first major resistance level and Thursday’s high $0.26391 would likely cap any upside.

In the event of an extended rally, the second major resistance level at $0.2703 would likely come into play.

Failure to move through the $0.2575 pivot would bring the first major support level at $0.2511 into play.

Barring an extended crypto sell-off, Ripple’s XRP should steer clear of sub-$0.2450 levels. The second major support level sits at $0.2447.

Looking at the Technical Indicators

First Major Support Level: $0.2511

Pivot Level: $0.2575

First Major Resistance Level: $0.2639

23.6% FIB Retracement Level: $0.3638

38.2% FIB Retracement Level: $0.4800

62% FIB Retracement Level: $0.6678

Please let us know what you think in the comments below.

Thanks, Bob

US Stock Market Overview – Stock Rise Led by Energy; Existing Home Sales Continue to Rise

 

Stocks moved higher on Thursday following better than expected economic data. Yields backed up with the 10-year treasury hitting the highest level since May. The dollar rebounded pushing gold lower. All sectors in the S&P 500 index were higher, led by energy and financials, consumer staples were the worst-performing sector. US Jobless claims rose less than expected and finally broke through the 800,000 mark. US existing home sales also rose by more than expected, but tight supply also pushed up housing prices. The final presidential debate will take place in Nashville Tennesee on Thursday. This will lead to a sprint to the finish line with is 2-weeks from this past Tuesday. Currently, the markets appear to be pricing in a Biden victory, which is also reflected in the betting markets.

Jobless Claims Rise Less than Expected

US jobless claims totaled 787,000 last week, the lowest total since the early days of the coronavirus pandemic. Expectations had been for claims to rise by 875,000. The total reflected a decline of 55,000 from the downwardly revised 842,000 in the previous week.  In addition to the substantial drop in the headline number, continuing claims also showed another hefty decline. The level of those getting benefits for at least two weeks declined by 1.02 million to 8.37 million.

Existing-Home Sales Rise By More than Expected

US Sales of existing homes rose by 9.4% in September to an annualized rate of 6.54 million units, according to the National Association of Realtors. Sales were up 20.9% annually. Prices are rising because supply is very tight. The inventory of homes for sale fell 19.2% annually to just 1.47 million homes for sale at the end of September. At the current sales pace that represents a 2.7-month supply. That is the lowest since the Realtors began tracking this metric in 1982. The median price of an existing home sold in September was $311,800, a 14.8% gain compared with September 2019. That is a new high for this series, dating back to 1968.

Natural Gas Price Prediction – Prices Consolidate Following Inventory Report

Natural gas prices moved lower on Thursday following a larger than expected build in natural gas inventories. Prices remain buoyed as the weather is expected to be much colder than normal throughout the mid-west for the next 6-10 days and then moderate over the next 8-14 days but still remain cooler than normal. There is a storm in the Caribbean that is entering the Gulf of Mexico that now has a 10% chance of becoming a tropical cyclone over the next 48-hours according to NOAA.

Technical Analysis

Natural gas prices moved lower consolidating Wednesday gains. Prices eased less than one percent. Support is seen near the former breakout level at 2.95. Resistance is seen near the October high at 3.07. The RSI is running into resistance and will need to make a higher high with price action to avoid a divergence. Medium-term momentum is positive as the MACD (moving average convergence divergence) histogram is printing in the black with rising trajectory which points to higher prices.

Inventories Rise more than Expected

Natural gas in storage was 3,926 Bcf as of Friday, October 16, 2020, according to the EIA. This represents a net increase of 49 Bcf from the previous week. Expectations were for a 39 Bcf build according to survey provider Estimize. Stocks were 345 Bcf higher than last year at this time and 327 Bcf above the five-year average of 3,599 Bcf. At 3,926 Bcf, total working gas is above the five-year historical range.

E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Setup for Late Breakout Over 28371 Pivot

December E-mini Dow Jones Industrial Average futures are trading slightly better late in the session on Thursday after clawing back earlier losses. The price action is being fueled by renewed optimism that Washington policymakers will be able to reach a fresh stimulus deal by Friday’s deadline. Perhaps weighing on the blue chip average is economic data which showed a slowing labor market recovery.

