The Weekly Wrap – Economic Data and Policy Jitters Delivered a Boost for the Greenback

The Stats

It was a busier week on the economic calendar, in the week ending 17th September.

A total of 61 stats were monitored, which was up from 42 stats in the week prior.

Of the 61 stats, 21 came in ahead forecasts, with 27 economic indicators coming up short of forecasts. There were 13 stats that were in line with forecasts in the week.

Looking at the numbers, 29 of the stats reflected an upward trend from previous figures. Of the remaining 32 stats, 30 reflected a deterioration from previous.

For the Greenback, upbeat economic data and sentiment towards monetary policy delivered support in the week. In the week ending 17th September, the Dollar Spot Index rose by 0.66% to 93.195. In the previous week, the Dollar had risen by 0.59% to 92.582.

Out of the U.S

Early in the week, inflation figures were in focus.

In August, the annual rate of core inflation softened from 4.3% to 4.0% versus a forecasted 4.2%. While softer than expected, 4% continued to sit well above the FED’s 2% target, leaving tapering on the table.

Mid-week, industrial production and NY Empire State manufacturing figures were market positive.

On Thursday, retail sales, Philly FED Manufacturing PMI, and jobless claims figures were of greater interest, however.

In August, retail sales increased by 0.7% versus a forecasted 0.2% decline. Core retail sales jumped by 1.8% versus a 0.1% decline. In July retail sales had fallen by 1.1% and core retail sales by 0.4%.

Manufacturing numbers were also upbeat, with the Philly FED Manufacturing PMI increasing from 19.4 to 30.7 in September.

Jobless claims figures failed to impress, however, with sub-300k remaining elusive. In the week ending 10th September, initial jobless claims rose from 312k to 332k. Economists had forecast an increase to 330k.

At the end of the week, consumer sentiment improved, albeit moderately. In September, the Michigan Consumer Sentiment Index rose from 70.3 to 71.0, falling short of a forecasted 72.0.

Out of the UK

It was also a busy week. Employment, inflation, and retail sales figures were in focus. The stats were skewed to the positive.

In August, claimant counts fell by a further 58.6k after having fallen by 48.9k in July. In July, the unemployment rate fell from 4.7% to 4.6%.

The UK’s annual rate of inflation accelerated from 2.0% to 3.25 in August, also delivering Pound support.

At the end of the week, retail sales disappointed, however. Month-on-month, core retail sales fell by 1.2% in August, following a 3.2% slide in July. Retail sales fell by 0.9% after having fallen by 2.8% in July. Economists had forecast a pickup in spending.

In the week, the Pound fell by 0.71% to end the week at $1.3741. In the week prior, the Pound had fallen by 0.23% to $1.3839.

The FTSE100 ended the week down by 0.93%, following a 1.53% loss from the previous week.

Out of the Eurozone

Economic data included wage growth, industrial production, trade, and finalized inflation figures for the Eurozone.

Finalized inflation figures for Spain, France, and Italy were also out but had a muted impact on the EUR.

In the 2nd quarter, wage fell by 0.4%, year-on-year, partially reversing a 2.1% increase recorded in the previous quarter.

Industrial production and trade data were positive, however.

Production increased by 1.5%, reversing a 0.1% fall from June, with the Eurozone’s trade surplus widening from €17.7bn to €20.7bn.

At the end of the week, finalized inflation figures for the Eurozone were in line with prelim figures. The Eurozone’s annual rate of inflation accelerated from 2.2% to 3.0% in August.

For the week, the EUR fell by 0.75% to $1.1725. In the week prior, the EUR had fallen by 0.56% to $1.1814.

The CAC40 slid by 1.40%, with the DAX30 and the EuroStoxx600 ending the week with losses of 0.77% and 0.96% respectively.

For the Loonie

Economic data included manufacturing sales, inflation, and wholesale sales figures.

The stats were mixed in the week.

In July, both manufacturing sales and wholesale sales disappointed with falls of 1.5% and 2.1% respectively.

Providing support, however, was a pickup in the annual rate of inflation from 3.3% to 3.5%.

The pickup in inflationary pressure and rising oil prices were not enough to support the Loonie against the Greenback.

In the week ending 17th September, the Loonie fell by 0.57% to C$1.2764. In the week prior, the Loonie had fallen by 1.34% to C$1.2692.

Elsewhere

It was another bearish week for the Aussie Dollar and the Kiwi Dollar.

The Aussie Dollar fell by 1.05% to $0.7279, with the Kiwi Dollar ending the week down by 1.03% to $0.7040.

For the Aussie Dollar

Business and consumer confidence figures were in focus in the 1st half of the week.

In spite of the latest lockdown measures, the stats were skewed to the positive.

The NAB Business Confidence Index rose from -8 to -5 in August.

More significantly, the Westpac Consumer Sentiment Index increased by 2.0% in September. The index had fallen by 4.4% in August.

On Thursday, employment figures disappointed, however.

In August, full employment fell by 68k following a 4.2k decline in July. Employment tumbled by 146.3k, however, versus a forecasted 90.0k decline. In July, employment had risen by 2.2k.

According to the ABS,

  • The unemployment rate fell from 4.6% to 4.5%, with the participation rate declining from 66.0% to 65.2%.
  • Year-on-year, the number of unemployed was down by 298,000.

For the Kiwi Dollar

It was also a mixed week on the economic data front.

2nd quarter GDP numbers impressed, with the NZ economy expanding by 2.8%, quarter-on-quarter. The economy had expanded by a more modest 1.4% in the previous quarter.

On the negative, however, was a slide in the Business PMI from 62.6 to 40.1 in August. The figures reflected the impact of the latest lockdown measures on production, justifying the RBNZ’s decision to leave the cash rate unchanged.

For the Japanese Yen

It was a relatively quiet week, with the numbers skewed to the negative.

According to finalized figures, industrial production fell by 1.5% in July. While in line with prelim figures, this was a partial reversal of a 6.5% jump from June.

In August, Japan’s trade balance fell from a ¥439.4bn surplus to a ¥635.4bn deficit. Exports rose by 26.2%, year-on-year, after having been up by 37% in July.

The Japanese Yen rose by 0.01% to ¥109.93 against the U.S Dollar. In the week prior, the Yen had fallen by 0.21% to ¥109.94.

Out of China

Fixed asset investment and industrial production figures were in focus mid-week.

There were yet more disappointing numbers from China for the markets to consider.

In August, fixed asset investment increased by 8.9%, year-on-year. This was softer than a 10.3% increase in July.

More significantly, industrial production was up by 5.3% in August versus 6.4% in July.

In the week ending 17th September, the Chinese Yuan fell by 0.34% to CNY6.4661. In the week prior, the Yuan had ended the week up by 0.18% to CNY6.4443.

The CSI300 and the Hang Seng ended the week down by 3.14% and by 4.90% respectively.

Wall Street Closes Rollercoaster Week Sharply Lower

All three major U.S. stock indexes lost ground, with the Nasdaq Composite Index’s weighed down as rising U.S. Treasury yields pressured market-leading growth stocks.

They also posted weekly losses, with the S&P index suffering its biggest two-week drop since February.

“The market is struggling with prospects for tighter fiscal policy due to tax increases, and tighter monetary policy due to Fed tapering,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York.

“Equity markets are also a little softer due to today’s weak Consumer Sentiment data,” Carter added. “It’s triggering concerns that the Delta variant could slow economic growth.”

A potential hike in corporate taxes could eat into earnings also weigh on markets, with leading Democrats seeking to raise the top tax rate on corporations to 26.5% from the current 21%.

While consumer sentiment steadied this month it remains depressed, according to a University of Michigan report, as Americans postpone purchases while inflation remains high.

