Crypto Market Daily Highlights – SOL Falls While Optimism (OP) Surges

Key Insights:

  • It is a mixed Wednesday session for the crypto top ten, with Solana (SOL) in the red to buck the top ten trend.
  • Geopolitics took a back seat as investors responded to upbeat US economic indicators and corporate earnings.
  • The Wednesday bullish session sees the total crypto market cap ending a four-day losing streak, with the market cap rising by $14 billion.

It is a mixed Wednesday session for the crypto top ten. Bitcoin (BTC) fails to revisit the $24,000 handle for the third consecutive session, while SOL suffers at the hands of a Solana wallet heist.

A busier day on the economic calendar provided the crypto market with direction. While geopolitics remained a focal point following Nancy Pelosi’s Taiwan visit, US economic indicators eased fears of a US recession.

In July, the ISM Non-Manufacturing PMI unexpectedly rose from 55.3 to 56.7. Economists forecast a PMI of 53.5. With services accounting for more than 70% of the US economy, the numbers delivered the FOMC hawks a reason to skew towards a 75% basis point rate hike in September.

US corporate earnings also delivered market support and a NASDAQ 100 breakout session. PayPal (PYPL) jumped by 9.25% on a rosy earnings forecast, supporting the NASDAQ 100’s 2.59% rally.

US corporate earnings have influenced the crypto market this earnings season. Crypto investors showed sensitivity to earnings results and outlooks from Amazon.com (AMZN), Apple Inc. (AAPL), Microsoft (MSFT), and Walmart (WMT).

NASDAQ influences
Total Market Cap – NASDAQ – 040822 5 Min Chart

The Total Crypto Market Cap Aims to End Four Day Losing Steak

On Wednesday, the total crypto market cap slid to a day low of $1,023 billion before rising to a high of $1,074 billion.

However, another bearish end to the session sees the market cap back down to $1,054 billion. The total crypto market cap is up $14 billion, reducing the August deficit to $5.7 billion.

Crypto market ends 4-day losing streak
Total Market Cap 040822 Daily Chart

A shift in market focus away from the US-China tensions to US economic indicators and corporate earnings delivered the boost. Cybercriminal activity failed the dampen the mood, despite the news of several attacks hitting the crypto wires.

The Crypto Market Movers and Shakers from the Top Ten and Beyond

It is a mixed Wednesday session for the crypto top ten.

BNB is up 6.41% to lead the way, with ADA (+2.62%) a distant second.

BTC (+1.07%), DOGE (+1.31%), ETH (+0.24%), and XRP (+0.81%) also find support.

SOL bucks the trend, falling by 0.73%.

From the CoinMarketCap top 100, it is a mixed session.

Optimism (OP), Lido DAO (LDO), and Stacks (STX) are among the front runners.

OP is up 35.77%, with LDO and STX gaining 16.29% and 8.16%, respectively.

At the other end of the table, Cronos (CRO), Oasis Labs (ROSE), and yearn.finance (YFI) are among the biggest losers. CRO is down 5.38%, with ROSE and YFI falling by 3.17% and 3.03%, respectively.

Total Crypto Liquidations Ease Back in Positive Crypto Session

24-hour liquidations are declining ahead of the Thursday session, reflecting improving crypto market conditions. A pullback in 24-hour liquidations coincides with the crypto market ending the four-day losing streak that saw BTC fall back to the $22,600 handle before finding support.

At the time of writing, 24-hour liquidations stand at $120 million, down from $208 million on Wednesday morning.

Liquidated traders declined over the last 24 hours. At the time of writing, liquidated traders stand at 43,241 versus 78,905 on Wednesday morning.

While four-hour liquidations also signal steadying market conditions, one-hour liquidations reflect the late crypto pullback.

Crypto liquidations ease
Total Crypto Liquidations 040822

According to Coinglass, four-hour liquidations stand at $13.04 million versus $37.01 million on Wednesday morning. One-hour liquidations are down from $5.39 million to $3.88 million, while up from Tuesday’s $1.28 million (see hourly crypto market cap chart below).

Market caps slips
Total Market Cap 040822 Hourly Chart

Daily News Highlights

  • Solana (SOL) became the victim of a “multimillion dollar heist.”
  • New York regulator slapped Robinhood (HOOD) with a $30 million fine.
  • Nomad Bridge hackers returned $9 million in USDT and USDC after a $190 million exploit.

5 Best Performing Coins of the Week – OP, ETC, ROSE, LDO, and YFI Lead

Key Insights:

  • It was a bullish Monday to Friday for the crypto market, supported by a shift in sentiment towards Fed monetary policy.
  • Optimism (OP) led the way, surging by 100%.
  • Ethereum Classic (ETC), Lido DAO (LDO), Oasis Network (ROSE), and yearn.finance (YFI) made up the rest of the top 5.

Monday to Friday, July 29, the total crypto market cap increased for a fourth consecutive week.

Crypto weekly market cap
Crypto Market Cap Weekly 300722

A dovish 75-basis point rate hike on Wednesday and US Q2 GDP numbers on Thursday delivered the crypto market a breakout session.

The US economy contracted by 0.9% in Q2, following a 1.6% contraction in the first quarter. Economic woes led the markets to price out a 75% basis point rate hike in September, which was crypto market positive.

Adding to the upside in the week included US corporate earnings. While Walmart (WMT) spooked the global financial markets with a grim outlook on Tuesday, Microsoft (MSFT), Amazon.com (AMZN), and Apple Inc. (AAPL) laid out positive earnings outlooks to add support to riskier assets.

Correlation with the NASDAQ 100 remained in place throughout the week, with the NASDAQ 100 rising by 4.7%.

NASDAQ correlation
Crypto – NASDAQ Daily Chart 300722

From the crypto news wires, investor sentiment toward the Ethereum (ETH) Merge continued to deliver support. Upbeat crypto market sentiment also allowed investors to brush aside news of a delay to the (ADA) Vasil hard fork.

Across the CoinMarketCap crypto top 100, the bullish week saw several cryptos outperform the broader market.

Optimism (OP) led the way. Ethereum Classic (ETC), Lido DAO (LDO), Oasis Network (ROSE), and yearn.finance (YFI) also outperformed the pack.

Optimism (OP)

Last week, Optimism (OP) surged by 99.85% to end the week at $1.837. A bearish start to the week saw OP fall to a week low of $0.7458 before rallying to a Friday high of $1.732.

A late Friday decline saw OP ease back to end the week at sub-$1.50.

While broader crypto market sentiment delivered support, Optimism news updates delivered the breakout week.

News of Curve Finance submitting a governance proposal on Optimism for 100 million OP tokens for distribution on the Curve Pool delivered early support.

The platform also released Drippie, a new transaction system, which added further support.

At the time of writing, OP was down 3.59% to $1.775. A choppy start to the weekend saw OP jump to a July high of $1.880 before sliding into the red.

Looking at the trends, a breakout from the week high of $1.880 would support a run at $2.00. However, market sentiment across the broader crypto market will need to improve for a breakout from $1.90. (There is no EMA technical analysis due to the available price points).

OP
OPUSD 300722 Daily Chart

Ethereum Classic

Last week, Ethereum Classic (ETC) jumped by 58.51% to end the week at $40.50.

Progress towards the September Ethereum Merge continued to drive ETC back towards the current year’s high of $52.88.

A bearish start to the week saw ETC fall to a Tuesday low of $22.89 before surging to a Friday and a new July high of $42.35.

Despite a pullback from the week high, ETC avoided a return to sub-$40.

At the time of writing, ETC was down 1.11% to $40.05. A mixed start to Saturday saw ETC fall to an early low of $39.64 before rising to a high of $41.25.

Looking at the trends, a breakout from the July high of $42.35 would bring the April high of $52.88 into view. A move through $52 would give ETC a run at the November 2021 high of $65.26.

