Stocks Rally As Tech Leads The Way

Okay, very good morning. It's Tuesday, 21st of July. Hope you're doing well. Before I begin, do not forget to like and subscribe to our YouTube channel for the latest market news every morning from myself, the head of market analysis here at Amplify Trading. But let's have a look at what's driving markets, and I was going to start with this heat map, uh, reflective of the close on Wall Street last night. And you can see the tech giants once again were on fire. So Amazon was up nearly 8%, gonna talk about that a little bit. Tech stocks, the NASDAQ future back above 11,000 once again, closing in on all-time highs this morning. We've also had some positive drug developments, uh, coming from a variety of different companies yesterday. IBM shares up around 5% after market last night after very positive earnings. And we've got COVID cases, the highest or the slowest increase that we've had in numbers nationally in confirmed cases in around 2 weeks. So quite a lot of positive news flow, uh, doing the rounds last night, and that has translated into the overnight Asia-Pacific session and into the European Open this morning. So before I start going into some of these stories in more detail, let's just have a look at these charts. And as you can see in the center, going left to right DAX, NASDAQ, and S&P futures, everything on the rise this morning since Europe has come into the market. And let's have a look at the S&P to start with. I'm going to put this on a daily continuation so we can see the overall story that has been the price activity really since the beginning of the year. So encapsulating this pandemic bounce, and this was the area which we were talking about in yesterday's briefing, some degree of resistance around those early June highs, which would have corresponded with some relevant technical, um, respect from both support and resistance points of view going back into late 2019 and the early pre-pandemic phase of 2020. And you can see now we're accelerating above and beyond that point. So it does start to become quite interesting. We were saying this in the Monday briefing, that that really does open up now a potential push-up to the target psychologically of that 3,300 mark, and we're trading around just under 40 points away from there at the moment this morning as we've continued to remain elevated, um, continuation of the US move in the NASDAQ and the tech stocks. Just wanted to have a quick look at the NASDAQ 100 here. This was that previous all-time high that we printed back on the, the 13th, and you can see we're right up retesting it pretty much technically perfect this morning. So you can see as Europe have come in quite enthused by what they saw last night on Wall Street, they've pushed it up and they're just booking some short-term profits on that fast money move, kind of speculative nature of that. Nothing actually new fundamentally has come out, it's more of a continuation play. So people are looking to book profits at that prior high that we had on a daily continuation. Perhaps it makes a little bit more sense Looking at the bigger picture of the NASDAQ, and obviously it's a little bit more pronounced than the S&P chart, just seeing this fantastic rally that we've, we've been under play or underway since the 23rd of March. And we've just now retesting the top end of that trend channel, which was the rejection that we initially had on that day when Tesla shares were pretty much parabolic and we had the California reversal of the closure. That was that big red the extension on the wick and the reverse on the red candle. But then here we are right back up above 11,000 and retesting that key area once again in the NASDAQ. So for the DAX, as you can imagine, it's basically following suit in a similar type of fashion. But the DAX, quite a mirror setup to that of the S&P, and that meaning then that we've broken above quite a key area of resistance. If anything, it's slightly more pronounced in the, the DAX having consolidated and pushed really on beyond that point now that was restricting. It was a key area, you can see here, of support that we had throughout really Q4 of 2019 and Q1 of 2020 before the pan— the epidemic turned into a pandemic through that March period. So now in the DAX, you know, this— the next levels on the upside, uh, probably beyond this point. I mean, you've still got You've got to go a little bit further, further north really to see that. Got a bit of a gap in price action would take us up to around the 13,421 on the upside. And as things remain at this point, I can't really see too much in a way stopping that developing. Now we've technically got a bit of clean air to the upside. The currency markets then, we continue to see that, that general read across where risk appetite equates to generally dollar weakness. So if you're looking at the DXY, it is down about 1/10 this morning. So moderate support for major pairs, but cable the real outperformer on the charts yesterday. Nothing really spectacular from a sterling point of view, I'd say. More so obviously the euro, a little bit choppy yesterday, but generally some underlying support, and we've broke some key longer-term levels we'll look at in a moment. More recently, after we've had confirmation of that Eurozone Recovery Fund being concluded, now, um, that does have positive, um, repercussions, I think, for the UK. Even though there's obviously things like Brexit going on, which is still an uncertainty, at the end of the day, the two are key trading partners geographically. And if Europe can put into place a