Inflation is likely to be a major issue next week, when the Federal Open Markets Committee holds its two-day monetary policy meeting. Market participants will be watching closely for changes in nuance which could signal a shift in the Fed’s tapering timeline.

“It has been a week of mixed economic data and we are focused clearly on what will come out of the Fed meeting next week,” said Bill Northey, senior investment director at U.S. Bank Wealth Management in Helena, Montana.

The Dow Jones Industrial Average fell 166.44 points, or 0.48%, to 34,584.88; the S&P 500 lost 40.76 points, or 0.91%, at 4,432.99; and the Nasdaq Composite dropped 137.96 points, or 0.91%, to 15,043.97.

The S&P 500 ended below its 50-day moving average, which in recent history has proven a rather sturdy support level.

Of the 11 major sectors in the S&P 500, all but healthcare ended in the red, with materials and utilities suffering the biggest percentage drops.

COVID vaccine manufacturers Pfizer Inc and Moderna Inc dropped 1.3% and 2.4%, respectively, as U.S. health officials moved the debate over booster doses to a panel of independent experts.

U.S. Steel Corp shed 8.0% after it unveiled a $3 billion mini-mill investment plan.

Robinhood Markets Inc rose 1.0% after Cathie Wood’s ARK Invest bought $14.7 million worth of shares in the trading platform.

Volume and volatility spiked toward the end of the session due to “triple witching,” which is the quarterly, simultaneous expiration of stock options, stock index futures, and stock index options contracts.

Volume on U.S. exchanges was 15.51 billion shares, compared with the 9.70 billion average over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 1.97-to-1 ratio; on Nasdaq, a 1.00-to-1 ratio favored advancers.

The S&P 500 posted seven new 52-week highs and two new lows; the Nasdaq Composite recorded 67 new highs and 82 new lows.

(Reporting by Stephen Culp; Additional reporting by Krystal Hu in New York and Ambar Warrick in Bengaluru; Editing by Richard Chang)

Did The Global Markets Rollover In April/May 2021? What Next? Part I

This research article is designed to answer a few questions related to the current market contraction and the news related to the potential US Fed tightening of monetary policy while it appears China may be experiencing a credit/debt crisis in the early stages. Many traders/investors are contacting us asking our opinions of the current market situation and what we expect in the near future. This article should help answer a lot of your questions and help you to understand what may come next.

Broad Market Cycles Transitioned Near The End Of 2019 – Were You Paying Attention?

First, let’s discuss the broader market cycles that have changed over the past 24+ months. My research team published these articles suggesting the US and Global markets had recently transitioned away from an Appreciation price cycle and into a new Depreciation price cycle. This is very important to understand because the new Depreciation price cycle will likely change how investors perceive opportunities and how currencies fluctuate in an attempt to revalue after an extensive Appreciation price phase. The US Federal Reserve and global central banks have pushed the reflation trade (pre and post-COVID) well beyond a traditional Supply/Demand Equilibrium.

Most importantly, this research article highlights the transition into the new Depreciation Price Cycle and the fact that it should last until 2029 to 2031…

  • November 27, 2020: HOW TO SPOT THE END OF AN EXCESS PHASE – PART II
  • May 20, 2021: BITCOIN COMPLETES PHASE #3 OF EXCESS PHASE TOP PATTERN – WHAT NEXT?
  • May 23, 2021: US DOLLAR BREAKS BELOW 90 – CONTINUE TO CONFIRM DEPRECIATION CYCLE PHASE

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What is important to understand about this transition between cycle phases is that it is usually associated with an “Excess Phase Price Event”. This is most commonly seen as a euphoric price rally phase, or a bubble rally phase, that drives incredible price advances in various asset types. We’ve seen these excess phase rallies in Cryptos, various stock symbols, Lumber, Copper, and other commodity prices recently. Currently, Natural Gas, Uranium, and a host of others are experiencing these types of Excess Phase “Blow-Off” peaks.

The transition into a new Depreciation Price Cycle will likely prompt the US Dollar to weaken below $87~88 eventually, prompting a very strong rally in Precious Metals. But before that happens, the “Blow-Off” peaks must complete and burst. We need to see some type of anti-climax event that changes trader/investor sentiment and restores more normal price relationships to assets. We may be experiencing that right now – the end of the “Blow-Off” euphoric price cycle phase as the next few charts will attempt to illustrate.

NYSE New Highs Collapse As US/Global Markets Rollover

This Weekly chart of the NYSE New Highs clearly illustrates the incredible rally after the March/April 2020 COVID collapse and the extreme new highs that were generated after the November 2020 US elections. In an incredible display of exuberance and euphoria, the NYSE New Highs level reached a massive 531 level on May 10, 2021. Since that time, the NYSE New Highs level has continued to consolidate below the 200 level and has recently moved below 100 as global equities continue to show weakness across the board.

I believe part of this cycle is related to the transition to the new Depreciation Price Cycle and another part of this is related to the Excess Phase “Blow-Off” peaking we’ve seen in price trends recently. Fundamentally, the markets must ramp up in activity and leverage for these excess phase processes to take place, and they must scale back and deleverage as these processes unwind. I still believe the US Federal Reserve will support the US markets and credit cycles throughout this transition, but as traders and investors move towards scaling back and unwinding leveraged trading positions near these peaks, we may see some aspects of overvalued market assets continue to contract over time.

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S&P 500 Stocks Above 150 DMA Is About To Break Below 50 – Possibly Moving

Into Bearish Trending

This Weekly chart of the S&P 500 stocks above the 150 DMA shows quite a bit of history (originating near the start of 2018). Over this time frame, we can highlight two extended downtrends in price: the first happened in August/September 2018, and the second was the COVID-19 virus event. Every major downward price cycle over the past 3 to 4+ years has seen a decline below the 50 levels as the impulse downside price trend. Then, if the trends continue lower, we usually see a move below 20~30 and many weeks of extended downward trending before support is found by the markets.

Since COVID, the US Federal Reserve, and the US Government have enacted a number of support measures to take the pressures off consumers, banks, and many retailers and corporations.

Now that these support systems are ending and the US/Global economy must transition back to more normal aspects of economic function, we may see a moderate sideways/downward price contraction in the US/Global markets if this level breaks below 40~50. Remember, we are not suggesting an all-out bearish market collapse at this phase of the market trend, but we are suggesting that traders/investors need to be aware that this current trend is not the “endless bull market trend” many are used to seeing since the COVID lows (March 2020). That trend ended in April/May 2021 and it looks like we may be in for a bit of a wild ride over the next 12+ months.

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Still, at this point, we don’t have any real technical confirmation that the US market trends have broken into any new Bearish price trends. The transition from the Appreciation cycle to the new Depreciation cycle does not guarantee or suggest the US stock market will enter a big bearish price trend. What it does suggest is that volatility will increase while the US Dollar trends below $87 to $88 (eventually) and that Precious Metals will start to move dramatically higher. We are at the early stages of what appears to be the end of the “Blow-Off” rally phase that is complicated by the end of COVID policy, changes in US Fed plans, resumption of more normal economic functions, and an excessive credit/debt rally phase which is contracting.

All of this suggests the markets are about to become very volatile and big trends are going to roil through the global markets as a revaluation process takes place. This will present incredible opportunities for traders and investors who are capable of profiting from these huge trends and price rotations. It could also be very dangerous for those who continue to chase the rally trends with extended leverage.

In Part II of this research article, I’ll explore even more data and charts that support my conclusions and better illustrate what we should expect from the markets over the next 12 to 24+ months.

Please take a minute to learn about my BAN Trader Pro newsletter service and how it can help you identify and trade better sector setups.  My team and I have built this strategy to help us identify the strongest and best trade setups in any market sector.  Every day, we deliver these setups to our subscribers along with the BAN Trader Pro system trades.  You owe it to yourself to see how simple it is to trade 30% to 40% of the time to generate incredible results.

