Semiconductors and AMD Close To A Breakout Move

Being a technical trader means we attempt to identify opportunities in and market, symbol, or sector based on technical indicators, price patterns, advanced price theory/modeling, and much more.  We don’t particularly care if the opportunity is a bullish breakout rally or a bearish breakdown selloff, we simply want to find the “setups” that create this opportunity because that is our “sweet spot”.  That is where the technical trader lives for the excitement of being able to find these technical setups and potential trade them for profits/success.

AMD Cup & Handle/Pennant Daily Chart

Let me teach you about two price patterns that are currently setting up in Advanced Micro Devices (AMD) where we can attempt to illustrate how a combination of technical triggers may align to present a very clear opportunity for technical traders.

This chart highlights a Cup & Handle pattern and a Bullish Pennant/Flag pattern.  Ideally, the combination of these two patterns would suggest a higher probability of an upside bullish breakout rally beginning near the apex of the Pennant formation. Yet, Pennant formations, and other types of technical patterns, can often present a “Washout sell-off in price” near the apex (or breakout area) as a means of shaking out stops before entering the next leg of the trend.

The “Washout” move happens as price tightens into a narrowing price channel and nears the end of a Pennant/Flag formation pattern. This typically results in a broader price move against the predicted technical pattern trend, in this case, down.  What happens is that traders tend to set stop levels just outside the tightening price channels as a means to protect against a price breakdown or rally against their position.  These stop orders present very real volatility targets when price begins the Apex breakout/breakdown event.  The price will usually rotate against the primary technical trend for a short period of time, taking out many stops in the process, then stall and begin to move in the direction of the technical pattern predicted trend, which would be a rally towards $72.

In this case with AMD, the Apex breakout move (to the upside) may be preceded by a price breakdown move near, or below, the $48 to $49 level – this is the “washout” move.  We’ve highlighted what we believe is the lower technical support level in AMD near $44.  This would represent a moderately deep downside price “washout” target level for skilled technical traders.  After this potential washout trend completes, a broader upside price trend usually sets us prompting a rally towards the original Pennant/Flag targets and likely completing the Cup & Handle pattern breakout.

The combination of the Cup & Handle pattern with the Bullish Pennant price pattern in AMD presents a very real opportunity for skilled technical traders.  If your risk tolerance for the trade is capable of riding out the potential “washout low”, then you may consider setting your long entry trades just below the $48 to $50 levels as we near the true Apex event of this trade setup.  There is no guarantee that the washout event will move down to the lower $44 support level – so consider that level a deeper price support level representing a deeper downside price washout.

Ideally, the pending Apex event of the Cup & Handle pattern and the Pennant pattern will result in a moderate 8% to 15% price washout move before the upside price trend initiates.  This suggests that the washout rotation may end near $48 or $49, where price may find support, then begin to rally higher.  The Breakdown Support level on this chart should be considered a “failure level” for this bullish price pattern.  If the price moves below that level when it initiates the Apex volatility, then it is very likely that support has broken down and the predicted upside price trend has failed.

This is how technical traders approach many types of technical price triggers.  We have an expected outcome for price and trends.  We understand the volatility factors related to the trade triggers and we attempt to identify risk factors and profit capabilities before we execute any trades.  If these parameters for our traders are adequate, then we may decide to execute the trade attempting to capture the profits.

Get ready, this AMD trade setup is nearing the Apex moment and our research team believes a $48 to $50 entry price range is an adequate “washout” range with minor risk factors.  Upside price targets should start near $61.50 and $69.  If you understand how to execute the trade properly, we’ve just delivered a complete blueprint for a potential Apex Breakout trade in AMD using simple technical analysis. This is the basic view of what we offer the active followers of our swing trade alert newsletter. Ride my coattails as I navigate these financial markets and build wealth one chart pattern at a time.

As a technical analyst and trader since 1997, I have been through a few bull/bear market cycles in stocks and commodities. I believe I have a good pulse on the market and timing key turning points for investing and short-term swing traders. Make 2020 and beyond incredibly profitable by following my analysis and trade alerts.

Get my Active ETF Swing Trading Newsletter or if you have any type of retirement account and are looking for signals when to own equities, bonds, or cash, be sure to become a member of my Passive Long-Term ETF Investing Signals which we are about to issue a new signal for subscribers.

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

Chris Vermeulen
Chief Market Strategies
Founder of Technical Traders Ltd.

E-mini S&P 500 Index (ES) Futures Technical Analysis – Strengthens Over 3107.25, Weakens Under 3072.00

September E-mini S&P 500 Index futures are trading higher on Monday shortly after the opening as investors shrugged off fears of a resurgence in coronavirus infections. Earlier in the session, the market was down on worries of another setback to business activity.

Shares of airlines, one of the worst-hit sectors by the lockdowns, tumbled with United Airlines, JetBlue Airlines and Alaska Air Group down between 2.1% and 4% in premarket trading.

At 15:10 GMT, September E-mini S&P 500 Index futures are trading 3083.25, up 23.75 or +0.78%.

American Airlines Group Inc. tumbled 9% as it planned to secure $3.5 billion in new financing by selling shares and convertible senior notes to boost liquidity.

Daily September 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. A trade through 2896.25 will change the main trend to down. A move through 3220.50 will signal a resumption of the uptrend.

The minor trend is down. This is controlling the momentum. A trade through 3156.25 will change the minor trend to up.

The minor range is 2923.75 to 3156.25. Its 50% level or pivot at 3040.00 is acting like support.

The short-term range is 3220.50 to 2923.75. Its retracement zone at 3072.25 to 3107.25 is potential resistance. This zone is currently being tested.

On the downside, the retracement zone at 2986.00 to 2930.50 is the major support.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 3083.25, the direction of the September E-mini S&P 500 Index the rest of the session on Monday is likely to be determined by trader reaction to 3072.25.

Bullish Scenario

A sustained move over 3072.25 will signal the presence of buyers. If this creates enough upside momentum then look for a surge into 3107.25. Overtaking this level will indicate the buying is getting stronger with 3156.25 the next key target.

Bearish Scenario

A sustained move under 3072.25 will indicate the presence of sellers. This could lead to a steep decline with 3040.00 the next target. This level is a potential trigger point for an acceleration to the downside with the major target coming in at 2986.00.

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

S&P 500 Price Forecast – Stock Markets Continue Grinding in Range

The S&P 500 initially gapped lower to reach as low as 3025 before turning around and rally towards the 3100 area. This is an area that shows a significant amount of resistance, so I think at this point in time it is highly likely that we will see back-and-forth trading, and therefore I think we are essentially range bound. The 50 day EMA underneath is starting to approach the 3000 handle, and that of course is an area that will attract a certain amount of attention due to the fact that we have seen buyers there previously, and of course it is a large, round, psychologically significant figure.

