Firm Close On Wall Street Ahead of Amazon & Google Earnings

Okay, very good morning to you, Tuesday, 2nd of February. Hope you're doing well. Gonna have a quick look around the markets this morning, recap some of the major news, and also some thoughts for the session ahead. So let's get straight to it and look at the charts. Overall market sentiment this morning still relatively positive, just given the firmer close we had on Wall Street. Uh, the US close saw the S&P finish up around 1.6%, uh, the Dow up 0.76%, the Nasdaq the big outperformer up 2.5%. Uh, tech was the leader, um, 9 of the 11 S&P sectors advanced yesterday. Uh, the likes of Amazon up 4.3%, Google up around 3.6% at the close. Of course, this is coming ahead of their corporate earnings, which we're going to get after the closing bell today. So having a look at where we are this morning, the equity index futures holding on to yesterday's gains and a little higher in the overnight Asia-Pacific session. Currency markets a little bit more quiet. The DXY is broadly flat at the moment. That's reflected in the major currency pairs, but importantly, the dollar holding on to some of the gains that it saw yesterday. Otherwise, elsewhere, we're going to have a look at silver in a moment. Some interesting things to be aware of there, just given all the attention it was drawing from the weekend for those reasons we all know about. And then the US 10-year is pretty flat as well at the moment. So all in all, it's relatively quiet, I'd say, for news perspective. Definitely get up to speed on, as I said, silver. There's been an RBA decision which has weakened the local currency there overnight, an update on stimulus, and a quick look at some of these earnings coming up. But we'll try and incorporate some of the charts into this. One of the first things I wanted to look at was really equities and oil. These rectangles were markups from a conversation that we were having, Sam and I, with some of the, the guys on our training program yesterday. And after we hit that initial low point that we had at the reopening of trade for the week on Sunday night, markets have just continued to rebound, and quite aggressively so. And as that kind of almost intensity of coverage around those that small group of, of heavily shorted stocks, uh, that as that kind of focus tends to fade, I think we just return back to the broader normality and narrative that is that that is a very concentrated move and it doesn't really have consequence for the rest of the broader market, which is still at the moment, if we're looking at all things on balance, um, you know, one of the most amazing things at the end of last week was that we've had further vaccine developments, whether it's J&J or Novavax. And obviously this comes with the EU kind of rolling back and doing a bit of a U-turn on their kind of more protectionist stance that they had just a week ago. And so still the focus, COVID vaccines, you know, this type of information is still the more dominant force overall. And, you know, Biden and Republicans were meeting yesterday. The talks were all very cordial is what's being reported. And these would all be kind of positive factors in that regard. So we had marked up basically technically areas where we would look at as good technical areas on the retracement and move back up. And these were drawn when the price was much lower. So you can see how technically these have played out quite well. A test and a break, a test back to the prior high that we had during what would have been Friday afternoon session. Retest the Asia break, and then to where we are just consolidating a little bit at the moment in the S&P, but in, in positive territory. So whether it happens today or not, you know, do we continue to drift up north of, back to 3,800 and above, and then retest where we were? I guess this would have been Thursday's recovery from the Wednesday sell-off we had on the initial GameStop squeeze and the platform outages and the apparent liquidation of some of the hedge fund positions. Uh, that 38.23, I think it's just a matter of time now before we move back up there. And then, you know, above there, back to the top end of the range, which would be, um, to where we were before the onslaught of that squeeze was happening. Uh, and that would put us back to 38.59. And obviously back on the daily, then that puts us back up to the all-time highs again. With oil, that's also followed suit, and we've continued to move higher. The JMMC meeting has as per expectations yesterday, not yielding any real surprises. But you can see here with the equity move, and this would, this would be in step then with the overall global kind of narrative being a little bit more positive at the moment. And on the daily continuation chart, so it's an interesting level that we've reached now in oil where we trade at the moment. This being, we are trading up 60 cents at $54.15 at the moment on the daily continuation chart. Up at around $54.50 starts