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

Have a great day!

Chris Vermeulen
Chief Market Strategist

 

E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Testing Major Support at 34481 – 34257

December E-mini Dow Jones Industrial Average futures are under pressure late in the session on Friday. The selling actually started early in the session as investors expressed caution due to a resurgent COVID virus that remains a threat to the U.S. economic recovery, the Federal Reserve’s tapering decision next week and a general tendency to dump stocks in September.

At 19:02 GMT, December E-mini Dow Jones Industrial Average futures are trading 34452, down 174 or -0.50%.

The Federal Reserve meets for two days next week and on Wednesday is expected to give further clues as to when it may start to slow its $120 billion in monthly bond purchases that have supported the recovery, but also perhaps aided in a jump in inflation.

Daily December E-mini Dow Jones Industrial Average

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 34379 will signal a resumption of the downtrend following the closing price reversal top on September 15.

A trade through 35383 will change the main trend to up. This is highly unlikely, but there is room for a normal 50% to 61.8% retracement of the current sell-off.

The minor trend is also down. A trade through 34826 will change the minor trend to up. This will also shift momentum to the upside with additional minor tops coming in at 34907 and 35076.

The main range is 33533 to 35429. The E-mini Dow is currently testing its retracement zone at 34481 to 34257. This zone could be controlling the near-term direction of the market.

The first minor resistance is 34728. This is followed by a second minor resistance zone at 34881 to 34999.

Daily Swing Chart Technical Forecast

The direction of the December E-mini Dow Jones Industrial Average into the close on Friday is likely to be determined by trader reaction to the main 50% level at 34481.

Bullish Scenario

A sustained move over 34481 will indicate the presence of late session buyers. If this move creates enough upside momentum then look for a surge into 34602, followed closely by 34728.

Bearish Scenario

A sustained move under 34481 will signal the presence of sellers. Taking out 34379 will reaffirm the downtrend with the Fibonacci level at 34257 the next key target.

Look for an acceleration to the downside if 34257 is taken out with strong selling pressure. The daily chart indicates there is no major support until the July 19 main bottom at 33533.

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

Will Quadruple Witch Send Stock Prices Lower?

The broad stock market index lost 0.16% on Thursday as it fluctuated within a short-term consolidation following last week’s declines. On September 2 the index reached a new record high of 4,545.85. Since then it has lost over 110 points. This morning stocks are expected to open virtually flat again following a pre-session rebound from overnight lows.

The index remains elevated after the recent run-up, so we may see more profound profit-taking action at some point.

The nearest important support level of the broad stock market index is now at 4,435-4,450 and the next support level is at 4,400-4,410. On the other hand, the nearest important resistance level is now at 4,490-4,500, marked by the previous support level. The S&P 500 bounced off its over four-month-long upward trend line, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

S&P 500’s Medium-Term Downward Reversal?

The S&P 500 index broke below its medium-term upward trend line a few weeks ago. However, it is still relatively close to the record high. The nearest important support level is at 4,300, as we can see on the weekly chart:

Dow Jones Trades Within a Consolidation

Let’s take a look at the Dow Jones Industrial Average chart. The blue-chip index broke below a potential two-month-long rising wedge downward reversal pattern recently. It remained relatively weaker in August – September, as it didn’t reach a new record high like the S&P 500 and the Nasdaq. The support level is now at around 34,500 and the near resistance level is at 35,000, marked by the recent support level, as we can see on the daily chart:

Apple at Support Level

Apple stock weighs around 6.3% in the S&P 500 index, so it is important for the whole broad stock market picture. Last week it reached a new record high of $157.26. And since then it has been declining. So it looked like a bull trap trading action. On Friday the stock accelerated its downtrend following an unfavorable federal judge’s ruling. We can still see negative technical divergences between the price and indicators and a potential topping pattern. The stock is at an over two-month-long upward trend line – it’s a ‘make or break’ situation.

Conclusion

The S&P 500 index continued to trade within a short-term consolidation yesterday. It’s been a week since the market reached the current price levels. So is this a flat correction within a downtrend or some bottoming pattern? Today we will most likely see another flat opening of the trading session – later in the day we may see some more volatility because of a quarterly derivatives expiration known as ‘quadruple witching Friday’.

The market seems overbought, and we may see some more profound downward correction soon. Therefore, we think that the short position is justified from the risk/reward perspective.

Here’s the breakdown:

  • The market retraced more of its recent advances this week, as the S&P 500 index extended its decline below 4,450 level.
  • Our speculative short position is still justified from the risk/reward perspective.
  • We are expecting a 5% or bigger correction from the record high.

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Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care

* * * * *

The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data’s accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his 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, affiliates as well as their family members 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.

 

S&P Ends Modestly Lower as Rising Treasury Yields Offset Robust Retail Data

The three major indexes spent much of the day in negative territory as rising U.S. Treasury yields pressured market-leading tech stocks, and the rising dollar weighed on exporters.

Amazon.com Inc, buoyed by solid online sales in the Commerce Department’s report, helped push the Nasdaq into positive territory.

“Looking at today, clearly we had positive news from retail sales and it looks as if the massive slowdown in the economy is not materializing as a lot of people expected,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.

“It’s a nice reminder that the economy is still taking two steps forward for each step back even amid the COVID concerns,” Detrick added.

Economically sensitive transports and microchips were among the outperformers.

Data released before the opening bell showed an unexpected bump in retail sales as shoppers weathered Hurricane Ida and the COVID Delta variant, evidence of resilience in the consumer, who contributes about 70% to U.S. economic growth.

“Once again, it shows the U.S. consumer continues to spend and continues to help this economy grow,” Detrick said.

The Dow Jones Industrial Average fell 63.07 points, or 0.18%, to 34,751.32; the S&P 500 lost 6.95 points, or 0.16%, at 4,473.75; and the Nasdaq Composite added 20.40 points, or 0.13%, at 15,181.92.

Eight of the 11 major sectors in the S&P 500 ended lower, with materials suffering the largest percentage drop.

The consumer discretionary spending sector posted the biggest gain, with Amazon.com doing the heavy lifting.

Apparel company Gap Inc gained 1.6%. Online marketplace Etsy Inc and luxury accessory company Tapestry Inc rose 3.1% and 1.9%, respectively.

Ford Motor Co rose 1.4% after it announced plans to boost production of its F-150 electric pickup model.

Declining issues outnumbered advancing ones on the NYSE by a 1.27-to-1 ratio; on Nasdaq, a 1.06-to-1 ratio favored advancers.

The S&P 500 posted nine new 52-week highs and one new low; the Nasdaq Composite recorded 82 new highs and 94 new lows.

Volume on U.S. exchanges was 9.37 billion shares, compared with the 9.44 billion average over the last 20 trading days.

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

(Reporting by Stephen Culp; Additional reporting by Ambar Warrick in Bengaluru; Editing by Richard Chang)

World Shares Slide on Wall Street Sell-Off, China Worries

International investors that have been piling into China in recent years are now bracing for one of its great falls as the troubles of over-indebted property giant China Evergrande come to a head.

The developer’s woes have been snowballing since May. Dwindling resources set against 2 trillion yuan ($305 billion) of liabilities have wiped nearly 80% off its stock and bond prices, and an $80 million bond coupon payment now looms next week.

Hong Kong’s Hang Seng index dropped to its lowest level so far this year.

A report from the U.S. Commerce Department showed retail sales unexpectedly rose in August, indicating America’s economic recovery is strengthening on positive trends in consumer spending. The strong data lifted the dollar and pushed up treasury yields, and sent safe-haven gold down nearly 3%.

However, the U.S. labor market remains under pressure, with initial jobless claims rising by slightly more than expected last week.

Losses on Wall Street were dominated by technology and energy stocks as oil retreated from recent highs now that the threat to U.S. Gulf production from Hurricane Nicholas has receded.