S&P 500 Video 23.06.20

To the upside I believe that the 3200 level is massive resistance, and I think at this point we are probably just going to go back and forth in this general vicinity but overall, I think we are simply trying to figure out what to do next. After all, the coronavirus numbers are up, and we are starting to see people ask a lot of questions about the global economy. Ultimately, this is a market that I think has shown itself to be extraordinarily resilient and with the Federal Reserve out there willing to lift the market at any costs, one has to think that buyers will continue to flock to this market on pullbacks. In fact, I see a lot of noise between here and 2800 so as long as we stay above there, there is always going to be a chance for the buyers to take over again.

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

Tesla Probing All-Time High Despite Deep Skepicism

Tesla Inc. (TSLA) dodged a bullet in the first quarter, reporting a Q1 2020 profit of $1.24 earnings-per-share (EPS), beating estimates by a hefty $1.45. The Shanghai Gigafactory was closed for two weeks during the quarter due to the coronavirus outbreak while the Fremont, California plant shut down in March. The unexpected profit overcame both of those obstacles, prompting a strong buy-the-news reaction.

Tesla Balance Sheet Issues

The electric vehicle manufacturer declined to provide net income or free cash flow guidance during the April earnings presentation, two metrics that are needed to evaluate Tesla’s performance accurately, due to heavy cash burn and high debt levels. In addition, the Fremont plant didn’t reopen until mid-May, adding to anxiety about second-quarter performance. On the flip side, the company just reported record sales in China, countering the continued drag of slumping United States and European revenue.

David Einhorn, head of Greenlight Capital, questioned CEO Elon Musk about the Q1 results, sarcastically commenting “I will continue to be left wondering if not only your accounts receivable are suspect, but your income statement as well”. He points out apparent inconsistencies in the SEC quarterly filing, which he says omit the negative impacts of the lower average selling price, factory shutdowns, interruption costs, margin compression, and currency factors.

Wall Street and Technical Outlook

Wall Street analysts are evenly divided on Tesla’s outlook, with 8 ‘Buy, 9 ‘Hold’, and 11 ‘Sell’ recommendations. The broad distribution of price targets highlights widely conflicting opinions, with a low of $246 and a street high of $1250.  The stock is now trading less than $250 below the high target and nearly $1000 above the low target. All in all, this disagreement translates into an excessive market risk that many investors may wish to avoid.

The stock’s price action has been phenomenal so far in 2020, with a 600-point decline from February high at 969, followed by an equal-sized rally into June. It broke out after completing the round trip but has made little progress so far, consolidating around the first-quarter peak. Accumulation and relative strength readings are solid as a rock, despite mixed analyst calls and skepticism from market insiders, raising odds for even higher prices in the coming weeks.

Wirecard Confirms Previously Missing 1.9 Billion Euros Do Not Exist

Wirecard, a German payment processor and financial services provider that links retailers, announced that previously missing 1.9 billion euros ($2.1 billion) it had booked in its balance sheet do not exist, tarnishing the image of a fast-growing online payments business in the country.

The German financial startup is in process of negotiations with banks, attempting to sell or close parts of its business to survive a mounting liquidity crunch.

Felix Hufeld, the head of Germany’s financial watchdog sees the event as a “total disaster”, describing it as “a scandal that something like this could happen”, reported Reuters.

Wirecard has appointed investment bank Houlihan Lokey to help it float through. The company’s Chief Executive Markus Braun resigned on Friday, June 19, following denial by two Philippine banks thought to be holding the funds, who said they never had them.

Wirecard’s Statement

The Management Board of Wirecard assesses on the basis of further examination that there is a prevailing likelihood that the bank trust account balances in the amount of 1.9 billion euros ($2.1 billion) do not exist.

The company previously assumed that these trust accounts have been established for the benefit of the company in connection with the so-called Third Party Acquiring business and has reported them as an asset in its financial accounts. The foregoing also causes the company to question the previous assumptions regarding the reliability of the trustee relationships, the company said.

The Management Board further assesses that previous descriptions of the so-called Third Party Acquiring business by the company are not correct. The Company continues to examine, whether, in which manner and to what extent such business has actually been conducted for the benefit of the company.

Wirecard outlook

After the announcement, Wirecard shares plunged massively on Monday, hitting its lowest level in nearly a decade. The Munich-based company has wiped out about $19 billion in market value. At the time of writing, Wirecard share was down 43% to EUR 14.77. It is already down about 90% so far this year.

Moody’s has already slashed Wirecard’s rating to ‘junk’ last week and said, “insufficient or otherwise inadequate information to support the maintenance of the ratings”.

An independent researcher cuts target price to EUR 12.00 from EUR 40.00 and rated ‘Sell’. Equity analyst at Autonomous Research, Josh Levin, slashed Wirecard’s price target to ZERO from EUR 39.

Daily Gold News: Monday, June 22 – Gold Closer to Medium-Term High

The gold futures contract gained 1.27% on Friday, as it broke slightly above the price level of $1,750. Last week’s Powell’s testimonies on Wednesday, Thursday and his Friday’s speech didn’t bring any new surprises for the financial markets. But gold got closer to its medium-term highs. However, it continues to trade within a consolidation, as we can see on the daily chart:

Gold is 0.2% higher this morning, as it is trading along Friday’s daily high. What about the other precious metals? Silver gained 1.94% on Friday and today it is 1.1% higher. Platinum gained 1.86% and today it is up 1.0%. Palladium lost 0.01% on Friday and today it is 0.5% higher. So precious metals’ prices are gaining today.

Last Thursday’s Philly Fed Manufacturing Index has been much better-than-expected but the Unemployment Claims number came at 1.5 million again vs. expectations of 1.3 million. So overall, the recent economic data releases have been mixed.

Today, we will have the U.S. Existing Home Sales release. The previous release came at 4.33 million, and the expectations for the month of May (annualized number) are at 4.15 million.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Monday, June 22

  • 10:00 a.m. U.S. – Existing Home Sales
  • 11:00 a.m. Canada – BOC Governor Macklem Speech

Tuesday, June 23

  • 3:15 a.m. Eurozone – French Flash Services PMI, French Flash Manufacturing PMI
  • 3:30 a.m. Eurozone – German Flash Manufacturing PMI, German Flash Services PMI
  • 9:45 a.m. U.S. – Flash Manufacturing PMI, Flash Services PMI
  • 10:00 a.m. U.S. – New Home Sales, Richmond Manufacturing Index

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

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

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

* * * * *

Disclaimer

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

 

U.S. Stocks Set To Open Higher As Traders Shrug Off Virus Worries

World Health Organization Reports A Record Daily Increase In Coronavirus Cases

On Sunday, the World Health Organization reported 183,020 new coronavirus cases. Most of this cases (116,041) were located in the Americas region.