Downside risks remain should developers announce any possible delays to the September Merge.

ETC Daily
ETCUSD 300722 Daily Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal on Saturday. ETC sat above the 50-day EMA, currently at $30.59.

The 50-day pulled away from the 100-day EMA, with the 100-day EMA moving away from the 200-day EMA, both bullish ETC signals.

Avoiding a fall through the 50-day EMA would continue to support the upward trend formed after testing support at the 50-day EMA on July 26.

However, a fall through the 50-day EMA could bring sub-$30 and the 100-day EMA, currently at $26.17, into play.

ETC EMAs
ETCUSD 300722 4-Hourly Chart

Lido DAO (LDO)

Last week, Lido DAO (LDO) rallied by 49.02% to $ 2.435.

Tracking the broader market, LDO fell to a Tuesday low of $1.321 before rallying to a Thursday high of $2.658.

Despite a pullback from the week high, LDO avoided a return to sub-$2.00, with three bullish days from five sessions delivering the upside.

Progress towards the Ethereum Merge delivered LDO the breakout week.

Away from the technicals and Merge updates, Ether staking numbers provided direction. The staking numbers dictate the LDO correlation with ETH, which could leave LDO in the hands of the Merge update news.

At the time of writing, LDO was down 0.50% to $2.396. A mixed start to Saturday saw LDO rise to an early high of $2.570 before falling to a low of $2.392.

Looking at the trends, a breakout from Thursday’s high of $2.658 would give LDO a free run at the May high of $3.56. From there, LDO would need to return to $4.00 levels to maintain the upward trend. However, a pullback to sub-$2.00 would see LDO face intense selling pressure.

LDO daily
LDOUSD 300722 Daily Chart

Looking at the 4-hourly chart and the EMAs, the signal was bullish. On Monday, LDO continued to steer clear of the 50-day EMA, currently at $1.8321, to target a return to $3.00.

The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA breaking clear of the 200-day EMA, both positive LDO indicators.

A further widening of the 50-day EMA from the 100-day EMA would support a run at $3.00. However, a fall through the 50-day EMA would bring the 100-day EMA, currently at $1.5626, and sub-$1.50 levels into view.

LDO EMAs
LDOUSD 300722 4-Hourly Chart

Oasis Labs (ROSE)

Last week, Oasis Labs (ROSE) rallied by 56.36% to $8.24.

Tracking the broader market, ROSE fell to a Tuesday low of $0.0465 before striking a Friday and a July high of $0.0860.

While finding support from the broader crypto market, news of Oasis Labs partnering with Meta (META) contributed to the upside.

At the time of writing, ROSE was down 1.82% to $0.0810. ROSE increased to an early high of $0.0853 before falling to a low of $0.0804.

Looking at the trends, a breakout from the July high of $0.0860 would give ROSE a free run at the May high of $0.1895. However, ROSE will need to break down resistance at $1.00 to support the upward trend.

A fall back to sub-$0.070 would bring the June and current year low of $0.0417 into play.

ROSE Daily
ROSEUSD 300722 Daily Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. This morning, ROSE sat above the 50-day EMA, currently at $0.0584.

The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA converging on the 200-day EMA, both bullish ETH signals.

A bullish cross of the 100-day EMA through the 200-day EMA would support a run at $0.100 to bring the May high into play. However, ROSE would need to hold above the 50-day EMA to avoid the 200-day EMA, currently at $0.559, and the current year low.

ROSE EMAs
ROSEUSD 300722 4-Hourly Chart

Yearn.finance (YFI)

Last week, yearn.finance (YFI) rallied by 58.11% to $11,033.

Tracking the broader market, YFI fell to a Tuesday low of $6,250 before rallying to a Friday and a July high of $11,253.

While finding support from the broader crypto market, market sentiment toward the anticipated August launch of veYFI delivered the breakout week.

At the time of writing, YFI was up 0.55% to $11,094. A bullish start to the weekend saw YFI rise to a new July high of $11,551 before easing back.

Looking at the trends, a breakout from the Saturday high of $11,551 would give YFI a free run at the May high of $18,565. From there, YFI would need to return to $20,000 levels to maintain the upward trend. However, a pullback to sub-$7,500 would see YFI face intense selling pressure.

YFI Daily
YFIUSD 300722 Daily Chart

Looking at the 4-hourly chart and the EMAs, the signal was bullish. YFI continued to steer clear of the 50-day EMA, currently at $7,491, to target a return to $15,000.

The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA breaking clear of the 200-day EMA, both positive YFI indicators.

A further widening of the 50-day EMA from the 100-day EMA would support a run at $15,000 to target the May high. However, a fall through the 50-day EMA would bring sub-$7,000 and the 100-day EMA, currently at $6,983, into view.

YFI EMAs
YFIUSD 300722 4-Hourly Chart

Amazon Joins Apple with Positive Outlook to Support Cryptos

Key Insights:

  • On Thursday, Amazon.com (AMZN) released its fiscal second-quarter earnings.
  • Revenue was up $121.23 billion versus a $119.09 billion estimate while recording a net loss of $2.0 billion for the quarter (EPS loss of 0.20 cents).
  • Amazon.com also delivered a positive outlook, leading to a 13.62% jump in the AMZN share price during extended trading hours.

It has been a bullish July, with market sentiment towards Fed monetary policy and US corporate earnings contributing to the upside.

Recovering from July 13 lows, the crypto market looks to end a three-month losing streak.

On fears of the Fed taking an aggressive interest rate path to bring inflation to target, the crypto market cap fell to a July 13 low of $824 billion. Fears of a US economic recession added to the market angst.

However, a shift in sentiment led the total crypto market cap to a July high of $1,094 billion, with US corporate earnings, US economic data, and market sentiment toward Fed monetary policy delivering support.

The crypto market correlation with the NASDAQ 100 remains firmly in place despite US economic woes and positive crypto network updates.

Crypto - NASDAQ
Crypto – NASDAQ Daily Chart 290722

On Tuesday, Walmart (WMT) spooked the markets with a negative outlook for Q2 and the full year. Walmart shares slid by 7.60% before steadying during extended trading hours. The gloomy outlook left the NASDAQ 100 down 1.87%, weighing on stocks linked to consumers, including Amazon.com (AMZN).

The NASDAQ 100 pullback, in response to the WMT outlook, weighed on the broader crypto market before a late rebound supported by a positive outlook from Microsoft (MSFT).

A similar market reaction is likely with other US corporate earnings results that investors consider a litmus test of the US economy. These include Amazon.com and Apple Inc., among others.

Amazon.com Beats Revenue Estimate and Delivers Positive Outlooks

On Thursday, Amazon.com released its fiscal Q2 ended June 2022 earnings results during extended market trading.

Key numbers included,

  • Net sales increased 7% to $121.2 billion in Q2 2022 compared with $113.1 billion in Q2 2021. Analysts expected net sales of $119.09 billion.
  • Operating income declined to 3.3 billion in Q2, compared with $7.7 billion in Q2 2021.
  • Net loss of $2.0 billion compared with net income of $7.8 billion. ($3.9 billion pre-tax valuation loss in Rivian Automotive Inc. investment).
  • Free cash flow decreased to an outflow of $23.5 billion for the trailing 12 months, compared with an inflow of $12.1 billion for the trailing 12 months ended June 30, 2021.

While beating revenue estimates, headwinds included,

  • Unfavorable foreign exchange ($3.6 billion negative impact year-over-year).
  • Fuel, Energy, and transportation costs

Amazon CEO Andy Jassy said,

“Despite continued inflationary pressures in fuel, energy, and transportation costs, we’re making progress on the more controllable costs we referenced last quarter, particularly improving the productivity of our fulfillment network.”

