Wednesday Market Recap

Asset	Current Value	Daily Change
S&P 500	2,355	0.53{88c91daedd271a990a10650c05d769cae2765e0603edf30ca95f18704e5748e8}
DAX	12,017	0.63{88c91daedd271a990a10650c05d769cae2765e0603edf30ca95f18704e5748e8}
WTI Crude Oil	47.77	-0.56{88c91daedd271a990a10650c05d769cae2765e0603edf30ca95f18704e5748e8}
GOLD	1,249	-0.05{88c91daedd271a990a10650c05d769cae2765e0603edf30ca95f18704e5748e8}
Bitcoin	1,045	-4.71{88c91daedd271a990a10650c05d769cae2765e0603edf30ca95f18704e5748e8}
EUR/USD	1.0787	-0.08{88c91daedd271a990a10650c05d769cae2765e0603edf30ca95f18704e5748e8}

 

The major stock markets continued to trade nervously following the biggest drop in the S&P 500 in the last six months on Tuesday. Stocks ended slightly higher after a negative start, but they remain well below the levels seen in the beginning of the week. Safe-haven assets were bought all day long, with Gold, the Japanese Yen, and the Swiss Franc all pushing higher. Traders haven’t been used to these kinds of moves lately, but the long-term trends are still positive concerning the major markets.

Political tensions regarding Donald Trump’s health-care reform were in the spotlight, although technical factors dominated trading after the surprisingly large decline of the previous day. The tragic London terror attack only caused a minor dip in the afternoon, as the major indices continued to drift higher. This morning’s price action was choppy, as most traders took a step back before the key US health-care vote.

Oil continues to be the weakest major asset, following the key technical breakdown last week. Crude oil inventories jumped unexpectedly by 5.0 million barrels last week, but oil ended the day on a positive note despite the bad news. The US Dollar continues to suffer; ever since last week’s interest rate hike on the Federal Reserve’s meeting. Cryptocurrencies are volatile once again, led by Bitcoin that remains in a short-term correction after breaching 1200 for the second time last week.

Technical Picture

S&P 500 Index, Hourly Chart

The S&P 500 broke a major trend line on the hourly chart on Tuesday, so traders should be cautious with long positions until the current falling trend is intact. The main technical indicators show some oversold signs today, and that could lead to a correction in most assets on the last two sessions of the week. That said, the dominant short-term trends remain clear — negative on Oil, Stocks, US Dollar, while positive Gold, Yen, Euro, Swiss Franc. Day- and swing-traders could take profits on their existing positions and wait for the correction to put their chips back on the table.

Key Economic Releases on Wednesday

Time, CET	Country	Release	Actual	Expected	Previous
10:30	US	Existing Home Sales	5.48 million	5.59 million	5.69 million
14:30	US	Crude Oil Inventories	5.0 million	1.9 million	-0.2 million

 

Key Economic Releases on Thursday

Time, CET	Country	Release	Actual	Expected	Previous
10:30	UK	Retail Sales (monthly)	1.40{88c91daedd271a990a10650c05d769cae2765e0603edf30ca95f18704e5748e8}	0.40{88c91daedd271a990a10650c05d769cae2765e0603edf30ca95f18704e5748e8}	-0.30{88c91daedd271a990a10650c05d769cae2765e0603edf30ca95f18704e5748e8}
14:30	US	Initial Jobless Claims (weekly)	258,000	240,000	241,000
14:45	US	Fed Chair Janet Yellen Speaks		–	–
15:00	US	New Home Sales	592,000	566,000	555,000

  

The Federal Reserve was in the focus once again today, but Fed Chair failed to shed more light on the future of the central bank’s interest rate, especially the timing of the next hike in her speech. As of now, the market expects a move by the FED in June or September. Any major change in the tone of the bank is likely to affect the Dollar and all asset classes.

The British retail sales report helped a bullish move in the Pound and on the European exchanges, while the weekly initial jobless claims number and new home didn’t shake the markets.

Key Economic Releases on Friday

Time, CET	Country	Release	Expected	Previous
9:30	EUROZONE	Manufacturing PMI	55.3	55.4
9:30	EUROZONE	Services PMI	55.4	55.5
13:30	CANADA	CPI (monthly)	0.20{88c91daedd271a990a10650c05d769cae2765e0603edf30ca95f18704e5748e8}	0.90{88c91daedd271a990a10650c05d769cae2765e0603edf30ca95f18704e5748e8}
13:30	US	Core Durable Orders (monthly)	0.50{88c91daedd271a990a10650c05d769cae2765e0603edf30ca95f18704e5748e8}	0{88c91daedd271a990a10650c05d769cae2765e0603edf30ca95f18704e5748e8}

Investment Recommendations

Bitcoin: Long-Term buy

Bitcoin, Daily Chart

The long-term picture is still clearly positive for the most popular cryptocurrency, despite the recent volatile correction. The major trend channel is still in play, with multiple strong support levels at 945, 925, and 880. The MACD momentum indicator is reaching oversold territory, although it remains on a sell signal as the blue (quick) line is still below the red (slow) line.

As Bitcoin is highly volatile, a spike to 880 is still in the cards, but more aggressive traders could already be looking for buying opportunities. A more conservative approach would be to wait until the short-term trend reverses, and the MACD gives a buy signal.

Oil: Short-Term Sell

WTI Crude Oil, 4-Hourly Chart

WTI Crude oil remains under pressure following last week’s key technical breakdown, as fundamental weakness finally translated to negative price action. The recovering US production numbers and the conflicting news regarding the OPEC’s output all are weighing heavily on the commodity.

The technical chart shows multiple crucial resistance levels above the current price at 49.50 and near 50.75, which could serve as stop-loss levels for a short-term trade. The MACD is close to a neutral stance after the 3-day consolidation.

Featured image from Shutterstock.