Meanwhile, Europe also has problems as coronavirus reproduction rate has rapidly increased in Germany while Bulgaria had to make wearing face masks compulsory again.

Despite the worrisome news, S&P 500 futures are pointing to a higher open as traders bet that the unprecedented monetary stimulus from the world central banks will continue to boost asset prices.

The risk-on mode is highlighted by the weakness of the U.S. dollar, which is declining against a broad basket of currencies. The U.S. Dollar Index failed to settle above 97.5 and pulled back below this level.

Oil Struggles To Settle Above $40

WTI oil continues its attempts to settle above the key resistance level at $40. A move above this level will likely lead to increased upside momentum and help most oil-related equities gain more ground, providing support to the whole market.

Oil supply is getting tighter due to oil production cuts while demand improves as economies lift virus containment measures. At the same time, oil traders are worried about the potential second wave of the virus and its implications for the travel industry which is an important source of oil demand.

A continuation of the current oil rally will have a positive impact on S&P 500 and could push it towards recent highs, so traders should closely watch oil price dynamics in the upcoming trading sessions.

Gold Tries To Get Above $1750

Gold may also have an impact on today’s trading session since it is trying to get above the key resistance level at $1750 on a spot basis.

Gold stocks like Barrick Gold and Newmont Mining have pulled back from their highs reached in May while gold is trying to get to new highs.

This situation creates a setup for increased demand for gold equities in case gold manages to settle above $1750 per ounce and continue its upside move after a period of consolidation.

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

Asia-Pacific Shares Settle Mixed on Second Wave Concerns

The major Asia-Pacific stock indexes finished mixed but mostly lower on Monday as investors reacted to a rise in the number of coronavirus cases with most of the surge occurring stateside. The price action suggests investors are taking a cautious approach as they deal with the conflict between exuberance over the reopening of several economies and the real danger of second wave infections risk.

On Monday, Japan’s Nikkei 225 Index settled at 22437.27, down 41.52 or -0.18%. Hong Kong’s Hang Seng Index finished at 24515.23, down 128.66 or -0.52% and South Korea’s KOSPI Index closed at 2126.73, down 14.59 or -0.68%.

China’s Shanghai Index settled at 2965.27, down 2.36 or -0.08% and Australia’s S&P/ASX 200 Index closed at 5944.50, up 1.90 or +0.03%.

Rising Number of Coronavirus Cases in the US

Investors reacted to a jump in the number of COVID-19 cases in the U.S., with more than 30,000 new infections reported on Friday and Saturday – the highest daily totals since May 1 – according to data compiled by Johns Hopkins University.

Meanwhile, in China, an official said Sunday that Beijing is capable of screening almost 1 million people a day for the coronavirus. That development came in reaction to a recent cluster of infections that was found in the city.

China Holds Rates Steady

China kept its benchmark lending rate unchanged on Monday, with the 1-year loan prime rate left at 3.85%. The 5-year loan prime rate was also kept steady at 4.65%.

The move left the benchmark lending rate unchanged for the second straight month at its June fixing, matching market expectations, after the central bank kept borrowing costs on medium-term loans steady last week.

China’s Startup Board Index Hits 4-1/2-Year High on Fresh Reforms

China’s startup board index hit its highest in more than four years on Monday, as investors cheered Beijing’s fresh reforms in its capital markets to help bolster the world’s second-largest economy.

The start-up board ChiNext Composite Index climbed 1.01%, its highest since January 7, 2016.

Meanwhile, over the weekend, China said it would revamp its benchmark equity index by introducing more high-tech strength and removing loss-making companies.

The inclusion of STAR stocks in the SSEC will make its structure more reasonable and representative, as STAR companies represent the development direction of China’s economy, Ma Wenyu, analyst at Shanxi Securities noted in report.

The reforms would bode well for the equities market, while securities and tech stocks would benefit first, Ma added.

Tokyo Shares Dip on Worries Over Rising Coronavirus Cases

Japanese shares edged lower on Monday, moving in a narrow range, as worries about the growing number of coronavirus infections across the world kept investors on edge.

The World Health Organization reported a record increase in global coronavirus cases on Sunday, with the biggest rise in North and South America.

Sentiment was also weighed by iPhone maker Apple Inc. announcing a temporary shutdown of its 11 stores in Florida, Arizona, South Carolina and North Carolina on Friday.

The announcement hit Apple-related stocks in Japan, with Alps Alpine, Murata Manufacturing Co. Ltd. and Rohm Co. Ltd. Falling between 0.67% and 1.25%.

Some market players said the rising daily infections in Tokyo dampened hopes of Japan’s economic recovery, others noted that its impact was small.

“It is not regarded as a huge risk, at least in Japanese markets, since Japan is still far from an outbreak that could lead to restrictions being imposed again,” said Yutaka Masushima, market analyst at Monex Securities in Tokyo.

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

American Airlines Plans to Secure $3.5 Billion in New Financing

American Airlines Group Inc, a publicly-traded airline holding company headquartered in Fort Worth, Texas, announced that it is planning to secure $3.5 billion in new financing to enhance the company’s liquidity position as the coronavirus and related travel restrictions have led to a collapse in air travel demand.

American Airlines Group, the largest in the U.S., proposed a private offering of $1.5 billion aggregate principal amount of secured senior notes due 2025. The notes will be guaranteed on a senior unsecured basis by American Airlines Group Inc.

The company also stated that it intends to enter into a new $500 million Term Loan B Facility due 2024 concurrently with the closing of the offering of the Notes, American Airlines Inc reported.

Debt Terms

According to Bloomberg’s June 19 report, the junk bonds were expected to carry a yield of 11%. However, the company said that the final terms and amounts of the notes and the Term Loan are subject to market and other conditions and may be different from expectations.

The Company intends to grant the underwriters of the offerings a 30-day option to purchase, in whole or in part, up to $112.5 million of additional shares of Common Stock in the Common Stock Offering and a 30-day option to purchase, in whole or in part, up to $112.5 million aggregate principal amount of additional Convertible Notes in the Convertible Notes Offering, in each case solely to cover over-allotments, if any, the company said.

The Company expects to use the net proceeds from the Common Stock Offering and the Convertible Notes Offering for general corporate purposes and to enhance the Company’s liquidity position. The closing of neither the Common Stock Offering nor the Convertible Notes Offering is conditioned upon the closing of the other offering, the airline added.

Goldman Sachs & Company LLC, Citigroup, BofA Securities and J.P. Morgan will act as the joint active book-runners and as representatives of the underwriters for the Common Stock Offering and the Convertible Notes Offering.

Stock Outlook

American Airlines Group closed nearly 3% lower at $16 on Friday. It has plunged about 45% so far this year, still outperforming every peer. Fourteen analysts forecast the average price in 12 months at $13.78 with a high of $27.00 and a low of $7.00.