The MSCI world equity index was last down by 0.29%, off an all-time high on Sept. 7. MSCI’s broadest index of Asia-Pacific shares outside Japan closed down 0.87%.

European equities bucked the trend, and Europe’s STOXX 600 closed up 0.44%.

The Dow Jones Industrial Average fell 91.51 points, or 0.26%, to 34,722.88, the S&P 500 lost 11.6 points, or 0.26%, to 4,469.1 and the Nasdaq Composite dropped 15.52 points, or 0.1%, to 15,146.01.

“(Retail spending) categories that were strongest in August were in Covid-beneficiary categories,” wrote Ellen Zentner, chief U.S. economist at Morgan Stanley.

“Now incorporating today’s retail sales release, we lift our real (personal consumer expenditures) tracking to +1.9% and GDP to +5.0%.”

Markets remain focused on next week’s Federal Reserve meeting for clues as to when the U.S. central bank will start to taper stimulus, especially after the flurry of U.S. economic data out this week.

On Tuesday, data from the U.S. Labor Department showed inflation cooling and having possibly peaked, but inflation in Britain was the highest in years, according to data on Wednesday.

“We have an unusual situation where the overall market is sideways to lower but with a  risk-on trend underneath and that’s down to signs the Delta variant may be peaking in the U.S., which is driving people into reflation and recovery plays,” said Kiran Ganesh, head of cross assets at UBS Global Wealth Management.

U.S. crude recently fell 1.2% to $71.74 per barrel and Brent was at $74.69, down 1.02% on the day.

The dollar index rose 0.506%, with the euro down 0.51% to $1.1755.

Spot gold slid 2.1% to $1,755.75 per ounce, after hitting an over one-month low of $1,744.30. U.S. gold futures settled down 2.1% at $1,756.70.

Caught in gold’s slipstream, silver was last down 4.3% at $22.79.

The U.S. 10-year Treasury yield was 1.3327%, while core euro zone government bond yields were little changed.

(Reporting by Elizabeth Dilts Marshall; editing by David Evans and Steve Orlofsky)

American Express Could Hit 140 in the Fourth Quarter

Dow component American Express Co. (AXP) is trading marginally higher in Thursday’s pre-market after Bank of America Securities upgraded the stock from ‘Underperform’ to ‘Neutral’, posting a $169 price target.  The ratings change matches recent actions by Seaport Global Securities and Credit Suisse Group, highlighting analyst caution after the financial technology provider gained nearly 270% off the March 2020 low.

Delta Variant Stalls Business Travel Plans

The stock is highly levered to business and travel spending that’s been impacted by the COVID-19 pandemic. The growth outlook looked bright at the end of the first quarter but the Delta variant has forced corporations to delay plans to reinstitute airline travel, having a negative impact on airline, hotel, conference, and food transactions. That headwind has also impacted rivals Visa Inc. (V) and Mastercard Inc. (MA), with the trio pulling back from summer peaks.

American Express released solid August card metrics on Wednesday, reporting a U.S. Consumer Card Member net loan write-off rate of 0.6% vs. 0.7% in the prior month, or a -10 bps change. Consumer loans 30 days or more past due stood at 0.6% vs 0.6% in the prior month, marking no change, while the U.S. Small Business Card member loan net write-off rate of 0.5% matched 0.5% in July. Loans that were 30 days or more past due rose slightly to 0.5%, compared to 0.4%.

Wall Street and Technical Outlook

Wall Street consensus now stands at an ‘Overweight’ rating based upon 12 ‘Buy’, 1 ‘Overweight’, 13 ‘Hold’, 2 ‘Underweight’, and 1 ‘Sell’ recommendation. Price targets currently range from a low of $140 to a Street-high $227 while the stock is set to open Thursday’s session about $23 below the median $185 target. This low placement should favor a strong fourth quarter bounce but technical factors are telling a more bearish tale.

American Express topped out at 138 in January 2020 and sold off to a four-year low during the pandemic decline. The subsequent uptick reached the prior peak in February 2021, triggering an immediate breakout that posted an all-time high at 179.67 in July. A steady downtick since that time has flipped weekly and monthly Stochastics into sell cycles, predicting continued weakness that could reach 200-day moving average support near 150 in coming weeks.

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

Disclosure: the author held Visa in a family account at the time of publication. 

E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Forming Closing Price Reversal Bottom

December E-mini Dow Jones Industrial Average futures are trading higher at the cash market close on Wednesday as surging crude prices boosted energy-related stocks and a couple of U.S. reports indicated the economic recovery is still intact a day after U.S. consumer price data suggested inflation has crested.

At 20:07 GMT, December E-mini Dow Jones Industrial Average futures are trading 34515, up 51 or +0.15%.

In economic news, import prices posted their first monthly decline since October 2020, in the latest sign that the wave of price spikes has crested, further supporting the Federal Reserve’s position that current inflationary pressures are transitory.

In stock related news, Apple Inc snapped a decline over recent sessions following an adverse court ruling on its business practices, and a lukewarm response to its event on Tuesday where it unveiled updates to its iPhone and other gadgets.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through today’s intraday low will signal a resumption of the downtrend. The next main bottom is 33533.

A move through 35383 will change the main trend to up. This is highly unlikely, but due to the prolonged move down in terms of price and time, the Dow is ripe for a potentially bullish closing price reversal bottom.

The minor range is 35076 to 34379. Its 50% level or pivot at 34728 is the first potential upside target.

The short-term range is 35383 to 34379. Its retracement zone at 34881 to 34999 is primary upside target area. Since the main trend is down, sellers could show up on the first test of this zone. They are going to try to form a potentially bearish secondary lower top.

Short-Term Outlook

The direction of the December E-mini Dow Jones Industrial Average into the close on Wednesday will be determined by trader reaction to 34464.

Bullish Scenario

A sustained move over 34464 will indicate the presence of buyers. Overtaking the 50% level at 34481 will indicate the buying is getting stronger.

If these move creates enough upside momentum then look for the buying to continue early Thursday with 34728 the minimum upside target.

Bearish Scenario

A sustained move under 34464 will signal the presence of sellers. This could generate an early downside bias on Thursday. The first target is 34379, followed by the main Fibonacci level at 34257.

Watch for a technical bounce on the first test of 34357. If this level fails to hold as support then don’t be surprised by an acceleration to the downside.

The daily chart indicates there is plenty of room to the downside with 33533 the next major target.

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

Wall Street Gains as Crude Price Surge, Strong Economic Data Prompt Broad Rally

All three major U.S. stock indexes gathered strength as the session progressed, with economically sensitive cyclicals, smallcaps and transportation stocks leading the charge.

While value stocks initially held the advantage, the risk-on sentiment gained momentum through the afternoon, broadening to include growth stocks.

“Today is the first time in a while when both growth and value stocks are doing pretty well. It’s been either or for much of the last few weeks and today it’s both,” said Chuck Carlson, chief executive of Horizon Investment Services in Hammond, Indiana. “Breadth matters, and that’s something investors like to see.”

A host of economic data showed hints of waning inflation and an ongoing return to economic normalcy, even as supply constraints, complicated by hurricane Ida, hindered factory output.

Import prices posted their first monthly decline since October 2020, in the latest sign that the wave of price spikes has crested, further supporting the Federal Reserve’s position that current inflationary pressures are transitory.

Next week, the Federal Open Markets Committee’s two-day monetary policy meeting will be closely parsed for signals as to when the central bank will begin to taper its asset purchases.

The graphic below shows major indicators against the Fed’s average annual 2% inflation target.

The Dow Jones Industrial Average rose 236.82 points, or 0.68%, to 34,814.39; the S&P 500 gained 37.65 points, or 0.85%, at 4,480.7; and the Nasdaq Composite added 123.77 points, or 0.82%, at 15,161.53.