Jassy went on to say,

“We’re also seeing revenue accelerate as we continue to make Prime even better for members, both investing in faster shipping speeds, and adding unique benefits such as free delivery from Grubhub for a year, exclusive access to NFL Thursday Night Football games starting September 15, and releasing the highly anticipated series The Lord of the Rings: The Rings of Power on September 2.”

Amazon expects net sales of between $125.0 billion and $130.0 billion for the third quarter. The forecasts represent growth of between 13% and 17% compared with the third quarter of 2021.

Amazon.com’s (AMZN) share price increased by 1.08% during regular trading hours. In response to the earnings results and outlook, shares surged by 13.62% to $16.66 during extended trading.

Amazon
Amazon Share Price

Crypto Market Responds to CEO Jassy’s Upbeat Outlook

After tracking the NASDAQ 100 through the US session, Amazon.com earnings results delivered the crypto market with a boost during extended trading hours.

The total crypto market cap struck a day high of $1,092 billion, coinciding with Amazon.com and Apple Inc.’s earnings results.

Crypto - Amazon
Crypto – Amazon 5-Min Chart 290722

Amazon.com reported its quarterly earnings at 1730 Eastern.

The upside for Amazon.com, the NASDAQ 100, and the crypto market came despite disappointing economic data from the US.

The US economy contracted by 0.9% in Q2 versus a forecasted 0.5% expansion. The economy contracted by 1.6% in the previous quarter.

On Thursday, bitcoin (BTC) rose by 3.90% to $23,856.

Apple Beats Estimates and Delivers Positive Outlook to Support Cryptos

Key Insights:

  • On Thursday, Apple (AAPL) released its fiscal third-quarter earnings, which beat sales and profit forecasts.
  • Apple reported diluted earnings per share of $1.20 beating an estimate of $1.16.
  • Apple also delivered an upbeat outlook to support an after-hours boost.

Crypto investors are enjoying a bullish July, supported by a sharp rebound from market lows on July 13.

Market sentiment towards Fed monetary policy and the US economy have influenced, with the NASDAQ 100 delivering the crypto market with much-needed support.

While the Fed has been the key driver throughout 2022, linking the crypto market with the NASDAQ 100, US corporate earnings have also influenced investor appetite for riskier assets.

Crypto - NASDAQ correlation
Crypto – NASDAQ Daily Chart 290722

On Tuesday, Walmart (WMT) spooked the markets with a grim outlook for Q2 and the full year. Walmart shares tumbled by 7.60% before finding support in extended trading. The doom and gloom outlook left the NASDAQ 100 down 1.87%, weighing on stocks linked to consumption, including Amazon.com (AMZN).

The NASDAQ 100 pullback, in response to the WMT outlook, weighed on the broader crypto market before a late rebound supported by a positive outlook from Microsoft (MSFT).

A similar market reaction is likely with other US corporate earnings results that investors consider a litmus test of the US economy. These include Amazon.com and Apple Inc., among others.

Apple Inc. Beats Estimates and Delivers Positive Outlooks

On Thursday, Apple Inc. (AAPL) released its fiscal Q3 ended June 25, 2022, earnings results during extended market trading.

Key results included,

  • Revenue was $83 billion, up 2% year-over-year.
    • Product revenue $63.4 billion.
    • Mac revenue declined 10% year-over-year to $7.4 billion.
    • Phone revenue increased 3% year-over-year to $40.7 billion.
    • Services revenue increased 12% year-over-year to $19.6 billion.
  • Diluted earnings per share was $1.20, decreasing 8% year-over-year.

The results beat estimates, with analysts forecasting diluted earnings per share of $1.16.

While hitting record June levels and beating estimates, headwinds included,

  • Macroeconomic environment
  • Supple constraints
  • Foreign exchange (300 basis points headwinds)
  • Russia

Apple CEO Tim Cook reportedly told CNBC,

“In terms of outlook in the aggregate, we expect revenue to accelerate in the September quarter despite seeing some pockets of softness.”

Apple Inc.’s (AAPL) share price increased by a modest 0.36% during regular trading hours. In response to the June quarter earnings results and outlook, shares increase by 2.97% to $162.02.

Apple released its earnings results at 1700 Eastern. The earnings call remains available for 14 days.

Crypto Market Responds to CEO Tim Cook’s Positive Outlook

After tracking the NASDAQ 100 through the US session, US corporate earnings results delivered the crypto market with a boost during extended trading hours.

The total crypto market cap struck a day high of $1,092 billion, which coincided with Apple and Amazon.com earnings results.

Apple - Crypto
Crypto – Apple 5-Min Chart 290722

For Apple Inc., the NASDAQ 100, and the crypto market, the upside came despite disappointing economic data from the US.

On Thursday, bitcoin (BTC) increased by 3.90%, with a revisit to $24,000 before easing back.

The US economy contracted by 0.9% in Q2 versus a forecasted 0.5% expansion. The economy contracted by 1.6% in the previous quarter.

Bitcoin (BTC) Fear & Greed Index Jumps to 32/100 in Response to the Fed

Key Insights:

  • Bitcoin (BTC) rallied by 7.68% on Wednesday to wrap up the day at $22,890.
  • Market reaction to the Fed’s 75-basis point rate hike and hopes of a slower pace of interest rate hikes delivered support to riskier assets.
  • The Bitcoin Fear & Greed Index increased from 28/100 to 32/100, supported by the BTC visit to $23,000.

On Wednesday, bitcoin (BTC) rallied by 7.68%. Reversing a 0.23% decline from Tuesday, bitcoin ended the day at $22,890. Bitcoin rose for just the second time in eight sessions.

Mid-week, Fed monetary policy shifted investor sentiment away from Tesla’s (TSLA) BTC off-load and Walmart’s (WMT) gloomy outlook.

A mixed start to the day saw BTC fall to an early low of $21,050 before making a move.

Steering clear of the First Major Support Level at $20,880, BTC rallied to a high of $23,102 before easing back.

BTC broke through the day’s Major Resistance Levels to end the day at $22,890.

On Wednesday, bitcoin tracked the NASDAQ before extending gains post the US market close. The NASDAQ 100 rallied by 4.06%. This morning, the NASDAQ 100 Mini was down 56.5 points, with US GDP numbers in focus.

NASDAQ correlation
BTC-NASDAQ 280722 5 Minute Chart

Bitcoin Fear & Greed Index Jumps in Reaction to the Fed

Today, the Fear & Greed Index increased from 28/100 to 32/100. The Index marked the third rise in seven sessions, supported by the BTC return to $23,000.

Market reaction to the Fed’s 75-basis point rate hike and Fed Chair Powell’s post-decision comments delivered support. With the rate hike in line with expectations, hopes of a slower pace of rate hikes supported the breakout session and the Index rise to 32/100.

Fear & Greed Index
Fear & Greed 280722

For the bulls, the next target is the “Neutral” zone, which starts at 46/100. The Index last sat in the “Neutral” zone on April 6, when bitcoin stood at $45,000 levels.

A move through last week’s high of 34/100 would signal improved investor sentiment and a possible bitcoin move towards $30,000.

Today, US GDP numbers for Q2 will need to ease fears of a US recession to support the Index at current levels.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.47% to $22,851.

BTC under early pressure
BTCUSD 280722 Daily Chart

Technical Indicators

BTC needs to avoid the $22,346 pivot to target the First Major Resistance Level (R1) at $23,645 and resistance at $24,000.

BTC would need a bullish session to support a breakout from the Wednesday high of $23,102.

An extended rally would test the Second Major Resistance Level (R2) at $24,397 and resistance at $25,000. The Third Major Resistance Level (R3) sits at $26,451.

A fall through the pivot would bring the First Major Support Level (S1) at $21,593 into play.

Barring an extended sell-off, BTC should avoid sub-$21,000 and the Second Major Support Level (S2) at $20,296.

The Third Major Support Level (S3) sits at $18,243.

BTC pivot level the key
BTCUSD 280722 Hourly

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. This morning, bitcoin sat above the 200-day EMA, currently at $22,087.

