AMC Skyrockets While Market Awaits US Data

Very good morning. It is Thursday the 3rd of June. Hope you're doing well, and great for those who joined us last night for the latest masterclass. And if you're not aware of what that is, it's basically when I get people from industry from a variety of different positions and they come in and speak to the community about their area of specialism, a bit about their background, the way they look at markets. So do feel free to check that out at amplifierlive.com. Otherwise, Otherwise, in terms of the briefing this morning, certainly we can have a look at the meme stocks, a couple of the cryptocurrencies, all of which have been moving with some degree of uniformity yesterday as we saw the likes of AMC seeing some ridiculous gains. So have a quick review of that and then we'll look at the broader asset classes which we're looking at here, of which an overall sentiment perspective, relatively quiet here at the open. Stock index futures and T-notes pretty flat, but starting to see a little bit of an uptick in the dollar. So quite large fluctuations in fact in the greenback yesterday, initially surging out of the gate and then reversing course throughout the European afternoon to finish pretty much square. And so some reflective, quite seesaw price activity in EURUSD and cable from yesterday, as you can see by that kind of V-shape here in the top left charts. However, as Europe has come in this morning, the dollar's just picked up a little bit of pace, trading up just shy of 0.2% in the Dixie, just weighing a touch on the precious metal space. Gold and silver looking a little more heavy this morning. Otherwise, WTI crude is the other key one. It continues to hold on to some of its relative gains, up about 45 cents, and we'll have a look at those charts again in a moment. So let's Let's just delve straight into the close on Wall Street last night and a fairly, fairly benign close. In fact, we only finished up roughly around 0.1 to 0.2% across the major 3 US indices and relatively quiet in follow-through in the Asia-Pacific session overnight. But one of the companies— and just have a look at some of the single stock stuff to start with on the heat map yesterday. It was quite interesting because kind of more cyclical-based, um, areas were outperforming. So energy, real estate, financials all outperformed. Um, Tesla was a quite a key underperformer. So let's start there and then we'll talk about some of these other meaningful individual single stock movers. And the reason why I was just looking at Tesla is finding a bit of support around a fairly significant key technical area of support. You can see this kind of these two lines here around $600 a share providing a bit of a floor to price yesterday. That's been a meaningful area, kind of an inflection point for the stock price to react to on prior occasions. So be interested to see how they perform. They did finish down, they underperformed the market. As I said, the, the broader indices finished up marginally. Tesla was actually down about 3% yesterday. Um, their reports from Credit Suisse about the company's market share declining and also a report coming out of the Wall Street Journal talking about Elon Musk was warned twice about his tweeting activity last year by the authorities. And so the market share thing, I wouldn't put too much weight in. Most analysts are of the belief that, you know, given the current period of the reopening that we're in, looking at market share volatility and fluctuation month to month is probably more erratic now given the situation that we're confronting at the moment in time. But nonetheless, quite a key technical area here on Tesla that might be worth keeping an eye on going forward. Otherwise, yeah, let's just flip over to the meme stocks. Eddie and I did a, did a good, uh, or had a good conversation yesterday, which you can access on the Amplify Trading YouTube channel if you just look for the ANC pump explained, and you'll be able to get a bit more rationale behind it. But without going too much in the details, This is looking at the, the kind of meme stocks. So AMC, the black line, which is a spectacular outperformer, and then GameStop, Bed Bath Beyond, and some of the other names as well. Um, but, um, at one point yesterday, GameStop shares were up 127%. Um, they closed up 92%. Total gains for the year now at 3,000% at one point. And that does mean then— I thought this was quite a somewhat ridiculous chart to put it in a bit of context in terms of what that means for the market cap of AMC. It's roughly about the same size as Delta Airlines or Tyson Foods, if you're aware of those companies in the US, which puts it pretty much as a median market cap of your average S&P 500 company. So it's gone from basically here a medium market cap of a Russell stock prior to 2021 to then now cutting the mustard in the main S&P 500. But of course I say this in jest because this is not going to last at this point. So yeah, pretty crazy. Actually, there was one interesting index that I thought I wasn't aware of, and I'm not sure if you could openly track this, but I was looking at something called the Index