The average price target represents a -13.88% decrease from the last price of $16.00, according to Tipranks.

It is good to sell at the current level as 150-day Moving Average and 100-200-day MACD Oscillator signals a selling opportunity.

A Stealth Double Dip or Bear Market Has Started

The stock has gone through many cycles since the 2000 tech bubble. The tech bubble was the last significant time the stock market’s popularity among individuals piqued their interest in such a huge way similar to what we see now in the markets.

Market legend Jeremy Grantham recently talked on CNBC about the price action in the markets is the “Real McCoy” of bubbles. We will get back to his insight later in this article, but let’s get into some technical analysis that helps us see when and where the market bubble could burst.  When it does, it’s going to seriously hurt all the newly unemployed and sports betting traders who don’t know better yet how the markets move.

The stock market and how it moves is always evolving. Since 2008 when the FED stepped into the bailout America, which manipulated the financial system, the markets have been riddled with new policies by presidents and the Fed.

Instead of letting the markets naturally correct and revalue stock prices with each economic cycle (which is more or less what happened in the past), now, leaders and central bankers don’t want to let the music stop.  Now they are pushing money into the economy and making the rules/policies/taxes better for each business.

Unfortunately, we know how all this fiscal stimulus and manipulation will ultimately end. Changing rules/policies, pumping money into the economy, and giving out free money, may help short term, but this only worsens everyone down the road.

Currently, traders and investors think they have the fed acting like their parents to fall back on if things get tough and that there are no financial threats to a falling stock market. Traders are paying a premium for stocks and buying ever pause of dip. While all those traders may be feeling great with position and gains, they can and will likely all be wiped out soon enough if position sizing and risk management are not in place for each position held.

Don’t get me wrong, I am not a doomsday kind of person, but this is “Crazy Stuff” as Jeremy said in his recent interview.

Ok, now with that rant behind us, let’s move on to three simple charts that paint a clear picture because last week’s closing price action is potentially the beginning of something ugly.

I know my team, and I have been talking about a market top and lower prices for a long time as we are trying to warn as many traders and investors as we possibly can. Unfortunately, the FOMO (fear of missing out) on this rally has taken over peoples emotions and forcing them to buy buy buy and think its smooth sailing from here, which we believe is not the case. Going against the herd during extreme sentiment times like this is tough to do.

Take a look at these charts for a simple view of the market internals weakening and how it has proved to play out in the past.

S&P 500 VS Stocks Trading Above 200-Day MA
2004-2009 Bull & Bear Market

This chart is fairly clear in showing that when 50% or more of stocks are trading above the 200-day moving average, we are in a bull market. It is not a short term indicator, it does lag, but the setup with the red arrows shows the strong stock market rally in the top, and the breakdown below 50% and the rebound of stocks trading over the 200 moving average. This is what happened during the last bull and bear market and just like what we are experiencing now.

S&P 500 VS Stocks Trading Above 200-Day MA
2014 – 2020 Bull & Bear Market

This chart shows a few interesting things. First, the number of stocks trading over the 200-day moving average is below 50%. Last week this value had a massive reversal indicating the majority of stocks have been experiencing momentum moves to the upside and are now starting to be sold.

Momentum stocks are when stocks move so quickly to the upside that everyone has FOMO and just chasing prices higher.  Once they begin to roll over, everyone panics and dumps the shares, and the share value falls fast and hard. This is a bearish sign because once the momentum stalls, we know what goes straight up, generally comes straight back down for at least half of the recent rally.

The other pattern that is of concern is the megaphone pattern. This indicates price instability and adds more risk to investors’ long stocks and not planning to dump them when things turn south.

Since 2015 the market has had all kinds of landmines and manipulation form fed, new tax policies, etc. In my opinion, and many others I have talked with 2015/2016, the market was ready for a normal correction cycle (bear market), but the new policies put in place supercharged the economy for another mega wave higher, which brings us to today. As I mentioned before, when you start gaming the system and changing the rules, things become uncertain and unstable long term, which eventually leads to failure. Megaphone patterns show precisely the unstable price and health of the market.

Bonds Point To Near Term Market Weakness

Bonds have been holding up exceptionally well during this fed induced rally. Bonds tend to lead the stock market and start to rally or at least outperform stocks before the stock market corrects in any significant way.

For example, in January this year, we traded GDXJ and TLT as they were leading the way and pointing to much higher prices vs. the stock market. GDXJ we locked in 10% and exited the position it at the high tick the day when gold miners topped and fell 57% over the next few weeks. That price level, which we exited was a significant resistance zone and was our target price to exit.

TLT had broken out of a huge bull flag and was starting to outperform stocks. We purchased TLT and ended up closing that out for over 20% as the stock market crashed.

Both of these assets not only warned us that the stock market was becoming fragile but provided great trading opportunities.

This shows you the power of using inter-market analysis, technical analysis, and predefined trading rules. By using these techniques, you don’t get sucked into the emotional side of trading, which leads to falling in love with winners and not selling them until they turn into losers you that you can’t handle the size of the loss anymore.

If you have not yet watched this video where I compile our recent major calls of the Feb crash months before it happened, the 30% rally prediction, and more on what I am talking about in this article, be sure to watch this video.

 

Concluding thoughts:

In short, I hope you glean something useful from this article and that I don’t come across as a doomsday kind of guy. If this is the start of a double-dip, it’s going to be huge, and if it’s the start of a bear market, it is going to be life-changing.

If you are new to trading, technical analysis, or are a long term passive investor worried about what to do, you can follow my lead. I share both my investing signals and more active swing trade signals using simple ETFs at www.TheTechncialTraders.com

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

Paragraph

Chris Vermeulen
Chief Market Strategist
www.TheTechnicalTraders.com

 

 

European Equities: A Quiet Economic Calendar Leaves COVID-19 and Geopolitics in Focus

Economic Calendar: 

Tuesday, 23rd June

French Manufacturing PMI (Jun) Prelim

French Services PMI (Jun) Prelim

German Manufacturing PMI (Jun) Prelim

German Services PMI (Jun) Prelim

Eurozone Manufacturing PMI (Jun) Prelim

Eurozone Markit Composite PMI (Jun) Prelim

Eurozone Services PMI (Jun) Prelim

Wednesday, 24th June

German IFO Business Climate Index (Jun)

Thursday, 25th June

GfK German Consumer Climate (Jul)

The Majors

It was back into the green for the European majors on Friday, delivering a 3rd day in the green for the week ending 19th June.

The EuroStoxx600 rose by 0.56% to lead the way, with the CAC40 and DAX30 gaining 0.42% and 0.40% respectively.

Market concerns over a spike in new COVID-19 cases failed to spook the markets at the end of the week.