The 50-day narrowed to the 200-day EMA, with the 100-day EMA closing in on the 200-day EMA, both bullish BTC price signals.

A bullish cross of the 50-day EMA through the 200-day EMA would support a run at $25,000. However, holding above the 200-day EMA would be the key to another upswing.

EMAs bullish
BTCUSD 280722 4 Hourly Chart

Looking at the trends, BTC would need a move through the July high of $24,276 and $25,000 to target the June high of $31,956. A bullish cross of the 100-day EMA through the 200-day EMA would support a run at the June high.

From $31,200, BTC should have a clear run at the May high of $40,004.

For the bears, the June 18 low of $17,601 would be the next target, with a fall through the July low of $18,768 likely to test investor resilience. A bullish cross of the 50-day EMA through the 200-day EMA would bring the July high into play.

EUR/USD Price Forecast: A 50-Basis Point Rate Hike To Deliver $1.0250

For the EUR, it is a busy day ahead on the Eurozone economic calendar. Before the European open, German consumer confidence figures will draw interest. Following weak business sentiment numbers for July, today’s numbers could force the ECB to reconsider a 50-basis point hike in September.

Later in the morning, French consumer confidence and Italian consumer and business confidence figures are also due, with forecasts EUR negative.

Following ECB chatter from the weekend, we expect EUR sensitivity to the consumer confidence numbers.

ECB chatter on inflation raised yet more questions on how the ECB will navigate inflationary pressures and a waning economy. ECB policymaker Pablo Hernandez talked about the risks to the Eurozone inflation outlook intensifying,

However, the event of the day is the Fed monetary policy decision, with uncertainty over the Fed’s next move likely to drive market volatility.

On Tuesday, Walmart (WMT) spooked the markets with a grim outlook for Q2 and the full year. Shares tumbled by 7.64% to $121.9 after the company said that higher prices for fuel and food would cause consumers to cut back on spending.

FOMC members may, therefore, need to look beyond the economic indicators.

EUR/USD Price Action

At the time of writing, the EUR was up 0.30% to $1.01454.

A bullish start to the session saw the EUR rise from an early low of $1.01130 to a high of $1.01476.

EUR/USD on the move
EURUSD 270722 Daily Chart

Technical Indicators

The EUR/USD needs to move through the $1.0158 pivot to target the First Major Resistance Level (R1) at $1.0208 and the Tuesday high of $1.02501.

Economic indicators will need to beat forecasts to support a return to $1.020.

An extended rally would likely see the EUR/USD pair test the Second Major Resistance Level (R2) at $1.0300 before any pullback.

The Third Major Resistance Level (R3) sits at $1.0443.

Failure to move through the pivot would bring the First Major Support Level (S1) at $1.0065 into play.

An extended sell-off throughout the day could see the EUR/USD test the second Major Support Level (S2) at $1.0015 and support at $1.00.

The Third Major Support Level sits at $0.9872.

EUR/USD support levels in play
EURUSD 270722 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal.

At the time of writing, the EUR sat below the 50-day EMA, currently at $1.01785.

The 50-day EMA pulled back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA, which were negative price signals.

A breakout from the 50-day EMA would support a run at R1 and the 100-day EMA, currently at $1.02111.

EMAs are bearish
EURUSD 270722 4 Hourly Chart

The US Session

It is a big day ahead for the Greenback. Going into the US session, core durable goods orders will draw market interest. With recessionary fears rising, weak numbers will test support for riskier assets and the EUR/USD.

However, the main event of the session will be the Fed monetary policy decision. While the interest rate decision is the key, the Fed’s forward guidance will also need considering. Weak economic indicators may force the Fed to readjust its rate path towards normalization.

Away from the economic calendar, US corporate earnings will also draw interest, though earnings will likely play second fiddle to the Fed.

XRP Finds Support as Another Court Ruling Goes Against the SEC

Key Insights:

  • On Tuesday, XRP rose by 0.48% to mark the second increase in five sessions.
  • A choppy Tuesday session saw XRP visit sub-$0.33 on Walmart earnings news before finding support from the broader crypto market.
  • The technical indicators are bearish, with XRP sitting below the 100-day EMA.

On Tuesday, XRP rose by 0.48%. Partially reversing a 6.33% slide from Monday, XRP ended the day at $0.3375.

A bearish morning saw XRP slide through the First Major Support Level at $0.3273 to an afternoon low of $0.3257.

Finding late support from the broader market, XRP rose to a high of $0.3385 before easing back. XRP fell short of the First Major Resistance Level at $0.3523.

Another Court Ruling Goes Against ahead of a New SEC Objection

It was another busy day, with news updates from the SEC v Ripple case drawing plenty of interest

Overnight, defense attorney James Filan shared the latest court ruling, saying,

“Judge Torres denies SEC’s Motion to Revoke amici status and bar John Deaton from further proceedings. Amici can’t participate in expert change now but may file application to brief concerns with SEC’s expert at summary judgment.”

Shortly after, Filan shared the SEC’s objection to the court ruling denying the SEC’s request to shield Hinman speech-related documents under the attorney-client privilege.

The ruling on the SEC objection could prove to be a turning point in the case that has been ongoing since December 2020.

The SEC is trying to shield the William Hinman speech-related documents from a 2018 speech.

In 2018, the former SEC Director of the Division of Corporation Finance said that Bitcoin (BTC) and Ethereum (ETH) are not securities.

XRP Price Action

At the time of writing, XRP was down 0.12% to $0.3371.

A mixed start to the day saw XRP rise to an early high of $0.3394 before falling to a low of $0.3368.

XRP under early pressure
XRPUSD 270722 Daily Chart

Technical Indicators

XRP needs to avoid the $0.3339 pivot to target the First Major Resistance Level (R1) at $0.3421.

XRP would need support from the broader market to break out from the Tuesday high of $0.3385.

In the case of an extended crypto rebound, XRP could test the Second Major Resistance Level (R2) at $0.3467 and resistance at $0.35.

The Third Major Resistance Level (R3) sits at $0.3595.

A fall through the pivot would leave the First Major Support Level (S1) at $0.3293 in play.

Barring another extended sell-off throughout the day, the Second Major Support Level (S2) at $0.3211 should limit the downside.

The Third Major Support Level sits at $0.3083.

XRP pivot level in play
XRPUSD 270722 Hourly Chart

This morning, the EMAs and the 4-hourly candlestick chart (below) sent a bearish signal.

At the time of writing, XRP sat below the 100-day EMA, currently at $0.3462. Today, the 50-day EMA fell through the 200-day EMA, with the 100-day EMA pulling back from the 200-day EMA, with both indicators price negatives.

A bearish cross of the 50-day EMA through the 100-day EMA would test buyers at $0.30.

However, a bullish cross of the 50-day EMA through the 200-day EMA would support an XRP move through the 100-day EMA to target $0.35.

EMAs bearish
XRPUSD 270722 4-Hourly Chart

Bitcoin (BTC) Fear & Greed Index Inches Up with the Fed in Focus

Key Insights:

  • Bitcoin (BTC) continued its downward trend from last week’s high of $24,276, with a 0.23% loss to end the day at $21,258.
  • Investor jitters over the Fed and US corporate earnings sent BTC to sub-$21,000 before a late rebound.
  • The Bitcoin Fear & Greed Index inched up from 26/100 to 28/100, supported by the BTC recovery from sub-$21,000.

On Tuesday, bitcoin (BTC) fell by 0.23%. Following a 5.66% slide from Monday, bitcoin ended the day at $21,258. Bitcoin fell for the sixth time in seven sessions, with bitcoin unable to shake off the news of Tesla offloading 75% of its BTC holdings.

Bearish through the morning, BTC slid from a high of $21,342 to an afternoon low of $20,733.