that Goldman Sachs runs that basically tracks changes in the shares of companies most frequently mentioned on the kind of Reddit WallStreetBets page. And their index was up more than 25% yesterday, and it's up 60% over the course of the past 2 weeks. But I guess really, I mean, that's kind of main Wall Street trying to kind of conceptualize what's going on on Reddit. I mean, you could just read Reddit. I mean, Uh, I don't think you really need too much percentage index-derived figures to then ascertain how much it's getting mentioned at that point in time. But nonetheless, I thought it was quite interesting. Um, otherwise, in terms of overnight in Asia, um, a few things to be aware of. One was the Chinese Caixin Services PMI did slow down a touch, but still firm expansion territory, 55.1 against 56.2. Not looking for any reaction this morning though to seep into European markets. Didn't really even impact the domestic scene overnight. And then US President Biden is to amend former President Trump's blacklist to target key industries and is likely to sign an order this week that intends to crack down on investment in Chinese defense and surveillance technology sectors, according to sources. That was a report released overnight. So again, I don't expect that to have too much of an impact at the open here, if anything at all. But one of the things that it does show is that, as we've been discussing of late, the Biden administration's stance on China is going to remain pretty firm at this point. And as we've said, uh, Piers and I, and I think last week's podcast, there's definitely agenda priorities here for Biden, of which our feelings are that it's going to be much more domestic focused as we go into the kind of midterms in a year's time, and how it's going to be more about getting the US back on its feet, people back employed. And so that means that China's kind of kept at arm's length. And the risk, I guess, the tail risk for markets is a mismanagement of that kind of keeping that dialogue open, but also keeping the pressure on, because obviously this is a political point as well that he'll want to bring back home in terms of the stance against China. So it's a fairly delicate situation. But what's happening right now and further kind of blacklisting, if you like, of defense and surveillance technology sectors in China is kind of, I guess, just continuation of the general approach that's been happening. So I don't find it too unnerving at this point, and it does run alongside ongoing dialogue. So yeah, not too much to look at right now, but again, something to be, to be mindful of. The other thing that came out last night, and it's something which I'd wanted to cover because some of you might not even be aware of this stuff, but, you know, outside of normal monetary policy tools, if you like, whether they be traditional like rates, unconventional like QE. I know QE gets all the talking kind of spotlight, if you like, because of the fact that we're getting close to the discussion about tapering and so on. And that's the sequencing of policy kind of normalization. But there were a whole batch of liquidity mechanisms that were put into place to avoid then any or to allow the system to function through that difficult period of adjustment when we went through the initial pandemic phase. And one of the things that came out last night was that— is this article here. It's basically saying the Fed will begin to unwind the corporate bond holdings that it acquired last year through an emergency lending facility launched to calm the credit markets at the height of the pandemic. The Fed said the sale of the holdings in the secondary market corporate credit facility So this is— remember, there's all these acronyms. I think there was 11 or 14 in total of different liquidity-inducing kind of programs. But the SMCCF, which includes corporate bonds purchased in the secondary market and exchange-traded funds that invest in corporate bonds, would be gradually and orderly in terms of, again, the sale of those holdings. The question here then, well, how much have they got to sell? And actually, it's very small. The point being is that this facility was hardly used. If you remember many months ago, I had a graphic of all these facilities and it was kind of like, this is how much they've been willing to do and this is how much is actually being used. And it was a fractional amount. You know, this is one thing that definitely I recognize going back to, um, the European sovereign crisis. If you remember those who were trading then, It was that fateful day when Super Mario came out and basically said, we will do whatever it takes. And mark my words, you know, he means that. That's what he kind of said at the time. And I remember there was liquidity-related mechanisms that were put in place then, which were never actually used. So it was his words with putting forward these programs was trying to then instill confidence, credibility, that in fact the central bank would follow through with that commitment to do whatever it takes. It's kind of the same with the Fed. It's this over, you know, kind of delivery of, of all of these, these measures