significant recovery fund that's going to help support the economic recovery, well then that does actually benefit in a way indirectly the UK, because if they're going to perform positively economically, it should start to reverberate around the region, of which for the time being the UK is still being a part of Europe. And so here then, if you look at the 240 on, on cable, uh, similarly we're breaking some key upside levels of resistance So you've got the peak of price, um, that was kind of a, almost a triple top going back to the mid, early midpoint of point of July. You've also got the, um, 15th and 16th around the highs that we had in June. We're just managing to push above that now. So 127, really the next target is where we roughly trade at the moment. Anything beyond that point probably starts to, to push up towards some of these previous highs that we were seeing back up towards 127.25 and so on. So again, the pound just being somewhat a benefit of just everything else that's going on at the moment rather than so much fundamentally itself. And then final chart, oil. I mean, when people are so positive in general, the global picture at the moment, that tends to be a net positive really across for oil prices. Um, just looking here then couple of areas to get above, of course, where we were peaking at the, the top end of price action last week. But again, we continue to just keep a very close eye on, uh, the natural squeezing in of price. The blue lines to 21 DMA, which you can see is just coinciding with that trend line that I've been marking up since around mid-June. So you've got a really nice area of downside support to price And if we do break higher, a key area that a few people are looking at is if we do push on up through this $41 with some more conviction, then you've got those lows that we're seeing back on the 2nd of March, which are coming around $43.30, and that coincides with the red line, the 200 DMA, as well. So a good area of resistance there if we do start to see oil break out of that fairly tight range that it has been trading in of late. All right, well, let's get into some of the headline stories. I'm going to start with the heat map, and obviously the one that really sticks out is Amazon, even though the likes of Microsoft, who do have earnings later this week, Google, Apple— obviously these are the, the giants, the titans, if you like, of the stock indices these days. But Amazon was up nearly 8%, which is a huge move for that stock. Um, to put it in some context, it's the biggest one-day move since December of 2018. on rising optimism about web shopping trends, particularly obviously accelerating through the pandemic period that we've been in. Amazon shares are now up in excess of 70% on the year. What happened here was Goldman Sachs and Jefferies both assigned a Street-high price target of around $3,800 on Monday, representing an upside potential of around 28% for the stock. Stock on Amazon's close on Friday. This whole idea, perception of accelerating e-commerce growth was really the, the main catalyst here. So really impressive day for Amazon, resulting in the tech stocks kind of surging. Zoom Technology again was on fire once more, that whole kind of working at home. I did see RBS putting out a company-wide memo Yesterday, and they were saying that their employees are not going to return to work throughout the rest of this year. They're not going back now. They've committed till 2021. So Zoom, not just on that, but just generally that type of activity continues to, to perform particularly well. IBM, um, you know, the 13th largest component of the Dow Jones Industrial Average. They're around 3.25% of that index. They were reported after market last night. The shares were up about 5%. The EPS at $2.18. The Street was looking for just over $2. Um, the revenue $18.1 billion above the expected $17.72, and their total cloud revenues were up about 30% year on year at $6.3 billion. So, uh, again, those earnings as well coming in for IBM last night, a real big upside surprise, which was a net benefit that saw we saw the futures continue to, to remain on fire last night. The other stories, of course, was the one that we're eagerly awaiting confirmation of, and it's come through. So there's no real follow-through this morning so much as really this was what was in focus yesterday, but a little bit more definitive now. The emergency fund here has been— the recovery fund clinched €750 billion. The split then, €390 billion of euros in grants €360 billion in, in low-interest loans. So in the end, compromises were made. Italy, the biggest beneficiary from the plan, expects to receive around €82 billion in grants and €127 billion in loans according to initial estimates. Now, €82 billion in grants, would that really fire up Italian assets? Probably not, because that €82 billion was the calculated kind of back-of-the-envelope calculation that we originally were working with right back when a lot of these negotiations were first forming several weeks ago. So it's not a particularly new number. Uh, the compromise then: Denmark, Germany, Netherlands, Austria, Sweden— basically they will get more than €50 billion in rebates over 7 years. That was what was required to get them on board. That, and also with a slightly lower number of €390 billion of grants rather than initial €500 billion that was tabled has got this deal done. But again, another underlying support, although the euro not that reactive because a lot of that now has been priced in. It's another supporting factor generally for sentiment to safeguard then the, the