The extended sell-off saw BTC fall through the First Major Support Level at $20,829 before a return to $21,200 levels.

Economic data took a back seat, with US corporate earnings in the spotlight.

On Tuesday, Walmart Inc. (WMT) weighed on riskier assets with a grim earnings outlook for the current quarter and the fiscal year. Shares slid by 7.6% after the company said that higher prices for fuel and food would cause consumers to cut back on spending.

The doom and gloom outlook comes ahead of the Fed monetary policy decision. Uncertainty over Fed monetary policy and the US economic outlook has weighed on the crypto market.

On Tuesday, bitcoin tracked the NASDAQ into the red before a post-US market close rebound. The NASDAQ 100 slid by 1.87%.

NASDAQ correlation
BTC-NASDAQ 270722 5 Minute Chart

Bitcoin Fear & Greed Index Moves Away from the Extreme Fear Zone

Today, the Fear & Greed Index increased from 26/100 to 28/100. The Index marked the second rise in six sessions, supported by the BTC rebound from sub-$21,000.

BTC Fear & Greed Index
Fear & Greed 270722

Investor angst over the Fed, fears of a US recession, and market reaction to the Tesla offload remained market headwinds. US corporate earnings were also in the mix, with Walmart testing crypto support.

Despite the market angst, the Index continued to avoid the “Extreme Fear” zone sitting at sub-25/100.

However, it could be a different story later today, with the Fed monetary policy decision the event of the week. A 100-basis point rate hike would likely see the Index slide back into the Extreme Fear zone.

For the bulls, the next target is the “Neutral” zone, which starts at 46/100. The Index last sat in the “Neutral” zone on April 6, when bitcoin stood at $45,000 levels.

A move through last week’s high of 34/100 would signal improved investor sentiment and a possible bitcoin move towards $30,000.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 0.43% to $21,166.

BTC under early pressure
BTCUSD 270722 Daily Chart

Technical Indicators

BTC needs to avoid the $21,113 pivot to target the First Major Resistance Level (R1) at $21,490 and resistance at $21,500.

BTC would need a bullish session to support a breakout from the Tuesday high of $21,342.

An extended rally would test the Second Major Resistance Level (R2) at $21,723 and resistance at $22,000. The Third Major Resistance Level (R3) sits at $22,239.

A fall through the pivot would bring the First Major Support Level (S1) at $20,880 into play.

Barring an extended sell-off, BTC should avoid sub-$20,000. The Second Major Support Level (S2) at $20,503 should limit the downside.

The Third Major Support Level (S3) sits at $19,891.

BTC pivot the key early on
BTCUSD 270722 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. This morning, bitcoin sat below the 100-day EMA, currently at $21,755.

The 50-day narrowed to the 100-day EMA, with the 100-day EMA pulling back from the 200-day EMA, both bearish BTC price signals.

A bearish cross of the 50-day EMA through the 100-day EMA would test support at $20,000. However, breaking through the 100-day EMA would support a breakout from R1 to test R2 and resistance at the 50-day EMA, currently at $21,956.

EMAs bearish
BTCUSD 270722 4 Hourly Chart

Looking at the trends, BTC would need a move through the July high of $24,276 and $25,000 to target the June high of $31,956. A bullish cross of the 100-day EMA through the 200-day EMA would support a run at the June high.

From $31,200, BTC should have a clear run at the May high of $40,004.

For the bears, the June 18 low of $17,601 would be the next target, with a fall through the July low of $18,768 likely to test investor resilience.

Trends
BTCUSD 270722 Trend Analysis

Crypto Market Daily Highlights – ADA, BTC, and SOL Buck the Trend

Key Insights:

  • It was a mixed Tuesday session for the crypto top ten, with Solana (SOL), Cardano (ADA), and bitcoin (BTC) seeing red.
  • Investor reaction to US corporate earnings and apprehension ahead of the Fed monetary policy decision tested appetite for riskier assets.
  • Recovering from a $36 billion slump, the total crypto market cap increased by $1.77 billion.

It was a mixed Tuesday session for the crypto top ten. Bitcoin (BTC) visited sub-$21,000, with Cardano (ADA) and Solana (SOL) joining bitcoin in the red.

On Tuesday, Walmart Inc. (WMT) weighed on riskier assets with a grim earnings outlook for the current quarter and the fiscal year. Shares slid by 7.6% after the company said that higher prices for fuel and food would cause consumers to cut back on spending.

The doom and gloom outlook comes ahead of the Fed monetary policy decision. Uncertainty over Fed monetary policy and the US economic outlook has weighed on the crypto market.

Walmart’s outlook warning added to investor angst over the economic outlook, which could force the Fed to lift rates by just 50 basis points on Wednesday.

On Tuesday, the broader crypto market tracked the NASDAQ into the red before a post-US market close rebound. The NASDAQ 100 slid by 1.87%.

NASDAQ correlation
Total Market Cap – NASDAQ – 270722 5 Min Chart

The Total Crypto Market Cap Recovers From Walmart Induced Slump

On Tuesday, the crypto market succumbed to uncertainty over the Fed and corporate earnings. The total market cap fell from a high of $961 billion to a low of $924 billion before bouncing back.

A post-US market close rebound saw the total market cap bounce back to end the day at $957 billion, up by $1.77 billion. The market cap had been down by $36 billion before the late recovery.

Crypto market cap
Total Market Cap 270722 Daily Chart

For the current month, the total crypto market cap is up $90 billion. However, the Fed will need to be crypto-friendly for the crypto market to end a three-month losing streak.

The Crypto Market Movers and Shakers from the Top Ten and Beyond

SOL and ADA fell by 1.07% and 1.47%, respectively, with BTC ending the day with a 0.23% loss.

It was a bullish session for the rest of the top ten, with BNB and DOGE rising by 2.04% and 1.02%, respectively, to lead the way.

ETH (+0.62%) and XRP (+0.50%) saw relatively modest gains.

From the CoinMarketCap top 100, it is also a mixed session.

Qtum (QTUM), OKB (OKB), and Trust Wallet Token (TWT) led the way. QTUM rallied by 11.95%, with OKB and TWT gaining 7.49% and 5.35%, respectively.

At the other end of the table, Uniswap (UNI) led the way down, with a 5.21% loss. Convex Finance (CVX) and ApeCoin (APE) weren’t far behind, falling by 4.89% and 3.97%, respectively.

Total Crypto Liquidations Inched Higher with the Fed in Focus

On Wednesday, 24-hour liquidations continued to move northwards, though liquidation levels remained low relative to last week’s spike.

This morning, 24-hour liquidations stood at $207 million, up from $182 million on Tuesday. In the previous week, liquidations spiked at $691 million.

Liquidated traders increased over the last 24 hours. At the time of writing, liquidated traders stood at 73,706 versus 67,978 on Tuesday morning.

One-hour and four-hour liquidations were in decline, reflecting the post-US market close market rebound.

Crypto liquidations
Total Crypto Liquidations 270722

According to Coinglass, four-hour liquidations stood at $24.01 million, down from $76.67 million on Tuesday. One-hour liquidations stood at $4.41 million, down from $18.00 million. (See hourly crypto market cap chart below).

Market cap rebound
Total Market Cap 270722 Hourly Chart

Daily News Highlights

  • Corporate earnings sent the crypto market into the red before a late rebound.
  • The news hit the wires of crypto exchange Kraken suspected of violating US sanctions.
  • Coinbase hit the news, with the US SEC reportedly investigating the US platform for unregistered securities listings.

Microsoft Earnings Fall Short as Walmart Spooks Crypto Investors

Key Insights:

  • Microsoft misses Q4 earnings estimates, with an EPS of $2.23 versus $2.29.
  • The company attributed the miss to unfavorable foreign currency movements.
  • However, the market reaction to the miss was muted, with Walmart Inc. hitting riskier assets.