that will be taken to safeguard the system. So then the market actually never even needs to use them. Confidence is already reinstilled and the market starts to recover and That was largely the same case with a lot of these liquidity programs, given the, the how quickly the pandemic kind of struck the market, and it could have been a tangible risk, of course, to liquidity. So in actual amounts, the facility had $13.8 billion of loans outstanding, $8.6 billion of corporate bond ETF holdings, and about $5.2 billion of corporate bonds that need to be kind of unwound. The Fed intends to sell the full portfolio by the end of the year. So to me that's of no real impact on the market. I mean, that's an incredibly small readjustment at that point. Um, it will start selling its ETF soon and begin offloading its corporate bond holdings later in the summer. But again, as I said, in summary, I don't really see this having much of an impact. But again, it does mark the first road to the Fed gearing itself up to the readjustment of, of some degree of normality and, and stepping off some of these programs, of which is to be expected, I would say. This isn't anywhere near as big as the idea about tapering and those types of more directly active things that people are looking at in the market. Um, the other thing then is the oil inventories last night, and we did have a fairly sizable drawdown actually. So, you know, just more ammunition on the headline for the bulls at the moment as we continue the, the path towards $70 in front-month crude futures. Um, Cushing though was a build, as was gasoline at 2.5 million. But look, let's have a look at the oil chart. And you know, this is a picture from, from really last week to where we're at at the moment. We've continued this move higher. I did also read this morning that as far as Iran, talks have been adjourned until the 10th So about another 7 days' time. Much of the commentary coming out of both sides of the negotiating table is still that there's a lot of work to be done. So as we've been emphasizing before, I wouldn't be expecting any deal to be brokered anytime soon, and consequently then the return of supply not happening as quickly as perhaps people were thinking a few weeks ago when oil was, was moving a little lower at the time. So that's kind of positive. Further reopening, positive data, and that comes out, it's going to be more positive on the demand side, keeping on that ongoing vaccine situation as well. And also with some of that emerging market risk, particularly India. You'll recognize it's really not in the headlines a great deal after it was really dominating things 2 weeks ago. Such is the media's intention to report only bad news. The point being that cases have been declining, so it's no longer something that editors want to run. But that's a positive sign, you know, that they're kind of over the hump in that respect, albeit there's some regions, uh, Singapore, Malaysia, these other areas that still need monitoring at this point in time. But things still remaining pretty bullish for, for oil. We obviously had the OPEC meeting as well earlier this week, and they kind of just stuck to their guns. And, you know, we've been looking at this for a, for a while. We still see kind of $70 as the next obvious target, and seemingly we're on that, on that, on our way at this point in time, right around 75 cents short of that psychological kind of marker. Once we get to $70, given the fact that we have risen— if you're looking here on a daily chart— fairly consistently through the breakthrough of that previous year-to-date high to trade at this highest level since 2018, I wouldn't be surprised to see a bit of a hiatus, profit taking, and therefore pullback and some consolidation after hitting that target. Um, not unless we got something new, um, in terms of the news sphere coming out to really move things in either direction. While we're here, before we look at the calendar, quick look across these charts then. As I said, bit of a dollar pickup as European players have come back in. Nothing really too much of a great deal of interest I'm looking at here in the euro for the time being. On this decline, we've had a bit of a, a top eeked out late in the US session and during Asia-Pacific hours. We're back below pivot and the 122 handle this morning. If we move any lower, perhaps that kind of previous area here comes into play, which would be 121.88. And then below there, that, that lower kind of rectangle I've got marked up, which would be the low from where we had the 19th retest, 21st, did break through it momentarily on 28th last Friday. And then we bounced off there in yesterday's session. So, um, euro, again, the levels I'll be looking at for cable. Yeah, I did see a couple of big banks come out and try to explain the sell-off in cable that we've had materialize over the previous 48 hours. Um, and, and I don't want to get into that game of trying to curve fit then a narrative to the sell-off because ultimately the dollar's kind of flipped flopped, and I don't think there is any real fundamental change of catalyst to create that movement. It's just happening, and I think you've