Hopes of progress to ease tensions between the U.S and China provide support as central banks continued to print money…

At the end of the week, news hit the Bloomberg wires of China agreeing to increase its purchase of soybeans, corn, and ethanol.

While the news of China and the U.S was a positive, WIRECARD’s fall from grace limited appetite on the day.

The Stats

It was a quiet day on the Eurozone economic calendar on Friday. German wholesale inflation figures for May were in focus that had a muted impact on the majors.

Factories saw deflationary pressures ease in May as demand picked up from April’s historic slump.

Germany’s producer price index fell by 0.4%, following a 0.7% slide in April.

From the U.S

From the U.S, there no material stats to provide direction later in the day.

The Market Movers

For the DAX: It was bearish end to the week for the auto sector. Continental and Volkswagen fell by 1.57% and by 1.97% respectively to lead the way down. BMW and Daimler saw modest losses of 1.14% and .0.57% respectively.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank saw losses of 0.19% and 1.83% respectively.

Deutsche Lufthansa ended a run of 2 consecutive days in the red with a 1.41% gain on Friday. On Thursday, Deutsche Lufthansa had fallen by 2.60%.

The story of the day once more, however, was WIRECARD AG, which slid by 33.06%. Missing funds and the resignation of the CEO at the end of the week led to another tumble.

From the CAC, it was a bearish day for the banks on Friday. Credit Agricole slid by 2.06% to lead the way down. BNP Paribas and. Soc Gen saw more modest losses of 1.44% and 1.68% respectively.

The French auto sector also struggled. Peugeot slid by 2.30%, with Renault falling by 1.88%.

Air France-KLM saw more red, falling by 0.33%, while Airbus SE partially recovered from a 1.98% loss with a 1.53% gain.

On the VIX Index

It was a 1st day in the green from 6, with the VIX having fallen for 5th consecutive days going into Friday. Rising by 6.62% on Friday, the VIX reversed a 1.58% fall from Thursday to end the day at 35.12.

It was a mixed day as the markets responded to rising new COVID-19 cases in recently opened U.S states and talk of further fiscal stimulus.

On the day, however, it was COVID-19 that had the greater sway, as concerns over a 2nd wave heightened.

The S&P500 and Dow fell by 0.56% and by 0.80% respectively, while the NASDAQ eked out a 0.03% gain.

 

VIX 22/06/20 Daily Chart

The Day Ahead

It’s a quiet day ahead on the Eurozone economic calendar. There are no material stats to provide the majors with direction on the day.

From the U.S, existing home sales figures for May are likely to have a muted impact.

Expect the latest COVID-19 numbers to influence along with chatter from Beijing and Washington.

In the early part of the day, the PBoC left loan prime rates unchanged, which was a market negative ahead of the European open.

The Latest Coronavirus Figures

On Sunday, the number of new coronavirus cases rose by 131,020 to 9,044,544. On Saturday, the number of new cases had risen by 155,790. The daily increase was lower than Saturday’s rise while up from 124,839 new cases from the previous Sunday.

Germany, Italy, and Spain reported 917 new cases on Sunday, which was down from 1,183 new cases on Saturday. On the previous Sunday, just 909 new cases had been reported.

From the U.S, the total number of cases rose by 26,079 to 2,356,657 on Sunday. On Saturday, the total number of cases had risen by 33,388. On Sunday, 14th June, a total of 19,920 new cases had been reported.

The Futures

In the futures markets, at the time of writing, the DAX was down by 149.5 points, while the Dow was up by 75 points.

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

Microsoft Trading At All-Time High After V-Shaped Recovery

Microsoft Corp. (MSFT) performed admirably during the first quarter’s pandemic swoon, beating fiscal Q3 2020 consensus estimates with $1.40 earnings-per-share (EPS) on $35.02 billion in revenue. Outstanding performance in the Productivity, Business Processes, and Intelligent Cloud divisions underpinned an impressive 14.6% year-over-year revenue growth while the company boasted that COVID-19 had a minimal impact on the bottom line.

‘Mr. Softee’ could lose commercial product sales in coming quarters, despite the first quarter’s remarkable results, because U.S and European corporations are primed to slash information technology budgets to cope with historic revenue contraction, triggered by the pandemic. I.T. spending tends to follow natural economic cycles, increasing during periods of economic growth and shrinking when recessions and downturns depress free cash flow across a vast customer base. These headwinds could eventually undermine the company’s long-term bullish outlook.

Protest Impact And Initiatives

Microsoft is headquartered in Seattle, on the front line of protests after the murder of George Floyd. The company has fostered a strong social identity in the last two decades so it isn’t surprising that CEO Satya Nadella outlined racial diversity initiatives, including a responsibility to “use our platform and resources intentionally to address systemic inequalities in our communities.” However, he offered few specifics, except for banning police from using their facial-recognition systems.

Microsoft Outlook

Wall Street analysts are nearly unanimous in their bullish outlook, issuing 22 ‘Buy’ and just one ‘Hold’ recommendation. Not one of the 23 analysts polled recommends that investors sell the stock at this time, despite the cyclical properties of company divisions.  Price targets currently range from a low of $190.00 to a street high $250.00, while the stock is now trading well below the median target of $207.26. This distribution strongly favors higher prices in coming weeks.

Microsoft has been an outstanding performer since 2017 when it finally cleared 17-year old resistance in the upper 50s. It nearly quadrupled into February 2020 and plunged with world markets into March, losing more than 30% of its value. The second quarter rally recouped those losses, lifting the stock to an all-time high last week. It’s also recovered 100% of the shareholder base lost during the downdraft, setting the stage for bullish price action into the third quarter.

S&P 500 Has Room to Run Higher, Says Raymond James Strategist

U.S. stocks ended the week low, erasing previous gains amid investors’ pessimism as some states saw a second wave of COVID-19 infections. The Dow Jones Industrial Average gained 1.0%, the S&P 500 increased 1.9%, and the NASDAQ jumped 3.7% last week.

Although economic data remained mixed, showing that the recession brought in by the COVID-19 pandemic may be sharp, but will not sustain for long. However, markets recovered to a bullish stance again this week after the Federal Reserve announced stimulus for corporate bonds, leading to tighter spreads, which lent a helping hand to riskier assets.

“On the positive note, we got further confirmation from the Fed that it will remain supportive. Potential COVID-19 treatments, improvement in economic data, and further fiscal stimulus could push the market closer to our upside case scenario of 3,384,” wrote Michael Gibbs, director of equity portfolio and technical strategy at Raymond James.

“We use 3,111 as our base case S&P 500 price target for 2020. With the S&P 500 currently trading in line with this target, we would look to accumulate favored sectors during market volatility. Moreover, the market will need to pass the baton from valuation expansion to re-acceleration of economic and earnings expansion. We believe this could cause some periods of volatility as this transition takes place and would use any dislocation to add to positions.”