Throughout 2022, the crypto market has closely tracked the NASDAQ 100.

Crypto investor sentiment towards the US economic outlook and monetary policy has led to the correlation between the NASDAQ and the crypto markets.

Uncertainty ahead of the Fed monetary policy decision, due later today, has tested support for riskier assets this week.

Movements across the NASDAQ 100 and the broader crypto market have reflected the uncertainty.

Crypto - NASDAQ
Crypto Market Cap NASDAQ Daily Chart 270722

Away from the economic calendar and the Fed, corporate earnings are also a consideration for investors as the interconnectedness grows.

This week, several US bluechip companies are in the spotlight, with corporate earnings results likely to draw plenty of interest and dictate appetite for riskier assets.

Walmart Inc. Outlook Mutes Disappointing Microsoft Earnings Impact

On Tuesday, Microsoft (MSFT) released its earnings results for the June 30, 2022, quarter end.

Key results included,

  • Revenue was $51.9 billion, up 12.6% compared with the quarter ended June 30, 2021.
  • Operating income was $20.5 billion, up 8%.
  • Net income was $16.7 billion, up 2%.
  • Diluted earnings per share was $2.23, increasing 3% when compared to the quarter ended June 30, 2021.

The results missed forecasts, with analysts forecasting earnings per share to increase to $2.29.

Microsoft cited several factors that contributed to the risk, including unfavorable foreign exchange movement within the quarter that impacted revenue ($595 million) and diluted earnings per share ($0.04).

Other contributory factors included,

  • Extended production shutdowns in China
  • Reduction in advertising spending.
  • The ongoing war in Ukraine.
  • Employee severance expenses.

Despite the earnings miss, Microsoft shares were up in extended trading, supported by a positive outlook for the year ahead.

For FY2023, Microsoft stuck to its previous forecast, saying,

“We continue to expect double-digit revenue and operating income growth in constant currency and in US dollars.”

However, the earnings miss and the positive outlook had a relatively muted impact on the NASDAQ 100 and the crypto market.

Doom and gloom from Walmart Inc. weighed on riskier assets.

On Tuesday, Walmart (WMT) spooked the markets with a grim outlook for current quarter and the full year. Shares tumbled by 7.64% to $121.9 after the company said that higher prices for fuel and food would cause consumers to cut back on spending.

Walmart shares are up just 0.10% in extended trading. The doom and gloom outlook left the NASDAQ 100 down 1.87%, with Amazon.com (AMZN) and others responding to the Walmart warning.

Crypto Market Responds to Walmart Warming and Microsoft Outlook

Movement across the crypto market closely tracked the Walmart share price through the US session.

A late partial recovery from day lows supported a crypto market recovery, with extended trading hours delivering support.

While Walmart is up just 0.10% in extended trading, Microsoft is up 5%, supported by the positive earnings outlook.

Stock - Crypto correlation
Crypto MSFT WMT 5 Minute Chart 270722

At the time of writing, bitcoin (BTC) was down 0.95% to $21,105.

BTC
BTCUSD 270722 Daily Chart

S&P 500 Drops 1.2% to 3,920s, Walmart Slumps 8% on Surprise Profit Warning

Key Points

  • Retail stocks led a slide on Wall Street on Tuesday after a surprise Walmart profit warning.
  • The S&P 500 fell 1.2% to the 3,920s and the Nasdaq 100 fell 2.0% under 12,100.
  • Post-earnings strength in Coca-Cola and Mcdonald’s helped cushion losses for the Dow.

Retail Stocks Lead Wall Street Lower After Walmart Profit Warning

Major US equity indices dropped on Tuesday after a surprise profit warnings from Walmart weighed heavily on retail stocks, including the likes of Target and Amazon, and as a new agreement in Europe on gas rationing measures plus soft Consumer Confidence data in the US highlighted global recession risks. The S&P 500 index was last down 1.2% and trading in the 3,920s, where it is for now finding support at its 50-Day Moving Average.

Unsurprisingly, the S&P 500 Consumer Discretionary GICS sector was the underperformer, dropping 3.0%. Walmart’s profit warnings, which comes weeks ahead of when it is scheduled to release Q2 earnings, warned that surging inflation in the US is damaging the willingness of consumers to spend on discretionary items, sending a chill across the sector. News that Amazon plans to raise its Prime subscription price by as much as 43% in Europe failed to deliver a boost to its stock price, as AMZN traders brace for the company’s earnings release later this week.

The jitters also hit major tech names Alphabet and Microsoft, both of whom are scheduled to post earnings after Tuesday’s close. The Nasdaq 100 index was last down 2.0% in the 12,100 area, now over 4.0% since last week’s multi-week peaks and eyeing a test of its 21 and 50DMAs which sit either side of the 12,000 level.

KO, MCD Cushion Losses For Dow Jones

Strength in Coco Cola and McDonalds after both posted strong earnings prior to the open helped cushion the losses for the Dow Jone Industrial Average, which was last down x% in the 31,800s. The former beat expectations on both the top and bottom lines and raised its forecast for full-year 2022 growth to 12-13% from 7-8%, though also noted that commodity price inflation is a growing headwind. McDonalds, meanwhile, saw higher than expected same-store sales growth amid price rises, though the company’s CEO warned that the environment remains challenging.

In other notable earnings releases, General Motors missed analyst forecasts, while UPS beat expectations thanks to higher courier prices. Meanwhile, Coinbase Global’s share price was hit by news that the US Securities & Exchange Commission is investigating the US-based cryptocurrency exchange over potentially listing unregistered securities.

Macro Tone Downbeat Pre-Fed

Long-term US yields have since pared back most of their earlier drop, but the tone to global macro trade remains very much on the defensive. Yields in Europe also tumbled on Tuesday, while Italian and German stocks suffered after EU energy ministers agreed on a somewhat watered-down plan to cut back on gas usage between now and next March, with Russia having further reduced Nord Stream 1 flows to just 20% of capacity.

Even though the EU isn’t yet at the point of gas rationing, recent data has highlighted that sky-high energy costs and massive uncertainty are already having a chilling impact on economic activity there and markets seem to be moving to price in a recession. Though things aren’t quite as bad in the US, markets also seem to be increasingly bracing for incoming recession, which a further drop in US Consumer Confidence data on Tuesday highlights as a growing risk.

Bond and money markets have been sending a message that the Fed is likely to start softening its tone on the outlook for tightening in 2023 amid signs that inflation has likely peaked and the economy is weakening. Traders will be looking for any such signals in Fed Chair Jerome Powell’s post-meeting press conference on Wednesday. The Fed is expected to raise interest rates by 75 bps for a second successive meeting, effectively closing out its pandemic era stimulus.

U.S. Dollar Rallies As Walmart Disappoints

Key Insights

  • U.S. dollar and Treasuries gain ground as demand for safe-haven assets increases. 
  • EUR/USD is under strong pressure as European natural gas prices hit multi-month highs. 
  • A move above the 107 level will push the U.S. Dollar Index towards the resistance at 108.

Walmart Cuts Guidance

The U.S. dollar is moving higher amid flight to safety which was triggered by the disappointing earnings report from Walmart.

Walmart cut its outlook for the fiscal second quarter and the full fiscal year 2023. The company’s guidance assumed “a generally stable consumer in the U.S., higher supply chain costs, continued pressure from inflation, and mix of products and formats globally.”

Walmart’s results are seen as a barometer of consumer health, so it’s not surprising to see that traders have increased purchases of the safe-haven U.S. dollar and Treasuries after the release of the report.

It remains to be seen whether Walmart’s report will have an impact on the Fed decision, which will be released tomorrow. Currently, there’s a 75.1% probability  of a 75 bps hike. If the Fed chooses to fight inflation with a 100 bps hike, the American currency will get more support.

Euro’s Problems Add To Dollar’s Strength

EUR/USD found itself under strong pressure as European natural gas prices rallied to new highs after Russia’s Gazprom reduced supplies.