At 18:10 GMT, December E-mini Dow Jones Industrial Average futures are at 28245, up 111 or +0.39%.

In economic news, the number of Americans filing for state unemployment benefits last week dropped more than expected to 787,000, but remained stubbornly high as support from fiscal stimulus faded.

In other news, Dow component, Coca-Cola Co gained 1.7% as it beat quarterly results expectations.

Daily December E-mini Dow Jones Industrial Average

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through 28846 will signal a resumption of the uptrend. The main trend will change to down on a move through the nearest main bottom at 26407.

The minor trend is down. This is controlling the momentum. A trade through 28732 will change the minor trend to up. A series of minor bottoms come in at 27531, 27109 and 27039.

The intermediate range is 29050 to 26407. Its retracement zone 28040 to 27729 is support. It’s also controlling the near-term direction of the Dow. It also stopped the selling at 27896 earlier today.

The minor range is 28846 to 27896. Its 50% level at 28371 is the next upside target. Aggressive counter-trend sellers could come in on a test of this level in an effort to form a potentially bearish secondary lower top.

The short-term range is 26407 to 28846. Its retracement zone at 27627 to 27339 is another potential support area.

Short-Term Outlook

The upside momentum created by the intraday breakout over 28040 could trigger a rally into the minor pivot at 28371.

Sellers could come in on a test of 28371. They will be trying to form a secondary lower top, which could eventually lead to a change in trend. Overcoming this pivot, however, could trigger an acceleration to the upside with potential targets a minor top at 28732, and a main top at 28846.

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

Gold Price Prediction – Prices Drop as Yields Rise Following Jobless Claims Data

Gold prices reversed course and moved lower on Thursday, as the dollar gained traction and US treasury yields continued to move higher. Stronger than expected Jobless claims data helped buoy US yields which have moved to the highest levels seen in May 2020. Additionally, stronger than expected US existing home sales helped buoy yields sending bond prices lower and paving the way for lower gold prices.

Trade gold with FXTM

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Technical analysis

Gold prices moved lower pushing through support near the 10-day moving average at 1,910 which is now seen as short-term resistance. Support is seen near the October lows at 1,872. Short-term momentum has whipsawed and turned positive after recently turning negative as the fast stochastic generated a crossover buy signal on the upper end of the neutral range. Medium-term momentum remains neutral to positive as the MACD histogram prints in the black with an upward sloping trajectory that points to a slow trend higher.

Jobless Claims Rise Less than Expected

US jobless claims totaled 787,000 last week, the lowest total since the early days of the coronavirus pandemic. Expectations had been for claims to rise by 875,000. The total reflected a decline of 55,000 from the downwardly revised 842,000 in the previous week.  In addition to the substantial drop in the headline number, continuing claims also showed another hefty decline. The level of those getting benefits for at least two weeks declined by 1.02 million to 8.37 million.

E-mini S&P 500 Index (ES) Futures Technical Analysis – Trader Reaction to 3431.75 Sets the Tone into Close

December E-mini S&P 500 Index futures are trading higher at the mid-session on Thursday after reversing earlier losses. Some investors, holding out for more fiscal stimulus, are helping to support the benchmark index. Earlier in the session, the index was pressured by an economic report pointing to a slowing labor market recovery.

At 17:21 GMT, December E-mini S&P 500 Index futures are trading 3438.25, up 5.75 or +0.17%.

Helping to underpin the index were comments from House Speaker Nancy Pelosi who said negotiators were making progress in ongoing talks with the Trump administration for another round of financial aid.

Earlier in the session, six of the 11 major S&P sectors declined, and tech and consumer discretionary stocks fell about 1% each.

S&P component Coca-Cola gained 1.7% as it beat quarterly results expectations, while chemicals maker Dow Inc fell 1.5% even as it surpassed quarterly profit estimates.

Daily December E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. The main trend will change to down on a trade through the nearest main bottom at 3198.00. A move through 3541.00 will signal a resumption of the uptrend.