to bring in this area here, which was the high basically pre-pandemic. So this was the 20th of Feb of last year. Obviously we did have a pull-off down here during the situation that was unfolding in China, but until it started to really move over until spill out into Korea, Iran, Northern Italy, and so on, and then the full pandemic took hold, these were around the price points that we were trading. So An interesting area of technical resistance now as we trade higher in crude oil this morning. API is obviously coming out later tonight, followed by the DOE's then in tomorrow's session. All right, let's, let's have a quick look at silver, and I'm going to bring the chart up. We're going to look on a few different time frames. So this encapsulates that on a 30-minute, the price activity from yesterday. We obviously had the sharp gap up, the brief rally at the market open, and then the push-up in, in two phases here. So you had the overnight people who were engaged in markets at the reopening of COMEX trade. Then you had the European entrance when there was kind of again a lot of media intensity around this kind of shift into the, um, into silver. And then After rising around 12%, we actually finished the day up just 8%. And I'd definitely be interested to just keep an eye on silver, um, as we go forward throughout the session. Definitely technically, um, this, this gap-up low that we've retested yesterday afternoon and in the overnight session definitely will be a key level which, if broke, um, markets could trade quite heavy and probably be looking then beyond the S1 for a move down toward the initial high that we saw close out the end of last week, which is more around $27.77. From a, from a technical point of view, you know, yesterday was, was quite important because we momentarily broke above $30. Looking at the silver futures on the daily chart here, and that did put us up at the high and breach of the high we had in the summer of last year when we had that phenomenal push up in precious metals, um, when gold was also north of $2,000. Uh, but that failed to sustain. You can see here a strong pullback from that level. And, you know, on the weekly chart, perhaps even more evident here, uh, on that break, being that that would have been a multi-year high very briefly, but we didn't get up close to that 50% fib, which was seen higher up at 3078, which was that 2011 high to the 2020 low. So, you know, a failure to sustain the move above there, I would see, is quite bearish in the short term. And definitely today, obviously, to keep an eye on the bottom end of this range. If it breaks lower, could trade a little heavy as some of that initial kind of bid into silver just unwinds a touch. Now, some of the rationale behind that is the fact that the CME have actually raised margins on COMEX silver futures by 18% last night. And this is, you know, this is one of the things that I did find a little bit unusual, that people had such a fanfare about this when Robinhood and other brokers, you know, the coordinated fashion of the turning off of those stocks is perhaps deemed as a little suspect. But the idea then that margin requirements are going to move much higher when there's extreme and excessive volatility is very normal practice. In the commodity markets, you know, this is— this happens fairly frequently if you're looking at surges in gold and silver and other, other metals. And so the fact that they've done that does tend to temper price rises for obvious reasons. Just the cost of trading it is much more expensive, in this case 18%. So, and that does tend to then take the wind out of the sails of any sharp appreciation of price. So that did happen last night. And, you know, also as well, in a similar fashion, a lot of those focused short squeeze stocks, majority of them did fall yesterday. But that's a side point. Elsewhere, other things that have happened, probably worth having a look at the Aussie dollar on a chart. And the Aussie this morning has weakened during the overnight Asia-Pacific session. So really just going to put a rectangle on this price activity here. This is the RBA reaction. Now, why has that reaction taken place and the Aussie weakened? Well, you've had the RBA extend its QE program by a further 100 billion Aussie dollars and beyond mid-April. It doesn't expect to increase interest rates until 2024, and they left their 3-year yield target unchanged at 0.1%. So yeah, more on the dovish surprise side of things. And definitely just keeping on the Aussie here with the general firmer tone in the last 24 hours of the dollar. If we can break below what was yesterday's kind of area of support, then on the downside you've got the low that was seen at the reopening of trade on Sunday night, and then a target down at the low that was seen last Thursday, which would be then beyond the S1 in the Aussie futures. So Aussie a little, little weaker this morning. Otherwise, back to the news. On the stimulus front, um, the new President