Raymond James in its weekly market guide noted that earning per share growth has seen stabilization as earnings season approaches. While it is largely expected to be a very challenging quarter, it is also expected to be the trough in earnings for this recessionary period. S&P 500 earnings are expected to drop 43.2% year-on-year.

While this continues to point to the severity of the economic situation, the recent stability, not just for the second quarter of this year, but also for the third and the fourth quarters, points to some expectation that the worst is likely behind us. However, the worst-case scenario may be averted.

The sectors that have seen the largest earnings revisions since the end of 2019 have been the more cyclical sectors such as Energy, Consumer Discretionary, Industrials, and Financials, Raymond James strategist added.

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

E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Rally Fizzles as Apple Re-Closes Stores

September E-mini NASDAQ-100 Index futures finished lower on Friday after giving up earlier gains after Apple said it was closing some stores due to a rise in coronavirus cases, stoking fears of further restrictions and possibly another lockdown of the economy.

Apple Inc. said it would re-close nearly a dozen stores across four states where cases of the coronavirus have spiked, showing wariness in the business community about the safety of reopening in some places. Apple said it’s reclosing a total of 11 stores in Florida, Arizona, South Carolina and North Carolina. All of the stores had been re-opened since Apple initially closed them in March amid the outbreak. Shares of the tech giant traded 0.5% lower.

On Friday, September E-mini NASDAQ-100 Index futures settled at 9923.50. In the cash market, the tech-heavy NASDAQ outperformed, rising 3.7%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, the closing price reversal top is an early sign that momentum may be getting ready to shift to the downside.

A trade through 10140.00 will signal a resumption of the uptrend. The main trend will change to down on a move through the last main bottom at 9368.25.

The minor trend is also up. A trade through 9866.50 will change the minor trend to down. This will also shift momentum to the downside.

The minor range is 9368.25 to 10112.50. Its retracement zone at 9740.25 to 9652.50 is the nearest downside target zone. Since the main trend is up, buyers could come in on a test of this area.

Short-Term Outlook

The good news is the September E-mini NASDAQ-100 Index futures contract closed within striking distance of its all-time high at 10140.00. The bad news is that momentum may be shifting to the downside. The scary news is that a bad announcement regarding COVID-19 from just one company like Apple can kill a rally and reverse the market lower.

The bad news may not actually turn out to be bad news if buyers re-emerge following a test of 9740.25 to 9652.50. However, I do believe that trader reaction to this zone will be a major determinant as to whether we see new highs next week or a further decline into 9490.50 to 9337.25.

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

E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Secondary Lower Top Could Be Forming

September E-mini Dow Jones Industrial Average futures finished lower on Friday after posting a volatile, two-sided trade throughout the session. Gains were capped by spiking cases of COVID-19 and Apple Inc’s announcement of fresh store closures. Prices were underpinned throughout the week on anticipated stimulus and continued economic recovery.

On Friday, September E-mini Dow Jones Industrial Average futures settled at 25529.

Apple Inc announced it is temporarily shutting some stores in Florida, Arizona, South Carolina and North Carolina, which have seen a spike in coronavirus cases in recent days.

The Dow posted a solid gain for the week and is now 8.5% shy of its all-time high reached in February.

In other news, in a video conference, U.S. Federal Reserve Chair Jerome Powell warned the economic recovery from the pandemic is set to be challenging and there will be no quick fix.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. The formation of a secondary lower top is weighing on momentum.

A trade through 27466 will signal a resumption of the uptrend, while a trade through 22640 will change the main trend to down.

The minor trend is down. A move through 26658 will change the minor trend to up. This will also shift momentum to the upside.

The minor range is 27466 to 24409. Its retracement zone at 25938 to 26298 is resistance. This zone had a hand in stopping the buying last week.

The short-term range is 22640 to 27466. Its retracement zone at 25053 to 24484 is support. This zone stopped the selling last week.

Short-Term Outlook

The Dow closed higher last week, but also settled lower three out of five trading sessions. Additionally, we are seeing early signs of a secondary lower top. This usually indicates the selling is becoming greater than the buying at current price levels. Also, it is often viewed as a precursor to a change in trend.

An early look at the price action suggests a downside bias could develop on Monday on a sustained move under 25938, while a sustained move over 26298 is likely to signal a resumption of the rally.

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

All That Glitters When the World Jitters is Probably Gold

The economic pressures and concerns within the global markets have not abated just because the US Fed has ramped up the printing presses. Inversely, the stock market price levels may be elevated based on a false expectation of a quick recovery and of future expectations that may be very unrealistic.

In terms of technical analysis, Gold has set up a very interesting sideways basing pattern after recently breaking above a major resistance channel near $1720.  Our research team believes the recent base in Gold, near $1720 to $1740 is setting up just like the 2005 to 2007 peak in the US stock markets – just before the Credit Crisis hit in 2008.  We believe the similarities of the current and past events, in price and in technical/fundamental data, are strangely similar.

An underlying asset/economic class had recently experienced a stupendous bullish rally.  This euphoric rally phase was brought on because the US Fed and global markets were running high on cash and credit – heck, everyone was.  The “no fear” mentality was running wild, and so was the market.  Suddenly, it appeared that the credit markets were seizing up and that interest rates had nearly doubled or tripled overnight as banks and lending institutions reacted to the US Fed raising rates.  At that point, the catalyst for the Credit Crisis had already been set up – much like what is happening today.

SPY – SPDR S&P500 ETF Trust Weekly Chart

This SPY chart highlights the similarities between 2006-08 and now.  It may be difficult for you to see on this compressed chart, but the price pattern we’ve experienced over the past 2+ years is very similar to the price pattern that set up the peak in the markets near October 2007.  This time, volatility appears to be 3x or 4x the levels from 2006/07 – yikes.

Gold to Silver Price Ratio Weekly Chart

The current level relating the price of Gold to the price of Silver is 98.2 – an extremely high historical level.  There has never been a time like this in history where Gold has achieved this high of a price ratio compared to Silver.  It is very likely that Gold has rallied to these current levels as a “global hedge against risk” and that Silver has simply been overlooked as a secondary asset.  Even though supply for Gold and Silver has been decreased over the past 6+ months because of demand and the COVID-19 virus, we believe the current pricing relationships present a very clear opportunity for skilled technical traders.

Traditionally, the Gold to Silver ratio will likely fall to levels below 65 to normalize the price disparity.  This suggests that Silver may see a 2x or 3x rally over the next 12+ months and Gold would likely see a 60% to 150% rally from current levels.