The minor trend is down. A trade through 3508.50 will change the minor trend to up. This will shift momentum to the upside.

The intermediate-term range is 3576.25 to 3198.00. The index is currently testing its retracement zone at 3387.00 to 3431.75. This zone is controlling the near-term direction of the index.

The short-term range is 3198.00 to 3541.00. If the selling pressure continues then look for the move to possibly extend into its retracement zone at 3369.50 to 3329.00.

The new minor range is 3541.00 to 3402.50. Its 50% level at 3471.75 is the next upside target.

Short-Term Outlook

The direction of the December E-mini S&P 500 Index into the close will likely be determined by trader reaction to the Fibonacci level at 3431.75.

Bullish Scenario

A sustained move over 3431.75 will indicate the presence of buyers. This could drive the index into the 50% level at 3471.75 into the close. Overtaking this level could lead to a test of the minor top at 3508.50.

Bearish Scenario

A sustained move under 3431.75 will signal the presence of sellers. This could lead to a retest of the intraday low at 3402.50, followed by a pair of 50% levels at 3387.00 and 3369.50.

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

EUR/USD Mid-Session Technical Analysis for October 22, 2020

The Euro is edging lower from a seven-week high on Thursday as hopes for a fiscal stimulus package in the United States before the November elections crumbled again and the global surge in COVID-19 cases fueled demand for safe-haven assets like the greenback.

After hopes of a deal were raised throughout the week, lifting the single-currency, pressure on the Euro emerged after U.S. President Donald Trump on Wednesday accused Democrats of being unwilling to craft an acceptable compromise. This comment threatened risk appetite, encouraging traders to trim their long Euro positions.

At 17:00 GMT, the EUR/USD is trading 1.1822, down 0.0037 or -0.31%.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 1.1881 will signal a resumption of the uptrend. The main trend will change to down on a move through 1.1688.

The minor trend is also up. A new minor top was formed at 1.1881.

The short-term range is 1.2011 to 1.1612. The EUR/USD is currently testing its retracement zone at 1.1811 to 1.1859. This zone is potential resistance. It could also be controlling the near-term direction of the EUR/USD.

The minor range is 1.1688 to 1.1881. Its retracement zone at 1.1785 to 1.1762 is the primary downside target. Since the main trend is up, buyers are likely to come in on a test of this area.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the EUR/USD into the close is likely to be determined by trader reaction to 1.1811.

Bullish Scenario

Holding 1.1811 will indicate the presence of buyers. The first upside target is a minor 50% level at 1.1847. This is followed by the short-term Fibonacci level at 1.1859 and the minor top at 1.1881.

Bearish Scenario

A sustained move under 1.1811 will signal the presence of sellers. This could create the downside momentum to challenge the retracement zone at 1.1785 to 1.1762. With the main trend up, look for buyers to reemerge on a test of this zone.

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

USD/CAD Daily Forecast – Strong Oil Provided Support To Canadian Dollar

USD/CAD Video 22.10.20.

Canadian Dollar Is Mostly Flat Against U.S. Dollar

USD/CAD continues to trade near the support level at 1.3135 while the U.S. dollar is gaining ground against a broad basket of currencies as strong oil provided support to Canadian dollar.

The U.S. Dollar Index continues its attempts to settle above the nearest resistance level at 92.80. If the U.S. Dollar Index manages to gain momentum above this level, it will get to the test of the next resistance at 93.00 which will be bullish for USD/CAD.

Today, the U.S. reported that Initial Jobless Claims declined to 787,000 while Continuing Jobless Claims decreased to 8.37 million. Both reports were better than analyst expectations.

U.S. Existing Home Sales increased by 9.4% month-over-month in September compared to analyst consensus which called for growth of 5%. The housing market clearly remains very strong.

Meanwhile, oil managed to rebound from the $40 level and provided support to Canadian dollar.

USD/CAD traders will continue to monitor the ongoing U.S. coronavirus aid package negotiations. U.S. House Speaker Nancy Pelosi has recently stated that the talks were on a good path but it remains to be seen whether Democrats and Republicans will be able to reach consensus before November elections.