Biden did meet with that 10 mostly moderate Republican lawmakers yesterday, led by Susan Collins, the senator from Maine. They had a 2-hour discussion. Um, the— well, the, the bottom line here is that nothing, as you would expect, has materialized as yet. It's probably way too early for that at the moment, and hence the The headline now begins the horse trading in order to close the gap between Biden's $1.9 trillion and their initial table, just over $600 billion. And obviously that's a very wide, significant gap at the moment. The thing I think markets are appreciating at this point in time is the fact that discussions are said to have been, quote, very productive and the general atmosphere, as I said, being relatively cordial that the two are talking. So I think the market's coming off what was such, um, a contrasting approach under the previous administration. The market's taking heed from the fact that yes, the goalposts are wide apart, but if they are talking in good spirit, then the timeline to get to that point of compromise hopefully is going to be sooner rather than later, given the necessity for further stimulus to come. So at the moment Um, the lack of delivery of a deal, I think, is not really a market consideration, and I don't think will be this week or perhaps next week. Um, that will only come an issue, I think, if this becomes protracted and if these talks— the sentiment starts to sour. At the moment though, it's apparently quite productive, and I think that in itself is actually a fairly positive thing. But that's pretty much it from a news perspective, so I'm going to jump over and have a look at the calendar Um, for this morning you've got the eurozone GDP flash numbers for Q4. Um, obviously Q4 has been hit by ongoing lockdowns, fairly stringent lockdowns being, being implemented across various areas in the eurozone, particularly likes of Germany, Netherlands, and so on. So we are anticipating a quarter-on-quarter contraction of 1.2% from the previous obviously snap up that we had of 12.5% in the prior quarter. Otherwise, if we go into the afternoon, it's fairly quiet. There's nothing too major coming out of the States from a data perspective. You've got the ISM New York Index, you've got the weekly API inventories after market close. And in terms of Fed speakers, there's only one voter, Williams, at 7 PM London, then Kaplan and Mester, non-voters, speaking post-6 PM London time. From an earnings perspective, definitely some interest today pre-market: Alibaba, Pfizer, UPS, Exxon, BP's US listing. And then you've got after close the big guns, so Amazon and Google. And just to give you a bit of an overview on what people are looking at with those two, because they will obviously be very meaningful for the Nasdaq future: Amazon, a huge beneficiary of the pandemic-driven acceleration for their business, both online shopping and the shift to cloud computing, of course, with infrastructure and, and so on, from working from home. Projected revenues for Amazon are seen in the $112 to $121 billion range, which would be up 28 to 29% from a year earlier. Wall Street consensus is for $4.4 billion operating income, $7.19 in terms of their per-share earnings. Looking out for expectations This is something that people have, have looked at with quite a lot of emphasis with Amazon's earnings during the pandemic period, is the costs, COVID-related costs, particularly to keep just this phenomenal demand for their products in warehouses and so on ongoing. So that the PPE, taking care of their employees and so on, has come at an expense, but obviously one probably worth taking for them in order to capture this particular period of time as best possible. The other things there are how the holiday season went for the e-commerce giant. Obviously you're going to see how that Christmas period reflected on the bottom line. And there'll also be scrutiny on how growth at AWS looks. And this is compared to the 50% growth rate we saw from the Microsoft cloud competitor Azure just a few days ago. So once again, that cloud computing division particularly important for a number of these big tech firms. So that's very similar as well for Google. Analysts broadly looking for Alphabet to continue growth in revenue, specifically advertising revenue in the quarter, given the ongoing pandemic environment and the push for online businesses and so on. But their cloud business expected to be a strong engine in Q4. And actually, my understanding is it's the first time they're actually going to disclose specific detail around their cloud business operating profit, and that will be closely looked at as well. That will likely determine a large bulk of their, their initial price reaction after market. Um, so more of the, the detail on that though, uh, all of the earnings, the live stream, we'll cover everything on the Amplify Live Discord room. So remember to check that out. Okay, that's it guys, I'll let you get on. Have a good day and I'll see you tomorrow.