Gold Futures Weekly Chart

This Gold Futures Weekly Chart highlights Fibonacci Expansion ratios from similar pre-expansion price ranges.  The first measures the advance of Gold from 2001 to 2008 – the peak of the 2008 markets.  The second measures the advance of Gold from 2015 to the recent peak (2020) – the presumed peak in the US stock markets

The overlapping Fibonacci expansion levels on this chart paints a very clear picture that Gold may attempt to target certain levels should it begin a much broader upside price move…

_ $1950 – Key initial target level and could become minor resistance.

_ $2250 – The next major target level representing a 2x expansion from the initial 2008 price rally.

_ $2731 – This key level is like to become the bigger target for 2020.  Our research team believes the alignment of this level with the current price expansion in Gold sits perfectly as the next upside price target.

_ $3200 – This upper price target shows some importance – yet it is still quite far away from current price levels.  Still, it is a valid upside price target.

We suggest taking a moment to review some of our earlier research posts related to Precious Metals and Gold…

June 3, 2020: Gold & Silver “Washout” – Get Ready For A Big Move Higher

May 28, 2020: Shortage Of Physical Gold & Silver

May 19, 2020: Gold. Silver, Miners Teeter On The Brink Of A Breakout

GLTR Precious Metals ETF Daily Chart

This Daily GLTR chart highlights the current FLAG formation that has setup in price and is about to breakout/breakdown.  Our researchers believe the obvious breakout move to the upside is going to happen given the current global economic environment and the fact that we are looking at Q2 data within 10+ days that will likely shock many investors.  Notice that our Fibonacci price modeling system has drawn UPPER GREEN and LOWER RED triggers levels well above and below the current FLAG APEX level.  This adaptive p[rice modeling system attempts to track price rotation and ranges while adapting internal factoring levels to identify proper Trigger and Target levels.  At this point, GLTR must move above $85 to trigger a new BULLISH TREND or below $77.50 to trigger a new BEARISH TREND.

GLTR Precious Metals ETF Weekly Chart

This Weekly GLTR chart highlights a 100% Fibonacci expansion range from the previous upside price rally levels.  Should GLTR breakout to the upside and complete a 100% measured upside price move, the next target level for GLTR would be $94.70 – nearly 15.5% higher.

This is an incredible opportunity for skilled technical traders if they understand how the precious metals and miners sectors are aligning for a bigger move higher.  There has rarely been a time in history where Gold and Silver have been this depressed in terms of pricing when the global economy and stock markets have been this inflated/elevated. It really may be the “opportunity of a lifetime”.

We believe the next 15 to 30+ days will prompt a “melt-up” in Gold to levels near $2000 to $2100. Silver will likely rally to levels above $25 to $26 over that same span of time.  Once the bigger price breakout begins in Silver, attempting to normalize to the advanced price levels in Gold, Silver will begin to rally much quicker than Gold prices.  We believe that will happen as Gold nears and breaches the $2000 price level.

For skilled technical traders, this extended price move in Precious Metals, Miners, and a host of other sectors presents a very clear opportunity to time and execute some very exciting trades.  We had been warning our friends and followers for over 18+ months now that the end of 2019 and all of 2020 was going to be incredible years for skilled traders.  Don’t miss the bigger moves – they are about to unfold over the next 30 to 60+ days and continue well into 2022.

In short, I hope you glean something useful from this article and that I don’t come across as a doomsday kind of guy. If this is the start of a double-dip, it’s going to be huge, if it’s the start of a bear market, it’s going to be life-changing. If you are new to trading, technical analysis or are long-term passive investor worried about what to do you can follow my lead and trades both as a swing trader and my long term investing signals using simple ETFs at www.TheTechncialTraders.com

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

Chris Vermeulen
Chief Market Strategist
Found of Technical Traders Ltd.

 

European Equities: A Week in Review – 20/06/20

The Majors

It was a relatively bullish week for the European majors in the week ending 19th June. The EuroStoxx600 rose by 3.22% to lead the way, with the DAX30 and CAC40 gaining 3.19% and 2.90% respectively.

While only partially reversing losses from the previous week, the majors remain in positive territory for the current month.

It was a mixed week for the bulls, with concerns over a 2nd wave of the COVID-19 pandemic testing risk appetite in the week.

Monetary policy support from the FED and expectations of more from the U.S government delivered the upside in the week, however.

On Monday, the FED announced that it would start buying individual corporate bonds in addition to ETFs. Named the Secondary Market Credit Facility and the FED can now purchase up to $250bn in corporate bonds of eligible issuers

The bonds need to have been rated investment grade as at 22nd March 2020. They must also have a remaining maturity of 5-years or less.

In addition, the FED also announced a “Mainstreet Lending Program” that would support small to medium-sized companies.

The Stats

It was a relatively quiet week on the Eurozone economic calendar.

Key stats included June’s ZEW Economic Sentiment figures for Germany and the Eurozone. April trade data and 1st quarter wage growth figures, along with finalized May inflation numbers for the Eurozone were also in focus.

There was a pickup in economic sentiment across both Germany and the Eurozone, according to figures released on Tuesday

Germany’s ZEW Economic Sentiment Index rose from 51.0 to 63.4, with the Eurozone’s rising from 46.0 to 58.6.

While positive and better than forecasts, it was the market reaction to the FED announcement from Monday that drove the majors on Tuesday.

Inflation, wage growth, and trade data had a muted impact. The markets just aren’t interested in the 1st quarter and April stats. On the inflation front, few are expecting this to be an area of focus for central banks near-term…

From the U.S

It was a mixed week on the day data front…

Retail sales bounced back in May, while industrial production figures suggested a slow recovery in the sector in May.

NY and Philly Manufacturing numbers for June were more positive, though the main area of focus remains on unemployment and spending.

On Thursday, the all-important jobless claims figures disappointed, with claims in the week ending 12th June up by 1.508m. This came in well above economist forecasts of 1.3m…

The weekly figure suggests that May’s bounce back in retail sales is unsustainable.

The Market Movers

From the DAX, it was a mixed week for the auto sector. Daimler rose by 0.33% to buck the trend in the week. Continental and Volkswagen slid by 1.55% and by 3.46% respectively, with BMW seeing a more modest 0.30% decline.

It wasn’t much better for the banking sector. Commerzbank slid by 7.44%, with Deutsche Bank falling by 0.96%.

Lufthansa followed on from a previous week 2.51% loss with a 3.82% slide in the week.

From the DAX30, the story of the week was WIRECARD AG, however. Following a 65.46% slump on Thursday, shares fell by a further 33.06% on Friday, to leave WIRECARD AG down 73.96% for the week. A missing €2bn ended with the resignation of the CEO on Friday.

From the CAC, it was a mixed week for the banks. Soc Gen fell by 2.71% following a 12.34% tumble from the previous week, with Credit Agricole down by 0.74%. BNP Paribas bucked the trend, gaining 0.94%.