Judging by the stock market action, traders are not ready to make any serious bets on the outcome of the current negotiations as S&P 500 has been stuck near its 20 EMA in recent trading sessions.

Technical Analysis

usd cad october 22 2020

USD to CAD made an attempt to get to the test of the resistance at 1.3200 but lost upside momentum and fell back towards the support 1.3135. The nearest support level for USD to CAD is located near the recent lows at 1.3100.

In case USD to CAD manages to settle below this level, it will head towards the support at 1.3050. This move may be fast as there are no significant levels between 1.3050 and 1.3100.

If USD to CAD settles below 1.3050, it will continue its downside move and get to the test of September lows at 1.3000.

On the upside, USD to CAD needs to stay above 1.3135 to have a chance to develop additional momentum and get to the test of resistance at 1.3200. The 20 EMA is in the nearby, and this resistance level is set to be a strong obstacle on the way up.

If the test of the resistance at 1.3200 is successful, USD to CAD will head towards the next resistance level at the 50 EMA at 1.3230.

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

Oil Rebounds After Yesterday’s Sell-Off

Oil Video 22.10.20.

Gasoline Demand Continues To Decline

Yesterday’s EIA Weekly Petroleum Status Report indicated that gasoline inventories increased by 1.9 million barrels.

According to EIA, demand for gasoline declined from 8.58 million barrels per day (bpd) in the previous week to 8.29 million bpd. Two weeks ago, demand for gasoline was 8.9 million bpd.

The trend is clear – demand for gasoline continues to decline which leads to the increase in gasoline inventories.

A year ago, gasoline demand was much stronger at 9.59 million bpd. The difference between current levels and demand in 2019 is 1.3 million bpd. Most likely, the key catalyst behind the recent drop of gasoline demand is the challenging situation with coronavirus in the U.S.

Yesterday, the U.S. reported more than 63,000 new cases of the disease, and the pandemic shows no signs of a slowdown. It is hard to expect that gasoline demand will soon get back to pre-pandemic levels if the number of new cases is rising.

While the EIA report showed that crude inventories decreased by 1 million barrels, it remains to be seen whether the downside trend in crude inventories would be sustained in the upcoming weeks.

Oil Stays Above $40 Despite Worries About Demand

Currently, several negative catalysts put pressure on oil. Europe is struggling to contain the second wave of the virus, and European countries are forced to introduce additional virus containment measures to improve the situation.

The U.S. is also suffering from the virus, and demand for gasoline is declining. Meanwhile, Libya’s production has increased to 500,000 bpd while the country’s government aims to increase production to 1 million bpd by the end of the year.

Despite these strong negative catalysts, oil continues to trade above the $40 level. Why? One could argue that oil traders hope that OPEC+ will extend current production cuts for the first months of 2021 instead of increasing production by 2 million barrels from January 1, 2021. This is a plausible scenario.

Another possible explanation is that oil is simply cheap at current levels. Despite short-term problems, oil demand is set to recover, and prices should ultimately recover as well.

At this point, the futures market is skeptical about a robust recovery since December 2021 futures trade below the $43 level, but the situation may change quickly once the second wave of the virus is contained.

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

S&P 500 Price Forecast – Stock Markets Continue to Wait on Stimulus

The S&P 500 initially pulled back during the trading session on Thursday, reaching down towards the crucial 3400 level again during the Globex session. We have seen buyers reenter the market in that area but quite frankly we have a couple of shooting stars proceeding this candlestick so what this tells me more than anything else is that the market is not ready to make a serious decision. We are obviously waiting for some type of news when it comes to the stimulus situation and of course a whole host of other issues. Whether or not Congressman Lisa stimulus probably will determine what we do in the stock market lease for the short term, but do not worry, somebody out there will bail Wall Street out as they have been doing for the last 12 years.

S&P 500 Video 23.10.20

Because of this, or you can do is buy the index on short-term pullbacks, perhaps near the 3400 level, or maybe even the 50 day EMA. The uptrend line underneath there also offers support, but the main take away here is that shorting the market is all but impossible. Because of this, you need to look for some type of value, and then wait for the latest narrative to come out of New York that stock market should go higher for a reason this, or reason that. I know it sounds cynical, but all one has to do is look at the markets for the last 15 years or so to see just how true that tends to be.