Among the 11 major sectors in the S&P 500, all but utilities gained ground. Energy was by far the biggest gainer, benefiting from a jump in crude prices driven by a drawdown in U.S. stocks.

U.S.-listed Chinese stocks extended recent losses, as weak retail sales data pointed to a possible economic slowdown in the mainland, while Beijing’s regulatory overhaul of Macau’s casino industry further dampened appetite for Chinese stocks.

This follows a series of regulatory moves by China against major technology firms, which has wiped out billions in market value this year.

“It would be tough to buy any Chinese stocks,” Carlson said. “From an investor standpoint you don’t know what sector is next.”

“I don’t think the situation is going to get better any time soon and it’s probably going to spread,” he added.

U.S.-based casino operators Las Vegas Sands Corp, Wynn Resorts Ltd and MGM Resorts International slid between 1.7% and 6.3%.

Apple Inc snapped a decline over recent sessions following an adverse court ruling on its business practices, and a lukewarm response to its event on Tuesday where it unveiled updates to its iPhone and other gadgets. Its shares gained 0.6%.

Lending platform GreenSky Inc shot up 53.2% after Goldman Sachs Group Inc said it would buy the company in an all-stock deal valued at $2.24 billion.

Advancing issues outnumbered declining ones on the NYSE by a 2.15-to-1 ratio; on Nasdaq, a 1.70-to-1 ratio favored advancers.

The S&P 500 posted seven new 52-week highs and three new lows; the Nasdaq Composite recorded 55 new highs and 106 new lows.

(Reporting by Stephen Culp; additional reporting by Ambar Warrick and Sruthi Shankar in Bengaluru; Editing by Richard Chang)

Global Shares Rise on Strong U.S. Equities, Factory Data

U.S. factory production data showed that manufacturing remained strong despite a slowdown due to factory closures related to Hurricane Ida and the ongoing microchip shortage.

Also out of the U.S. import prices declined for the first time in 10 months in August. That followed Tuesday data from the U.S. Labor Department showing that inflation cooled last month and may have peaked.

The MSCI All Country World Index 0.21%. The S&P 500 rose from more than a three-week low and the Dow Jones index recovered from a near two-month trough hit on Tuesday.

“The Delta wave is likely receding in the U.S. and globally, and the pandemic recovery should restart,” JPMorgan Securities analyst Marko Kolanovic wrote, referring to the highly infectious coronavirus delta variant.

The Dow Jones Industrial Average rose 230.55 points, or 0.67%, to 34,808.12, the S&P 500 gained 33.31 points, or 0.75%, to 4,476.36 and the Nasdaq Composite added 94.48 points, or 0.63%, to 15,132.24.

The pan-European STOXX 600 index was down 0.80% after data showed that inflation in the U.K. hit a more than nine-year high last month. Economists believe it was largely due to a one-off boost that analysts said was likely to be temporary.

All eyes now are on next week’s U.S. Federal Open Market Committee’s monetary policy meeting. Expectations that the Fed will announce plans to taper its bond-buying program were lower after Tuesday’s softer-than-expected U.S. inflation data, especially as some expect inflation to remain high for months.

Possible increases to the U.S. corporate tax rate remain important in the background, and one bank estimated that raising the corporate tax to 25% could shave 5% off S&P500 earnings in 2022.

“We still have a very fragile market, especially if we get some type of tapering from the Federal Reserve,” said David Wagner, portfolio manager at Aptus Capital Advisors. “Any material change to tax policy can create a more volatile market.”

Data out of China showed that factory and retail output and sales growth hit one-year lows in August, as fresh COVID-19 outbreaks and supply disruptions pointed to a possible economic slowdown in the mainland.

The dollar was last down 0.122% mainly due to a sharp slide USD/JPY’s, which broke below important supports as safe-haven buying bolstered the yen in particular.

The yield on the U.S. government 10-year note was 1.3107%.

U.S. crude settled up 3.1% at $72.61 a barrel, and Brent ended 2.5% higher at $75.46 a barrel.

Spot gold dropped 0.8% to $1,790.56 an ounce. U.S. gold futures fell 0.68% to $1,792.40 an ounce.

(Reporting by Elizabeth Dilts Marshall in New York, Huw Jones in London; Editing by Will Dunham and Marguerita Choy)

S&P 500: Striking Similarity to the September Last Year

The broad stock market index fell to the daily low of 4,435.46 on Tuesday and it was the lowest since August 20. On September 2 the index reached a new record high of 4,545.85. Since then it has lost over 110 points. This morning stocks are expected to open virtually flat.

The index remains elevated after the recent run-up, so we may see some more profound profit-taking action at some point.

The nearest important support level of the broad stock market index is at 4,435 and the next support level is at 4,400-4,410. On the other hand, the nearest important resistance level is now at 4,465-4.475, marked by the recent support level. The S&P 500 got back close to its over four-month-long upward trend line, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Dow Jones – Short-term Consolidation

Let’s take a look at the Dow Jones Industrial Average chart. The blue-chip index broke below a potential two-month-long rising wedge downward reversal pattern last week. It remained relatively weaker, as it didn’t reach a new record high like the S&P 500 and the Nasdaq. The support level is now at around 34,500 and the near resistance level is at 34,750, marked by the recent support level, as we can see on the daily chart:

September Last Year – S&P 500 Fell Almost 11%

In 2020, the S&P 500 index reached a local high of 3,588.11 on September 2 and in just three weeks it fell 10.6% to local low of 3,209.45 on September 24. This year, September’s downward correction has started at the new record high of 4,545.85 on September 3, so there is a striking similarity between those two trading actions. However, the index is just 2.4% down this time.

Apple Stock at Trend Line

Apple stock weighs around 6.3% in the S&P 500 index, so it is important for the whole broad stock market picture. Last week it reached a new record high of $157.26. Since then it has been declining. So it looks like a bull trap trading action. On Friday the stock accelerated its downtrend following an unfavorable federal judge’s ruling. We can still see negative technical divergences between the price and indicators and a potential topping pattern. The two-month-long upward trend line remains at around $147.

Conclusion

Yesterday, the S&P 500 index extended its short-term downtrend following breaking below 4,500 level on Friday. For now, it still looks like a correction within an uptrend. Today we will most likely see a flat opening of the trading session – we may see some more short-term consolidation.

The market seems overbought, and we may see some more profound downward correction soon. Therefore, we think that the short position is justified from the risk/reward perspective.

Here’s the breakdown:

  • The market retraced more of its recent advances this week, as the S&P 500 index extended its decline below 4,450 level.
  • Our speculative short position is still justified from the risk/reward perspective.
  • We are expecting a 5% or bigger correction from the record high.

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

Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care

* * * * *

The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data’s accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his 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, affiliates as well as their family members 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.

 

US Stock Index Futures Cautiously Higher as September Correction Looms

The major U.S. stock futures contracts are moving higher during the premarket session on Wednesday, clawing back some of the previous session’s losses. Although the “technical bounce” in the market is a welcome sight following the current downdraft, investors are still facing potential headwinds in the form of worries about the state of the economic recovery and the next policy move by the Federal Reserve.

At 08:54 GMT, the benchmark December E-mini S&P 500 Index futures are trading 4445.75, up 11.00 or +0.25%. The blue chip December E-mini Dow Jones Industrial Average is at 34529, up 65 or +0.19% and the tech-heavy December E-mini NASDAQ-100 Index is trading 15426.25, up 46.50 or +0.30%.

Are Stocks Entering a Correction Phase?

According to CNBC, “The Dow, S&P and the small-cap Russell 2000 have now traded in the red for six of the last seven days. Tuesday marked the fifth straight day of losses for the NASDAQ. September has historically been a down month for the markets, which have seen an average decline of 0.56% in the month since 1945, according to CFRA. And after eight months of straight gains, strategists say a major pullback could be imminent.”