The French auto sector saw red, however, with Peugeot and Renault falling by 0.89% and by 3.95% respectively. It was a modest loss for the pair following double-digit losses from the previous week.

Air France-KLM followed the previous week’s 13.34% tumble with a 5.49%, slide, while Airbus rose by 2.84%. In the previous week, Airbus had slumped by 17.31%.

On the VIX Index

It was a week in the red, with the VIX seeing red for 4 weeks out of 5. In the week ending 19th June, the VIX fell by 2.69%. Following a 47.19% jump in the previous week, the VIX ended the week at 35.12.

A mixed week left the U.S majors with relatively modest gains, as the markets grappled with spikes in new COVID-19 cases.

While economic data from the U.S delivered mixed results, it was the FED’s move into individual corporate bonds that weighed on the VIX.

The S&P500 ended the week up by 1.86%, with the Dow and NASDAQ gaining by 1.04% and by 3.73% respectively.

The Week Ahead

It’s a busier week ahead on the Eurozone economic calendar, and we can expect economic data to influence in the week.

On Tuesday, June’s prelim private sector PMIs are due out for France, Germany, and the Eurozone. While manufacturing sector activity remains key, we would expect the service sector PMIs to garner greater interest.

We continue to see a recovery in the services sector as pivotal to any economic rebound across the Eurozone. A removal of lockdown measures should lead to a jump in consumption to support the sector.

Unemployment, however, will be a drag. This week’s figures will reveal just how much of a drag this is likely to be.

The focus will then shift to Germany’s June business confidence figures on Wednesday and July consumer confidence figures on Thursday.

Business and consumer confidence will need to continue improving to support a pickup in hiring and spending near-term.

From elsewhere, U.S private sector PMIs, May’s durable goods orders, and the weekly jobless claims will also influence.

Outside of numbers, expect particular attention to COVID-19 news and any progress by the U.S government towards the next stimulus package.

E-mini S&P 500 Index (ES) Futures Technical Analysis – Weaker After Apple Recloses Some Stores

September E-mini  S&P 500 Index futures are trading mixed on Friday after giving up earlier gains. Futures are trying to hold on to gains but the cash market is trading lower. This divergence indicates investor uncertainty and when traders become uncertain, they tend to sell.

The catalyst behind the selling pressure is the news that Apple said it will reclose some stores given recent spikes in coronavirus cases. The tech giant said a total of 11 stores will be closed in Florida, Arizona, South Carolina and North Carolina.

Apple shares dropped more than 0.7% on the news. Earlier in the day, they hit an all-time high.

At 17:23 GMT, September E-mini  S&P 500 Index futures are trading 3092.75, down  5.25 or -0.17%.

Daily September 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 2896.25. A move through 3220.50 will signal a resumption of the uptrend.

The minor trend is down. This is creating the downside momentum.

The short-term range is 3220.50 to 2923.75. Its retracement zone at 3072.00 to 3107.25 is currently being tested. Trader reaction to this zone will determine the near-term direction of the market.

The minor range is 2923.75 to 3156.25. Its 50% level at 3040.00 is the next potential support level.

The main retracement zone target is 2986.00 to 2930.50.

Short-Term Outlook

A potentially bearish secondary lower top may be forming at 3156.25. This chart pattern could attract enough sellers to trigger an eventual change in trend.

Essentially, we’re looking for the upside bias to re-establish itself on a move through 3107.25, and for a downside bias to begin on a move through 3072.00.

The big test for buyers will be following a break into 2986.00 to 2930.50. This zone has to hold or the market could collapse as much as 200 points over the near-term.

Closing lower for the week will also be a bearish sign. Traders fear that Apple’s closing of stores in several states that have seen spikes in new coronavirus cases could open the door to another round of lockdowns and restrictions.

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

S&P 500 Price Forecast – Stock Markets Continue to Stay Resilient

The S&P 500 continues to try to grind to the upside, as we have a significant amount of volatility. At this point, the 3200 level is the next target, just as the 3000 level will offer plenty of support. The 50 day EMA just crossed above the 200 day EMA so longer-term traders are looking at the “golden cross” as a reason to start buying. Regardless, I think the only thing that you can pay attention to is whether or not there is liquidity in the market, which is the only thing Wall Street seems to care about. Granted, this is completely divorced from economic reality, but you cannot argue with price.

S&P 500 Video 22.06.20

Looking at this chart, I think pullbacks will continue to be buying opportunities but it is worth noting that we have not cleared the Thursday candlestick from last week that was so negative, so at this point in time there is still a lot of chopping back and forth in a little bit of tenuous trading. Nonetheless, the Federal Reserve has Wall Street’s back, and therefore it is difficult to imagine that the stock market falls for any significant amount of time. In fact, it is not until we break down below the 2800 level that we would see a significant break down for the longer term. At this point, then things could get out of hand. However, I think the one thing you can count on is Jerome Powell saving Wall Street if we do break down given enough time.

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

Deutsche Telekom in Talks to Buy Out Shares in T-Mobile From Softbank

Deutsche Telekom, by revenue the largest telecommunications provider in Europe, announced that it is in talks to acquire stakes in its U.S. subsidiary T-Mobile from Japanese multinational conglomerate holding company Softbank.

The European telecommunications leader, Deutsche Telekom, that delivers services to more than 150 million global customers, owns over 40% stake in its U.S. subsidiary T-Mobile but it can vote shares owned by Japanese holding company SoftBank.

That brings its voting stake to 67%, ensuring overall financial control and allow the company to consolidate the financial statement of T-Mobile. Hoettges added that the negotiation is still in its nascent stage will inform when one has reached.

CEO Tim Hoettges’ comment

CEO Tim Hoettges on Friday said that the deal will be under a shareholder agreement and it has the right of first refusal.

According to Reuters, Hoettges, answering a question at Deutsche Telekom’s annual general meeting, said Softbank was seeking to sell down its stake due to “heightened liquidity needs arising from the demanding economic environment”.

He further noted that, under a 4-year shareholder agreement that entered effect when T-Mobile completed its acquisition of Sprint, Deutsche Telekom had the pre-emptive purchase right to ensure it retains control of its U.S. subsidiary, Reuters reported.

CEO also confirmed that the profit outlook was resilient to the coronavirus pandemic.

“Of course, we are also feeling the effects. From bad debts. Forgone roaming revenues and temporary shop closures,” Hoettges said, according to pre-released extracts of his video address to the event which is being held online.

“But we are confident that we will bounce back. Because digitalization is everywhere right now. And this brings us opportunities.”

Stock price outlook

According to Tipranks, three analysts forecast the average price in 12 months at $18.83 with a high of $19.28 and a low of $17.93. The average price target represents a 10.76% increase from the last price of $17.00.