economic recovery ongoing in one of the largest trading areas in the world, of course, and economies. Um, elsewhere as well, quick look at the Aussie. I just wanted to bring that into shot because there's been a little bit of movement overnight and I'm just going to quickly jump across to the chart. Not too much of a move, but nonetheless a little bit of a pop when Europe have come in. A few things to be aware of with all this talk about emergency stimulus rolling off in lots of European countries, particularly the US in focus as I discussed yesterday. Australia have come out overnight and said they'll spend an extra $16.8 billion Aussie dollars, so that's around £9 billion sterling, to extend its wage subsidies for businesses hit by the coronavirus pandemic. Economic. Also overnight, we had the RBA, the Reserve Bank of Australia's July minutes, and it stated that economic conditions have stabilized and the downturn had been less severe than earlier expected. Members agreed that negative interest rates in Australia remain extraordinarily unlikely. So the Aussie, a little bit of a twofold, more positive notes coming out of Jen Libes, the central bank, and what they've done and what seeing. But top that up with the fact that Australia are going to extend wage subsidies by a fairly significant amount, again looking to just ensure that the economy or the economic recovery underway remains on track. So all net positives. Um, back to stories then. A few other things to be aware of, and having a look at the, the drug news that's been coming out, quite a lot of it yesterday. And the first one, University of Oxford and AstraZeneca showed some promising results in early human testing. Uh, you probably would have seen it yesterday, AstraZeneca shares initially popped 10% but then came back down, only up around 1.5%, as Oxford researchers said that further studies would prioritize a two-dose program. Now, two-dose programs, if you think about it, if you're going to immunize the world population against a pandemic virus, then having to do two shots rather than one shot is a bit of a logistics nightmare. So that kind of took a little bit of the, the wind out of the sails of that initial pop. And one thing I would say, I was having a bit of a slight comment on Twitter yesterday, um, and now I was suggesting that you should just short every COVID vaccine therapy spike higher because it's almost nearly every case without fail so far this emotive knee-jerk reaction that markets tend to have. You get this positive singular headline drop down Bloomberg or Reuters, the, the stock and equity markets tend to pop, and then they just fade the move. And, and very similar in the initial movement yesterday, albeit now we're continuing that. The trend is undeniable though, from beyond just the intraday noise that we tend to see. Um, similarly though, China's Cansino Biologistics and a partnership with Pfizer, the US firm, and BioNTech have also delivered positive trial results. However, one thing I would say, despite all these other seemingly positive steps forwards we're making in the development of a vaccine, the largest laboratory company in the US, company called Quest Diagnostics— I did read an interesting article this morning in the FT, and they said that they're warning that it will be impossible to increase coronavirus testing capacity to cope with demand during the autumn flu season. So basically what they're saying is, is that, you know, it's all great at the moment. It looks like we're making some positive medical advancements in these trials and tests. However, given the natural seasonal flu, as the weather changes and temperatures become cooler and the normal seasonal flu starts to pick up you know, testing capacity is already fairly stretched, well then that's going to mean it's going to slow down a lot of the ability to capture and identify people who have in fact contracted the coronavirus in itself. And that's going to delay what they suggested, the speed of which they can turn around results from testing for COVID-19. If you think about it, that in itself can be quite deadly because if you have to wait for a prolonged period you're relying on people to then self-contain, which isn't always going to be the case that they'll be that disciplined. And so therefore, without the immediacy of results and being able to turn around that quickly and let people know whether they have it or not, whether they need to self-contain or not, could then be a key antidote in itself in order to suppressing a significant second wave globally. So something to just keep in mind seasonally Yeah, amid all of this positive noise that we've been hearing over individual test trials and so on at the moment. Um, on the COVID situation, obviously America still, um, not looking great from a numbers perspective, albeit nationwide. Some of the headlines I was seeing last night were suggesting that the increase nationally is going up, but at a slowest rate in 2 weeks. But nonetheless, deaths in Texas topped a record for the 3rd straight day New Jersey's virus transmission rate rose to its highest level in a few weeks, and Arizona infections have also started to reaccelerate at this point. So definitely I would suggest still some vigilance around this particular subject matter. Um, moving elsewhere then, I just saw as well a sequence of, of graphics I thought was quite interesting, and this is because one of the main things that I was suggesting yesterday to look at on the calendar. It's not so much economic data because it's a particularly quiet week for data, particularly at the