just got to trade what you see in, in that respect. But I think here, a couple of things that were, were interesting on the reversal, on the pickup that we saw as the dollar faded those gains yesterday afternoon. Nice kind of technical response to the 50% fib from that relative high to low from earlier this week. With also the daily pivot level on the futures, and that acted as a nice cap for price. And now we've started to drift back down lower. Um, we've just broken back below pivot this morning, so technically quite interesting. That was an area that was holding, uh, on the retest after we broke high yesterday afternoon, was a previous area of support as well on some prior occasions. Um, so obviously to keep, to keep an eye on, probably take that off. And so therefore, on the downside not a great deal of support here till we get back down to yesterday's low. Um, overall, again, fundamentally, I don't really see a lot going on here in terms of sterling in the UK perspective, either from COVID lockdown or the Bank of England. So I'd be looking at relative kind of ranges here. Um, so perhaps not that much interest until we get a bit lower down, uh, for me personally. Um, otherwise, uh, bit of dollar pickup has just weighed a little bit on the precious metals, as I said earlier at the beginning of the briefing. And that has just led to initial test on that low point. That was quite a key area for gold. I was just talking about that very early before I started the briefing in the community. And this was that level around $1903. It's been quite key for near-term price action. You can see we tapped on it a few times yesterday for the eventual break higher. Came back, tested it, tested it again this morning, and the breakdown— you can see markets traded heavy straight down to the S1 of the $1,900 handle here. Next level on the downside, uh, be keeping an eye beyond that point of the handle at $1,896.7, which would be the lower bound of the price activity that we're seeing intraday yesterday. Um, silver likewise below pivot, following suit in just a declining at the moment. I mean, some of these recent moves, equity indices, not really going to comment on, not a great deal of interest going on there. So let's move straight on to the calendar and look to wrap things up. So calendar-wise, um, we've already got all the overnight stuff. So then the service PMI numbers coming out later on this morning from Europe and the UK. These are final readings, so not anticipating much in the way of a market reaction to that. Um, very much a US-centric session. One thing yesterday was, despite some of the FX fluctuations, yesterday was very quiet because the calendar really had no major things going on. Today's a little bit different. It's definitely a US focus. We've got really 3 major readings coming out: ADP National Employment, which will act, no doubt, as still, despite its inability to really accurately predict the jobs report, we saw last month, people will still look to it for guidance for how we might perform on the jobs data tomorrow. That's expected at 6:50 from previous 7:42. So that's at 1:15, followed 15 minutes after by initial jobless claims, which is expected to show further improvements to 390,000 from 406,000. So that positive trend continuing. Uh, and then we get the ISM Services PMI, which last time showed actually very strong employment institutement. The pace of job creation quickened to the highest, um, level since September of 2018 in the service figure last month. We are expecting a continuation of a fairly solid number at 63. Here's what the data kind of looks like for the ISM Non-Manufacturing PMI. So 63 puts us up here, and this is very reflective— this is kind of March April and obviously May, we'll see today of this period of— because of the speed of vaccinations in the US allowing further reopenings. And that should definitely feed through, one would imagine, into the service sector, uh, kind of figure. Other than that, you get the oil inventories, remember, slightly later time of 4 PM instead of regular 3:30. And this is always the case when it's delayed a day due to the Memorial Day holidays in the US on Monday. Speaker-wise, Fed's Bostic, the only voting member, speaking at 5:30, and then Kaplan-Harker, non-voter, speaking later on. In fact, you do have, uh, Quarles speaking as well at 8 PM this evening. Bank of England's Bailey speaks at an IMF event on the financial sector. We've kind of heard from Bailey a lot in recent weeks, so I'm not expecting too much there, to be quite honest, but it's 5 PM. and then supply out of Spain, France, and a 3, 10-year note, 30-year bond auction announcement coming out in terms of the sizes from the US Treasury at 4 PM. So that is it, that should wrap. Um, again, feel free to contact me either, um, in the Discord room. Obviously you're getting this early, uh, it's going out just after 7 AM. If you're watching this delayed on YouTube, Feel free to leave a comment. Remember to like and subscribe on the channel. And, and don't forget, you can access this particular briefing early for free at AmplifyLive.com. All right, with that, have a good day, guys. See you tomorrow.