Professional Investors Eyeing the S&P’s 50-Day Moving Average

The S&P 500 has continued to move higher throughout the year, dipping below the 50-day moving average only once, according to Fundstrat. Mike Wilson, chief investment officer at Morgan Stanley, told CNBC’s “Fast Money” that could be just the beginning.

“The midcycle transition always ends with a correction in the index,” he said of the S&P 500. “Maybe it’ll be this week, maybe a month from now. I don’t think we’ll get done with this year, however, with the 50-day moving average holding up throughout the year because that’s the pattern we typically see in this part of the recovery phase.”

Early Thoughts on Next Week’s Federal Reserve Monetary Policy Decision

Tuesday’s soft U.S. consumer inflation report has turned investor attention back to the Fed’s September 21-22 monetary policy decision. Earlier in the week, investors were betting the central bank would reveal its timeline for the start of tapering on the back of a robust U.S. producer price index report. After Tuesday’s U.S. consumer inflation report (CPI) showed a flattening of the data, however, investors are now uncertain about the timing of the Fed’s tapering of asset purchases.

“The Federal Reserve will probably delay slowing its purchase of Treasury and mortgage-backed securities despite slight indications that the price increase in durable goods is transitory, as illustrated by the reduction in used car prices,” said Dawit Kebede, senior economist at Credit Union National Association. “This is because we are far from maximum employment,” one of the Fed’s two goals of its dual mandate.

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

U.S. Stocks Close Lower on Worries Over Recovery, Corporate Tax Hikes

Optimism faded throughout the session, reversing an initial rally following the Labor Department’s consumer price index report. All three major U.S. stock indexes ended in negative territory in a reminder that September is a historically rough month for stocks.

So far this month the S&P 500 is down nearly 1.8% even as the benchmark index has gained over 18% since the beginning of the year.

“There is a possibility that the market is simply ready to go through an overdue correction,” said Sam Stovall, chief investment strategist at CFRA Research in New York. “From a seasonality perspective, September tends to be the window dressing period for fund managers.”

The advent of the highly contagious Delta COVID variant has driven an increase in bearish sentiment regarding the recovery from the global health crisis, and many now expect a substantial correction in stock markets by the end of the year.

“We’re still in a corrective mode that people have been calling for months,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. “Economic data points have been missing estimates, and that has coincided with the rise in the Delta variant.”

The CPI report delivered a lower-than-consensus August reading, a deceleration that supports Federal Reserve Chairman Jerome Powell’s assertion that spiking inflation is transitory and calms market fears that the central bank will begin tightening monetary policy sooner than expected.

U.S. Treasury yields dropped on the data, which pressured financial stocks, and investor favor pivoted back to growth at the expense of value. [US/]

The long expected corporate tax hikes, to 26.5% from 21% if Democrats prevail, are coming nearer to fruition with U.S. President Joe Biden’s $3.5 trillion budget package inching closer to passage.

The Dow Jones Industrial Average fell 292.06 points, or 0.84%, to 34,577.57; the S&P 500 lost 25.68 points, or 0.57%, at 4,443.05; and the Nasdaq Composite dropped 67.82 points, or 0.45%, to 15,037.76.

All 11 major sectors in the S&P 500 ended the session red, with energy and financials suffering the largest percentage drops.

Apple Inc unveiled its iPhone 13 and added new features to its iPad and Apple Watch gadgets in its biggest product launch event of the year as the company faces increased scrutiny in the courts over its business practices. Its shares closed down 1.0% and were the heaviest drag on the S&P 500 and the Nasdaq.

Intuit Inc gained 1.9% following the TurboTax maker’s announcement that it would acquire digital marketing company Mailchimp for $12 billion.

CureVac slid 8.0% after the German biotechnology company canceled manufacturing deals for its experimental COVID-19 vaccine.

Declining issues outnumbered advancing ones on the NYSE by a 2.25-to-1 ratio; on Nasdaq, a 2.40-to-1 ratio favored decliners.

The S&P 500 posted two new 52-week highs and two new lows; the Nasdaq Composite recorded 50 new highs and 107 new lows.

Volume on U.S. exchanges was 10.07 billion shares, compared with the 9.38 billion average over the last 20 trading days.

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

(Reporting by Stephen Culp; additional reporting by Krystal Hu in New York and Ambar Warrick in Bengaluru; Editing by Richard Chang)

 

After Moderate Selling US Stock Markets Rebound Higher – How Long Will This Trend Continue?

But our interpretation of this rotation was consistent with moderate price rotation that we’ve seen nearly every 20 to 30 days, on average, for almost the past year or longer.  The markets need to really break away from this upward price trend in order to initiate some new correction or downward price phase.  Otherwise, we continue to see moderate price rotation in an upward sloping market.

The economic data and investor expectations may change at some point in the future, but we have not seen the S&P500, NASDAQ or Dow Jones break away from any major trending recently.  One could argue that the Dow Jones, the big Blue Chip Index, and the Russell 2000, the Mid Cap Index, have actually broken away from upward trending.  But one could also argue that investor capital has shifted over the past 6+ months away from Blue Chips and Mid Cap, and more towards Technology, Healthcare, Biotech, Home Builders, and Real Estate.  This shift in how capital is being deployed may account for the somewhat sideways price trend in the Dow Jones and Russell 2000 recently.

S&P Riding The 50 DMA Higher

This Daily ES, S&P 500 E-Mini Futures chart, highlights the continued upward price trend and the continued rebounding off the 20 & 50 DMA Averages over the past 8+ months.  I’ve drawn MAGENTA arcs below each time the S&P has pulled back to the 50 DMA and initiated a strong rebound/recovery attempt.

Until this cycle of moderate rotation, then a strong rebound in price trending is broken and we see some decidedly downward price trending, traders should expect more of this type of pattern in the future.  Of course, the US Federal Reserve’s continued support and buying of assets assist in supporting this type of trending higher.  Traders look at these pullbacks as very strong buying opportunities for instant profits in many cases. Let’s take a look at some current price charts to see how this trend is setting up right now.

https://www.thetechnicaltraders.com/wp-content/uploads/2021/09/Chart_21-09-14_ES_D.png

The NASDAQ Shows More Bullish Bias Than The S&P 500

The NASDAQ has been ripping higher over the past 6+ months.  This is mostly because of how the US economy has transitioned into a remote/work-from-home economy and how technology services, Healthcare, Biotech, Real Estate, and Home Building sectors have been performing over the past 6+ months.  The NASDAQ is uniquely positioned to take advantage of the current shift in how the economy is performing and where consumers/traders are taking advantage of trends.

We are seeing the NASDAQ trending within a very defined and tightening price channel, highlighted by the CYAN trend lines.  Recently, near the end of August and into early September, we saw the NASDAQ rally above the upper CYAN trend line and recently fall back into the trend line range.  As the NASDAQ nears the apex level of this very broad Pennant/Flag formation, traders should expect increased volatility in price and the potential for some very big price swings in the near future.

The current bottom in price is setting up near the 20 DMA Average, which has happened many times over the past 6+ months.  It would take a much deeper price pullback to reach the 50 DMA average (the LIGHT GREEN line).  We don’t believe that is likely as we move into Q3:2021 earnings over the next few weeks and into the Christmas Rally phase of the markets.

https://www.thetechnicaltraders.com/wp-content/uploads/2021/09/Chart_21-09-14_NQ_D.png

Changing Markets Push Global Investors Into US Assets

Certainly, we will agree the markets have extended to what some consider extreme highs and are showing signs of extreme overbought conditions.  But, we also have to consider how the markets have changed over the past 24 months.  COVID pushed the markets away from a more traditional Brick-n-Mortar type of economy and shoved us into a new type of economic process.  Where services, technology, essential supplies/components, and rampant inflation are changing how consumers spend their time/money.