ECB President Christine Lagarde has recently promised to raise rates until inflation declined to the 2% target. However, ECB will also have to deal with a recession in the eurozone, which will be triggered by high energy prices.

Raising rates at a time when the economy is shrinking will put more pressure on the Euro Area GDP. Judging by the recent market action, traders do not believe that Lagarde can afford to be hawkish.

In addition, the spread between Germany’s government bonds and the bonds of weaker members, like Italy, continues to grow. ECB has previously stated that it would buy weaker bonds to limit the spread, but such actions will further boost inflation.

In this environment, the U.S. dollar is viewed as the ultimate safe-haven currency. Currently, the U.S. Dollar Index is trying to settle back above the 107 level. In case this attempt is successful, the U.S. Dollar Index will move towards the next important resistance level at 108. However, traders should note that market action may be choppy ahead of the Fed decision on Wednesday.

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

Best Consumer Staples Stocks To Buy In June

Key Insights

  • The stock market remains under pressure amid worries about high inflation. 
  • Consumer staples stocks may serve as safe-haven assets in the current market environment. 
  • Procter & Gamble and Walmart look attractive at current levels. 

Investors will continue to search for stocks that could help them protect their funds in an inflationary environment after the recent U.S. Inflation Rate report indicated that Inflation Rate increased by 8.6% year-over-year in May. Consumer staples companies, which make products that are used every day, are one of the segments that could attract investor interest.

Procter & Gamble

Analyst estimates for Procter & Gamble have moved a bit lower in recent months. Currently, the company is expected to report earnings of $5.84 per share in 2022 and $6.23 per share in 2023, so the stock is trading at 23 forward P/E.

This is not cheap for a consumer staples stock, but traders are willing to pay a premium for a company that can raise prices in an inflationary environment.

Earnings estimates are moving lower as the company’s costs are also increasing due to inflation, but the stock will likely outperform the broader market in case the broad sell-off continues.

Walmart

Walmart stock has found itself under significant pressure after the release of its first-quarter report in May. As a result, the stock declined to levels that were last seen back in July 2020.

Not surprisingly, analyst estimates have moved lower in recent weeks. The company is expected to report earnings of $6.41 per share in the current fiscal year and earnings of $6.96 per share in the next fiscal year, so the stock is trading at 17 forward P/E.

The key question for investors is whether risks have been already priced in by the market. Walmart declined from the $160 level to the $120 level in less than two months, so the stock may attract speculative traders and investors who are willing to bet that the strong sell-off was not justified.

To keep up with the latest earnings updates, visit our earnings calendar.

Best Buy Is Down By 3%, Here Is Why

Key Insights

  • Barclays downgrades Best Buy after analysing its recent earnings report. 
  • Retailers’ stocks remain under pressure after disappointing reports from Walmart and Target. 
  • Best Buy is trading at just 7 forward P/E, so the stock could be attractive for speculative traders who are willing to bet that the recent sell-off was not justified. 

Best Buy Falls After Analyst Downgrade

Shares of Best Buy found themselves under pressure after Barclays cut its rating for the stock after the first-quarter report, which was released on May 24.

Best Buy reported revenue of $10.65 billion and adjusted earnings of $1.57 per share, beating analyst estimates on both earnings and revenue. Comparable sales declined by 8.0%, but the report did not put additional pressure on the stock as it has already declined by about 25% in several weeks.

The recent weeks have been challenging for retail stocks. Leaders like Walmart and Target suffered heavy losses, creating significant pressure on the whole segment. The analyst downgrade served as an additional bearish catalyst for Best Buy stock and pushed it closer to yearly lows.

What’s Next For Best Buy Stock?

Analyst estimates for Best Buy have been moving lower in recent months. Currently, the company is expected to report earnings of $8.86 per share in the current year and earnings of $10.35 per share in the next year, so the stock is trading at just 7 forward P/E.

While current valuation levels look cheap, analyst estimates may remain under pressure if analysts see signs of economic problems. The recent reports from retailers highlighted current challenges, and it remains to be seen whether the second-quarter reports will be better.

At the same time, it should be noted that current valuation could be attractive for speculative traders who are ready to bet that Best Buy stock can rebound after losing more than 25% of its value since the start of this year.

To keep up with the latest earnings updates, visit our earnings calendar.

Target Is Down By 24%, Here Is Why

Key Insights

  • Target stock declined below the $165 level after Q1 report indicated that the company failed to pass higher costs to consumers. 
  • Yesterday, Walmart released a weak quarterly report, and the whole segment is under pressure during today’s trading session. 
  • Target stock is trading at just 10 forward P/E, but analyst estimates will likely decline in the upcoming weeks. 

Target Falls After Weak Quarterly Report

Shares of Target  gained strong downside momentum after the company released its first-quarter report. The company reported revenue of $25.17 billion and adjusted earnings of $2.19 per share, beating analyst estimates on revenue and missing them on earnings.

According to the report, comparable sales increased by 3.3%, reflecting traffic growth of 3.9%. Operating margin rate was just 5.3%, “driven primarily by gross margin pressure reflecting actions to reduce excess inventory as well as higher freight and transportation costs.” In the second quarter, Target expects that operating income margin rate will be in a wide range centered around 5.3%.

Traders were shocked that Target failed to pass higher costs to consumers, and the stock lost 25% of its value. Yesterday, Walmart also presented a weak report, and it looks that retailers are not as safe as many investors expected.

What’s Next For Target Stock?

Target is expected to report earnings of $14.64 per share in the current year and earnings of $15.95 per share in the next year, so the stock is trading at just 10 forward P/E, which is cheap for the current market environment.

However, the company has just released a weak quarterly report, so analyst estimates will likely decline in the upcoming weeks. In addition, the whole segment is under pressure after disappointing reports from leading companies like Walmart and Target, so retail stocks will likely need additional upside catalysts to break the current downside trend.

The key question is whether Target’s inability to pass higher costs to consumers is a one-time event or a beginning of the new trend, which would hurt its profitability in the upcoming quarters. The company’s Q2 margin forecast is not inspiring, and it remains to be seen whether speculative traders will rush to buy Target stock despite the major pullback.

To keep up with the latest earnings updates, visit our earnings calendar.

Stock Bulls Remain Optimistic As Data Indicates a Slowdown in Manufacturing Inflation

Stock bulls remain extremely cautious but a bit more optimistic as data indicates a slowdown in manufacturing inflation. The Producer Price Index rose +11% year-over-year in April, higher than expected but a meaningful pullback from March’s +11.5%. Producer prices lead consumer prices, so the report is a good sign overall, though investors, as well as the Fed, will need to see a couple more months of declines before declaring that inflation is indeed cooling.

Inflation

Economists also warn that goods inflation may be coming down because consumer demand is shifting more to services, meaning high prices could simply be moving from one part of the economy to another. The latest data shows services prices are rising at the fastest rate in three decades with airfare leading the way. Even if inflation has peaked, the question now is, how long will it remain elevated?

Federal Reserve Chair Jerome Powell cautioned yesterday that he can’t guarantee the central bank can deliver a so-called “soft landing” for the economy, pointing to the tight labor market and ongoing supply chain dislocations. Powell also stressed that other “huge events” are playing important roles right now, including Russia’s war in Ukraine, that are beyond the Fed’s control. Powell made the comments after being confirmed by the Senate for a second 4-year term.

The central bank’s target inflation rate is still a “flexible +2%” but several officials have indicated that the new normal might be more in the +2.5% to +3% range. One of the main gauges (but not the only one) the Fed uses to determine the rate of inflation is the Core PCE Prices Index, which for March was running at +5.2%. The April read is due out on May 27, which is a couple weeks ahead of the Fed’s next meeting on June 14-15.