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

Silver Price Forecast – Silver Markets Pull Back to 50 Day EMA

Silver markets pulled back a bit during the trading session on Thursday to reach down towards the 50 day EMA. It is not a huge surprise, because quite frankly this is a market that continues to see a lot of inflow and outflow based upon the most recent headline. Silver tends to be very volatile under the best of circumstances, so that is not a huge surprise. As we continue to wait for the results of stimulus stocks in the United States, the US dollar has been all over the place, and this of course has an influence on silver as it is a relatively thin market and of course priced in that same currency.

SILVER Video 23.10.20

The markets at this point in time are dancing around the 50 day EMA as they tend to do, and this will attract a lot of attention in both directions. Because of this, I think that you are looking at a market that is going to be very choppy going forward, but I see a couple of areas that would be interesting. The $24 level is very interesting for me, as it has recently offered a bit of stability and support. Underneath there, we could be looking at a move down to the $23 level, and then $22 following that.

The 200 day EMA underneath is very important as well, and it is sitting just above the $21 level. In other words, even though it does look like silver is at the mercy of stimulus right now, the reality is that it is still very much in an uptrend so you should be looking for buying opportunities on dips more than anything else.

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

Crude Oil Price Forecast – Crude Oil Markets Continue Sideways Move

WTI Crude Oil

The West Texas Intermediate Crude Oil market has rallied a bit during the trading session on Thursday, trying to gain back some of the losses from the disappointment on Wednesday with the inventory figure. At this point, it is probably influenced more or less on the idea of stimulus apnea in the United States or something of that ilk. Keep in mind that demand for crude oil will continue to be a major issue and therefore I think it is difficult to get overly excited about. At this point, I think we simply are continuing the same sideways action around the 50 day EMA more than anything else.

Crude Oil Video 23.10.20

Brent

Brent markets continue to see back-and-forth action as well, as we are looking at a scenario where the energy demand will be questionable and of course we have OPEC+ falling apart when it comes to the production cuts. Whether or not that holds may have a huge influence on what happens next but quite frankly I think this is a market that will ultimately trying to figure out a way to make a move lower. The $40 level underneath will be interesting, as it should be somewhat supportive.

To the upside, the $45 level and the 200 day EMA will more than likely be resistance. In the meantime, you are looking at a situation where we are simply going back and forth. Stimulus could give crude oil a bit of a pop higher, so pay close attention to that scenario as it continues to unfold, but that should be temporary at best.

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

Natural Gas Price Forecast – Natural Gas Trading Around Big Figure

Natural gas markets have gone back and forth during the trading session on Thursday, as we are sitting right about and the $3.00 level, an area that in and of itself of course would attract a certain amount of attention. Ultimately though, this is a market that is being driven higher by a whole host of reasons, not the least of which of course is the cold weather coming to the north, as demand will pick up quite drastically.

NATGAS Video 23.10.20

When you look at the chart, you can see clearly that the 50 day EMA has been offering support, fairly reliably since we were down at the $1.80 level. This signifies that we are in an uptrend and channel, albeit one that is very choppy more than anything else. I think that the market continues to see a lot of back and forth in the short term, perhaps even a pullback towards the $2.80 level, maybe even down to the $2.60 level where the 50 day EMA sits.

The idea is that you are looking for value, because quite frankly the natural gas markets have been driving higher for some time and of course we had a ton of bankruptcies out there over the last year or so that should continue to drive down supply, at least for the time being. Beyond all of that, this is a cyclical trade that happens almost every year so quite frankly there is no reason to think that this year will be any different. I look at pullbacks as buying opportunities, at least until we start trading the spring contracts a few months down the road.