The US stock market, and the continued strength of the US Dollar, has continued to attract capital from all corners of the world. The US stock market is more than 8x more capitalized than any other foreign market exchange.  Take a look at this graphic from Statista.com highlighting the incredible amount of capital deployed in the US stock market compared to other foreign markets.

https://www.thetechnicaltraders.com/wp-content/uploads/2021/09/2021-07-16_Statista_WorldMarketCap.jpg

(Source: https://www.statista.com/statistics/710680/global-stock-markets-by-country/)

It seems the world is running on US Fuel related to the strength of the US economy and the support of the US Federal Reserve.  While the US Dollar continues to stay above $88~$89, it is very likely that the upward trending in the US stock market will continue.  Traders/Investors simply can’t move away from the US market and miss the opportunities it creates.

Get ready for more trending as we shift into Q4:2021 and the start of the 2021 Christmas Rally Phase in the US Stock markets.

Please take a minute to learn about my BAN Trader Pro newsletter service and how it can help you identify and trade better sector setups.  My team and I have built this strategy to help us identify the strongest and best trade setups in any market sector.  Every day, we deliver these setups to our subscribers along with the BAN Trader Pro system trades.  You owe it to yourself to see how simple it is to trade 30% to 40% of the time to generate incredible results.

As something entirely new, check out my initiative URLYstart to learn more about the youth entrepreneurship program I am developing. This is an online program of gamified entrepreneurship designed to introduce and inspire youth to start their own businesses. Click-by-click, each student will be guided from their initial idea, through the startup process all the way to their first sale and beyond. Along the way, our students will learn life lessons such as communication, perseverance, goal setting, teamwork, and more. My team and I are passionate about this project and want to reach as many people as possible!

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

Have a great day!

Chris Vermeulen
Chief Market Strategist

 

Oil Settles Unchanged as Latest Storm Spares U.S. Energy Sector

Brent crude settled up 9 cents to $73.60 a barrel after hitting a session high of $74.28. U.S. West Texas Intermediate (WTI) crude settled up 1 cent, at $70.46, after touching a high of $71.22.

More than 39% of the U.S. Gulf of Mexico’s production of crude and natural gas remained shut on Tuesday, the regulator Bureau of Safety and Environmental Enforcement (BSEE) said. Nicholas made landfall in Texas on Monday and was to reach Louisiana on Wednesday, bringing more floods and heavy rains to the Gulf’s oil facilities.

“The Gulf situation is not resolving itself quickly,” said John Kilduff, partner at Again Capital LLC in New York.

Royal Dutch Shell shut production at an offshore oil platform due to heavy winds. Vessel traffic at some energy hubs was halted due to difficult weather conditions.

“There’s going to be import-export issues because Houston is in a semi-flood zone,” said Bob Yawger, director of energy futures at Mizuho.

Nicholas is the second major storm to threaten the U.S. Gulf region in recent weeks, bringing heavy rains to the Deep South and causing power outages. Still, most Texas refineries were operating normally and Texas utilities were restoring power to customers who suffered outages.

The Colonial pipeline, the largest U.S. fuel pipeline, partially resumed operations after shutting due to a power outage early in the day.

Oil turned negative during the session after new data from the U.S. Labor Department showed inflation cooling and as worries receded about the storm’s impact on the energy sector.

After three months of declining global oil demand, rollouts of COVID-19 vaccines should rekindle appetite for oil that was suppressed by pandemic restrictions, especially in Asia, the International Energy Agency (IEA) said on Tuesday.

The IEA sees a demand rebound of 1.6 million barrels per day (bpd) in October and continued growth until the end of the year.

Overall, the agency lowered its 2021 global oil demand growth forecast by 105,000 bpd to 5.2 million bpd but raised its 2022 figure by 85,000 bpd to 3.2 million bpd.

These forecasts are below those of the Organization of the Petroleum Exporting Countries (OPEC), which expects demand to grow by about 5.96 million bpd this year and 4.15 million bpd next year.

Protesters blocked an oil tanker from loading at the Libyan terminal of Es Sider on Tuesday, the National Oil Corp’s (NOC) media office and an engineer at the port said.

Details on China’s plans to sell crude from strategic reserves pressured prices. China’s state reserves administration said it would auction about 7.4 million barrels of crude on Sept. 24.

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

(Additional reporting by Ahmad Ghaddar in London, Yuka Obayashi in Tokyo; Editing by Paul Simao, Mark Potter and David Gregorio)

 

Equities Fall as U.S. Inflation Data Raises More Questions

MSCI’s world stocks benchmark fell 0.23%, and all of the major U.S. stock indexes were down by mid-afternoon New York time. European shares closed 0.1% lower, dragged down by mining, banks and luxury stocks, which followed Asian luxury stocks in falling on a new spike in COVID-19 cases in Fujian, China.

The Labor Department said on Tuesday its Consumer Price Index (CPI) was up just 0.1% last month, compared to an expected increase of 0.3%. That was the smallest gain in six months, and it indicated that inflation has probably peaked.

However, concern that inflation could remain high for a prolonged period has pressured stocks in September, and the data included warning signs that some bottleneck issues have not entirely gone away.

“Today’s CPI data came in a bit weaker than expected, but (the Producer Price Index) is at a record high and inflation continues to be a key challenge for investors,” said David Petrosinelli, Senior Trader at InspereX.

The U.S. Federal Reserve will meet next week. The August CPI data lifts some of the pressure the Fed faced to announce it would begin tapering its massive bond-buying program.

Further delaying this key Fed announcement is “distorting” the economy and throwing off markets, said BlackRock’s Chief Investment Officer of Global Fixed Income Rick Rieder.

“Continuing to stimulate demand higher increases the risk of a severe supply/demand mismatch across economic as well as financial assets,” said Rieder, also the head of BlackRock’s global allocation team.

The Dow Jones Industrial Average fell 262.72 points, or 0.75%, the S&P 500 lost 20.69 points, or 0.46%, and the Nasdaq Composite dropped 33.25 points, or 0.22%.

The prospect of a corporate tax rise in the United States from 21% to 26.5% as part of a $3.5 trillion budget bill is also front and center for investors.

Investment bank Goldman Sachs Group Inc estimates that if Democrats succeed in raising the corporate tax rate increase to 25% and get half of the hike proposed in foreign income tax rates, it could shave 5% off S&P500 earnings in 2022.

In Asia, China’s tightening grip on its technology companies again kept investors on edge after authorities told tech giants to stop blocking each other’s links on their sites.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.43%.

The dollar index fell 0.161 points or 0.17%, to 92.514.The euro was last up 0.09%, at $1.1819 .

The yield on 10-year Treasury notes US10YT=RR was 1.282%.Bond yields in the euro area moved up, with Germany’s 10-year yield, the benchmark for the bloc, at -0.34%, hitting a two-month high.

Oil prices rose, extending gains as Nicholas weakened into a tropical storm and the International Energy Agency said demand would rebound in the remainder of the year.

Brent crude settled up $0.9, or up 0.12%, at $73.60 a barrel. U.S. crude settled up $0.1, or up 0.01%, at $70.46 per barrel. Spot gold prices rose $12.7509 or 0.71 percent, to $1,806.24 an ounce.

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

(Reporting by Elizabeth Dilts Marshall in New York; Tom Arnold in London and Scott Murdoch in Hong Kong; editing by Angus MacSwan and Nick Zieminski)

S&P 500 Snaps Losing Streak With Tax Hikes, Inflation Data on Horizon

The Dow Jones Industrial Average also advanced, but the Nasdaq Composite Index ended lower.

Investors favored value over growth, with stocks set to benefit most from a resurging economy enjoying the biggest percentage gains.