Data to watch

Consumer data recently has been sending mixed signals that are hard to interpret. Sentiment has been mostly falling since the start of the year but consumer spending has not shown any signs of pullback.

Next week, investors get an update on how spending is holding up via April Retail Sales on Tuesday. A slew of fresh housing data next week will provide a deeper look at how substantially higher mortgage rates might be impacting the market. The NAHB Housing Market Index for May is out on Tuesday, followed by April Housing Starts on Wednesday, and April Existing Home Sales on Thursday.

Several key earnings are on the calendar next week as well, including Home Depot and Walmart on Tuesday; Cisco, Lowe’s, Target, and TJX Companies on Wednesday; Applied Materials, Palo Alto Networks, and Ross Stores on Thursday; and Deere & Co. on Friday.

Best Retail Stocks To Buy In May

Key Insights

  • Traders stay focused on finding safe-haven plays as S&P 500 is testing yearly lows. 
  • Leading retail stocks received strong support this year. 
  • Analyst estimates for Walmart and Dollar Tree remain stable, making the stocks more attractive after the recent pullback. 

Some retail stocks continue to outperform the market. While S&P 500 is down by more than 15% year-to-date, Walmart and Dollar Tree gained ground in 2022 as traders viewed them as safe-haven plays.

Walmart

Analyst estimates for Walmart have been mostly stable in recent months. The company is expected to report earnings of $6.76 per share in the current fiscal year and $7.27 per share in the next year, so the stock is trading at roughly 20 forward P/E.

This is not cheap, but traders are ready to pay a premium for safety. Traders will soon have a chance to evaluate whether this premium is justified as Walmart will report its earnings on May 17.

Walmart is expected to report revenue of $138.8 billion and earnings of $1.47 per share. At this point, it looks that meeting this forecast would be sufficient enough to provide some support to the stock.

Dollar Tree

While analyst estimates for Walmart have stagnated in recent months, earnings estimates for Dollar Tree have moved a bit higher. The company is expected to report earnings of $8.00 per share in the current year and earnings of $8.97 per share in the next year, so the stock is trading at 18 forward P/E.

The recent earnings reports exceeded analyst estimates and provided significant support to Dollar Tree stock, which managed to gain strong upside momentum despite the weakness in the general market.

Dollar Tree has recently pulled back from highs, and this pullback could attract traders who are willing to increase their exposure to retail stocks.

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

Best Consumer Staples Stocks To Buy In May

Key Insights

  • S&P 500 is testing yearly lows, so traders are focused on finding safe-haven assets in the current market environment. 
  • Consumer staples stocks have enjoyed strong support this year. 
  • The stocks in this market segment are trading at reasonable valuation levels. 

S&P 500 remains under strong pressure and is testing the 4000 level, so traders continue to search for safe-haven assets that could protect them from the broad market sell-off. Consumer staples stocks have outperformed the market in 2022, and it looks that demand for such stocks would remain stable.

Walmart

Walmart has recently pulled back from its all-time highs levels, which is not surprising given the broader market performance.

Analysts expect that Walmart will report earnings of $6.77 per share in the current fiscal year and earnings of $7.27 per share in the next fiscal year, so the stock is trading at roughly 21 forward P/E.

This is not too cheap, but companies like Walmart have a good position in the inflationary environment. Not surprisingly, investors’ demand for the company’s shares remained strong in 2022, and Walmart stock is up by roughly 5% year-to-date despite general market correction.

Kellogg

Kellogg stock has recently gained strong upside momentum and moved to new highs after the company released its quarterly report.

Kellogg reported revenue of $3.67 billion and adjusted earnings of $1.10 per share, beating analyst estimates on both earnings and revenue. Traders focused on the company’s ability to deal with supply chain problems and inflationary pressures.

Analysts estimates moved higher after the release of the report. Currently, the company is expected to report earnings of $4.11 per share in the current year and $4.3 per share in the next year, so the stock is trading at 18 forward P/E. Such valuation levels look reasonable at a time when traders are ready to buy shares of consumer staples companies that can deal with inflationary pressures.

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

Best Retail Stocks To Buy Now

Key Insights

  • Investors are searching for safe-haven assets, and retail stocks may benefit from this trend. 
  • Some retail stocks, like Walmart and Dollar Tree, have already shown strong performance at the start of this year. 
  • Other retail stocks, like Home Depot, have suffered a pullback and returned to cheaper valuation levels. 

S&P 500 gained strong downside momentum in the recent trading sessions as the market reacted to hawkish comments from the Fed. Not surprisingly, investors are searching for safe-haven assets in the rising interest rate environment, and retail stocks have a good chance to benefit from this trend.

Walmart

Shares of Walmart had a strong start of this year and are up by about 10% year-to-date. Analyst estimates have improved in recent months, and the company is expected to report earnings of $6.76 per share in the current fiscal year.

In the next fiscal year, Walmart is projected to report earnings of $7.28 per share, so the stock is trading at 22 forward P/E. This is not cheap for a retailer, but investors are willing to pay a premium as the company has reported strong performance in recent quarters.

Dollar Tree

Dollar Tree developed strong upside momentum in 2022, but the stock is still valued at less than 19 forward P/E.

Shares of Dollar Tree have clearly benefited from the rush into potential safe-haven assets amid high inflation and rising yields, and they have a good chance to continue the current upside trend.

Home Depot

Unlike Walmart and Dollar Tree, shares of Home Depot had a challenging start of this year. Currently, Home Depot is down by more than 25% year-to-date.

Analyst estimates have moved a bit lower in recent months. The company is expected to report earnings of $16.1 per share in the current year and earnings of $17.31 per share in the next year, so the stock is trading at less than 18 forward P/E.

At such levels, the stock may attract more traders who are willing to initiate positions in this market segment.

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

Walmart Breaks Out to All-Time High

Dow component Walmart Inc. (WMT) broke out to an all-time high this week, clearing 19-month resistance at 152. SPDR S&P Retail ETF (XRT) is struggling near a 52-week low at the same time, highlighting a rotation out of smaller brick and mortar operations into the relative safety of the Arkansas-based megastore. Although questionable, new investors apparently believe that WMT can successfully navigate the gauntlet of soaring inflation and shrinking profit margins.

Soaring Labor Costs and Lower Margins

Costs are rising rapidly, just like its smaller competition, with employee wages surging to new highs. In fact, the company just announced that 12,000 drivers can earn up to $110,000 per year, adding to prior increases across the board. Fortunately, smart investments are bolstering profits at the same time, led by a 77% stake in India’s Flipkart, with valuation ahead of a 2023 initial public offering now standing in the lofty $60 to $70 billion range.

Walmart is increasing expenses by expanding into Atlanta and Toronto hubs, adding to labor costs with the hiring of 50,000 floor workers and 5,000 technology workers. These new hires come on top of 100,000 employees that were added to the global workforce in the prior fiscal year. The rapid expansion, at the same time that employee wages are skyrocketing, will require the company to rapidly translate expenses into profits to avoid disappointing market watchers.

Wall Street and Technical Outlook

Wall Street consensus stands at an ‘Overweight’ rating based upon 21 ‘Buy’, 7’ Overweight’, and 9 ‘Hold’ recommendations. No analysts are recommending that shareholders close positions and move to the sidelines. Price targets currently range from a low of $136 to a Street-high $190 while the stock is set to open Friday’s session about $9 below the median $165 target. This modest placement bodes well for continued upside into the mid-range number.

Walmart broke out in April 2020, carving a series of new highs into the September peak at 151.33. Three breakout attempts into November 2021 failed, carving a sideways pattern that crisscrossed the 200-day moving average multiple times. Aggressive buyers emerged after February 2022’s 11-month low, yielding a vertical impulse that surged above resistance this week. However, the rapid ascent has set off a major bearish divergence because accumulation has barely budged during the rally, predicting severe testing at new support.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held no positions in aforementioned securities at the time of publication.