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

Gold Price Forecast – Gold Markets Break Down

Gold markets have broken down a bit during the trading session on Thursday, slicing through the 50 day EMA. That of course is an indicator that a lot of people pay attention to. Ultimately, I think that the fact that it has gone flat tells you that gold is not quite ready to take off to the upside for a bigger move quite yet. However, the $1900 level underneath is significant support, just as the $1850 level should offer support given enough time. I do believe that we are looking at a scenario where the markets will continue to see a lot of choppy behavior, and perhaps reaction to the stimulus stocks or possibly the lack of progress.

Gold Price Predictions Video 23.10.20

The knock on effect of course is that the US dollar strengthens, which weighs upon the strength of the gold market, at least in the short term. I believe that we will continue to see more downward pressure than up, but longer-term is still very bullish for gold as central banks and governments around the world look to flood the financial system, which of course has people looking for “hard assets.” Gold is essentially the ultimate hard asset.

To the upside, I see the $1950 level as an area that begins pretty significant resistance extending towards the $2000 level. Once we get above the $2000 level, this is a market that will continue to go much higher and truly take off to the upside. In the meantime, I look at pullbacks as buying opportunities, but I would not jump “all in” on one particular move.

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

Silver Price Daily Forecast – Silver Slides Back Below $25.00

Silver Video 22.10.20.

Silver Pulls Pack After Yesterday’s Upside Move

Silver declined below $25.00 as the U.S. dollar rebounded against a broad basket of currencies amid uncertainty over stimulus timing.

The U.S. Dollar Index is currently trying to settle above the nearest resistance level at 92.80. If this attempt is successful, the U.S. Dollar Index will try to get above the 93 level which will be bearish for silver.

Meanwhile, gold returned to the nearest support at the 50 EMA at $1905. Gold needs to stay above the 50 EMA to have a chance to gain upside momentum. If gold settles below the 50 EMA, it will gain downside momentum which will be bearish for silver and other precious metals.

Gold/silver ratio is flat near the 77 level. Recently, gold/silver ratio made an attempt to gain some upside momentum but was stopped near the 20 EMA at 77.80. If gold/silver ratio gets above the 20 EMA, it will move towards the 50 EMA at 78.25 which will be bearish for silver.

From a big picture point of view, silver remains in an upside trend. The upcoming trading sessions are set to be volatile due to uncertainty over U.S. stimulus so traders should be prepared for quick moves.

Technical Analysis

silver october 22 2020

Silver did not manage to settle above $25.00 and declined below this level. The nearest support level for silver is located at the 50 EMA at $24.55. A move below this support level will indicate that the recent attempt to gain more upside momentum yielded no results.

In this case, silver will decline towards the next support level at $23.90. A move below $23.90 will present an additional problem for silver bulls and push silver towards the support at $23.30.

Silver needs to stay above the 50 EMA to have a chance to develop upside momentum. In case silver remains above this level, it will likely face some resistance at $25.00. If silver gets above $25.00, it will continue to move higher towards the next material resistance at October highs at $25.55. A move above $25.55 will push silver towards the next resistance level at $25.85.

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

USD/JPY Price Forecast – US Dollar Trying to Stabilize

The US dollar has rallied slightly against the Japanese yen during the trading session on Thursday, bouncing a bit from the massive selloff that we had seen on Wednesday. That being said, the actual shape of the market itself has been a descending triangle, and that suggests that the market is eventually going to break down much further. This will be especially true if we get massive stimulus, because it should work against the value of the greenback eventually.

USD/JPY Video 23.10.20

At this point, if we can break down below the ¥104 level, the market is likely to go looking towards the ¥102 level. That being said, it is not necessarily going to happen overnight. However, breaking below the ¥104 level will open up a bit of a “trapdoor effect” as the bottom would be falling out. Nonetheless, I think there are a multitude of reasons to think that we may get a short-term bounce, but I do believe that the ¥105 level will offer pretty significant resistance, and obviously the 50 day EMA will be even more so as it has been so reliable for the last several months.

I do not have a scenario in which I am buying this pair, because we either get the US dollar selling off due to stimulus, or we get this pair selling off due to a “risk off scenario” which almost always favors the Japanese yen anyway. Ultimately, I still like the idea of fading rallies in this pair for the bigger move.

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