“There are probably not a lot of positive surprises coming this month,” said Liz Young, head of investment strategy at SoFi in New York. “We’re having another period of volatility where I think that rotation could go back to cyclicals and the reopened trade, as the 10-year bond rate slowly grinds higher through the end of the year.”

Market participants are focused on the likely passage of U.S. President Joe Biden’s $3.5 trillion budget package, which is expected to include a proposed corporate tax rate hike to 26.5% from 21%.

Goldman Sachs analysts see the corporate tax rate increasing to 25% and the passage of about half of a proposed increase to tax rates on foreign income, which they estimate would reduce S&P 500 earnings by 5% in 2022.

The Labor Department is due to release its consumer price index data on Tuesday, which could shed further light on the current inflation wave and whether it is as transitory as the Fed insists.

“I don’t see inflation settling back down under 2% where it was pre-pandemic,” Young added. “Even if some of those transitory forces weaken, we will still stay at a higher rate than we were before.”

Other key indicators due this week include retail sales and consumer sentiment, which could illuminate how much the demand boom driven by economic re-engagement has been dampened by the highly contagious COVID-19 Delta variant.

The Dow Jones Industrial Average rose 261.91 points, or 0.76%, to 34,869.63, the S&P 500 gained 10.15 points, or 0.23%, at 4,468.73 and the Nasdaq Composite dropped 9.91 points, or 0.07%, to 15,105.58.

Of the 11 major sectors in the S&P 500, healthcare suffered the largest percentage loss, while energy, buoyed by rising crude prices was the biggest gainer.

Shares of vaccine makers Moderna and Pfizer Inc sank 6.6% and 2.2%, respectively, after experts said COVID booster shots are not widely needed.

Coinbase Global Inc announced plans to raise about $1.5 billion through a debt offering aimed at funding product development and potential acquisitions. The cryptocurrency exchanges shares slid 2.2%.

Salesforce.com Inc dipped 1.2% as rival Freshworks Inc’s regulatory filing indicated that the business engagement and customer engagement software company is aiming for a nearly $9 billion valuation in it U.S. debut.

Advancing issues outnumbered declining ones on the NYSE by a 1.60-to-1 ratio; on Nasdaq, a 1.02-to-1 ratio favored advancers.

The S&P 500 posted 12 new 52-week highs and one new low; the Nasdaq Composite recorded 53 new highs and 71 new lows.

Volume on U.S. exchanges was 10.30 billion shares, compared with the 9.29 billion average over the last 20 trading days.

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

(Reporting by Stephen Culp; Additional reporting by Krystal Hu in New York and Ambar Warrick in Bengaluru; Editing by Richard Chang)

Global Stock Markets Slip on Inflation, Tax, Regulation Worries

Leading U.S. House of Representatives Democrats said they are seeking to raise the tax rate on corporations to 26.5%, up from the current 21%.

The U.S. consumer price data due out on Tuesday will give a broad picture of the economy’s progress ahead of the Federal Reserve’s meeting next week.

The MSCI world equity index, which tracks shares in 45 nations, shed 0.22%, while U.S. stocks were mixed.

The Dow Jones Industrial Average rose 0.4% and the S&P 500 fell 0.17%. The Nasdaq Composite dropped 0.4%, as investors pivoted away from major technology stocks to sectors more likely to benefit from an economic bounce later this year.

The dollar climbed to a two-week peak against a basket of major currencies as investors priced in the possibility that the Federal would reduce its asset purchases.

“Investors are grappling with an unusually wide range of potential economic outcomes beyond the post-pandemic restart, reflected in frequent shifts in equity market leadership and volatile bond yields,” said Vivek Paul, senior portfolio strategist at BlackRock Investment Institute.

The yield on 10-year Treasury notes was down 2 basis points to 1.321%.

European stocks ended higher for the first time in five days on hopes that a strong euro zone economic recovery can outweigh risks of a global slowdown. The pan-European STOXX 600 index was up 0.3% after hitting a three-week low last week.

Asian stocks fell earlier in the day following news of a fresh regulatory crackdown on Chinese firms.

China fired a fresh regulatory shot at its tech giants, telling them to end a long-standing practice of blocking each other’s links on their websites. The Financial Times also reported that China is aiming to break up the payments app Alipay.

The Chinese blue-chip index fell 0.5% and MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.78% lower. Japan’s Nikkei rose 0.22%.

The core reading of the U.S. consumer price index is expected to show a rise of 0.3% in August, down from 0.5% the previous month and 0.9% in June.

The U.S. Federal Reserve is paying close attention to price pressures as it mulls when to begin to reduce its massive bond holdings and how soon to begin lifting rates from near zero. It also remains on the lookout for any signs that price pressures may broaden.

The general air of risk aversion helped lift the dollar index to 92.69, up 0.12%.

Oil prices rose to six-week highs as U.S. output remains slow to return two weeks after Hurricane Ida slammed into the Gulf Coast and worries another storm could affect output in Texas this week.

Brent crude settled up $0.59, or up 0.81%, at $73.51 a barrel. U.S. crude settled up $0.73, or up 1.05%, at $70.45 per barrel.

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

(Reporting by Sujata Rao in London and Elizabeth Dilts Marshall in New York; additional reporting by Wayne Cole in Sydney and Dhara Ranasinghe in London; editing by Emelia Sithole-Matarise, Will Dunham, Chizu Nomiyama and Dan Grebler)

S&P 500, NASDAQ Composite Reverse Gains, Turn Lower after House Democrats Propose New Tax Hikes

The S&P 500 Index and the NASDAQ Composite Index fell sharply shortly before the mid-session on Monday after U.S. House Democrats laid out their plans for massive corporate and individual tax rate increases. Meanwhile, the Dow Jones Industrial Average was able to hold onto most of its earlier gains.

At 16:08 GMT, the benchmark S&P 500 Index is trading 4459.33, up 0.75 or +0.02%. This is down from an intraday high of 4492.99.

The blue chip Dow Jones Industrial Average is at 34848.22, up 240.50 or +0.69%. It’s high of the session is 34939.10.

The tech-heavy NASDAQ Composite is trading 15062.85, down 52.64 or -0.35%. This is down from an intraday high of 15215.44.

US House Democrats Propose Hefty Corporate, Personal Tax Hikes

Leading Democrats in the U.S. House of Representatives said on Monday they are seeking to raise the nation’s top tax rate on corporations to 26.5%, up from the current 21%. The proposal also calls for a top individual tax rate of 39.6%. Additionally, the proposal includes a 3% surcharge on individual income above $5 million and a capital gains tax of 25%.

According to Reuters, the powerful House Ways and Means Committee said it will debate legislation this week that would achieve the change as part of Democrats’ broader, $3.5 trillion domestic investment plan.

House Ways and Means Chairman Richard Neal will attempt to win the committee’s approval of the tax changes that are aimed at helping pay for the $3.5 trillion bill to expand social services for the elderly and children and tackle climate change, Reuters reported.

Neal wants to set a graduated corporate tax rate of 18% on annual income below $400,000, 21% on income up to $5 million and 26.5% on income above $5 million.

His proposal also would increase the capital gains tax rate for those with incomes above $400,000 to 25% from the current 20% and include an additional 3% surcharge on taxable income in excess of $5 million.

The House proposal would take huge steps to reverse the 2017 Republican tax cuts. It would take the corporate rate to 26.5%, after the GOP slashed it to 21% from 35%.

S&P, NASDAQ Give Back Earlier Gains while Dow Holds Steady

The Dow Jones Industrial Average gained Monday as the index rebounded from a losing streak. The blue chip average’s bounce comes after the Dow and the S&P posted a fifth straight day of losses Friday, while the NASDAQ Composite registered its third consecutive negative session. For the S&P 500, Friday marked its worst losing streak since February 22.

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