US. Really, it's only the PMIs. It's only Friday really when things are a little bit more exciting on a fixed docket perspective. Otherwise, US politics is back in the spotlight, and this is because the White House has shot down yesterday extending the unemployment benefit boost. A continuous $600 a week payment emerges as a sticking point as stimulus talks begin now in earnest on Capitol Hill. Now, what am I talking about? Remember this from yesterday? So in June, there was $116 billion worth that was dispersed in regards to paychecks in federal unemployment insurance. Now, this is really important because with jobless rates still near Great Depression era levels, the Treasury paying out some $116 billion of benefits June is equivalent to more than 6% of last year's monthly GDP. So there's a considerable amount of, um, fiscal support that the government is offering. But at the moment, the White House is saying that they're not going to extend, that is due to roll off at the end of this month, which has made some people very nervous then about what might happen as a trigger point when we get to that deadline. So what's happened? Well, Steven Mnuchin, the guy here you can see sat on the left, the Treasury Secretary, has talked about in favor of a $1 trillion in supplementary aid rather than continuation of this particular facility. So definitely this, this needs to be continued to be monitored because at the moment, if I just show you a couple of interesting observations of the US economy, for one, yesterday we had US consumer confidence And most people had been anticipating then that after this sharp decline we'd see the bounce. However, that bounce has not continued, and actually we've seen it an about-turn back to the downside. Now, I wasn't actually on the desk yesterday afternoon, but I can only imagine then that those people surveyed, these consumers, were probably getting a little bit nervous given the, the acceleration that we're seeing across those Sunbelt states, which are the most populous America. So I'm sure that is impeding the, the recovery of confidence. But if confidence remains depressed, we've also got growth in US economic activity has stalled according to the Economic Activity Index. It kind of plateaued. So if you look though, this is sharply below the pre-pandemic level. And remember when we were looking at that Google Mobility data, still heavily lower or significantly less mobile in terms of activities in various different ways. People going to work, the general movement as people try to still contain, suppress the virus from spreading. Then you've got the household survey suggesting a slowdown in US job gains. You've got many Americans still seeking unemployment benefits. This is looking at the index of web traffic to unemployment filing portals for the 20th most populous US states on a 7-day average. And then you've got progress in reopening US restaurants has stalled, just given the likes of what we heard just last week, around a week to date, when we had California now reversing some of its reopening plans, closing any indoor gathering including bars, dinings, and this type of activities. So all in all you know, the, the market is somewhat built up on the prospects of monetary and fiscal stimulus, and the fact that there's a natural expiration to a lot of these fiscal programs could be a little bit of a road— a speed bump for some of the positivity that we have been seeing in markets. Now, my anticipation is that governments like the Australian government overnight will do what is necessary to keep the show going for the time being, because although markets have recovered very aggressively, the economy is still on its knees somewhat and does require more time. The payoff here though, that could be a difficult one for governments to manage, is that this stuff doesn't come for free, and it means that they're going to have to acquire ever more larger amounts of debt, which is what they want to, to get away from. So there's a, there's a, there's a fine balance here that they need to manage. So So keep an eye out for any developments on Capitol Hill as we go through today and this week. But then a quick look elsewhere on the calendar. It is really quiet today. So I guess I'd still be looking at sentiment overall. I'm just looking at that S&P. It's just bouncing and pulling back now from this R1 after surging out of the gate this morning. The Nasdaq still teetering around resistance here. Be interesting just to see how equities perform now. We're at some key technical levels. Is this enough now for this recent surge that people just book some profits on these short-term longs, or are we going to really smash through and continue on and really start to power higher? I'm feeling a little bit more inclined for the former rather than the latter for the moment as far as the intraday is concerned. Otherwise, elsewhere as well, worth keeping an eye on gold because irrespective of this there's been a bit of a disconnect between generally the usual flight to quality moves that we'd be used to seeing. At the moment, gold's, you know, listening to its own tune at the moment, and we're right up here in terms of a near-term price range from testing yesterday's high that we saw in the afternoon. So just keep an eye on that, we're up $5 at the moment. We just had a test and a fail initially here, but worth keeping on. Might open up the door then for a, for a move higher up to, uh, 25.5 and the eventual highs coming up at 29.8, which we printed actually back on the 8th of July. And remember, on the monthly charts, this again very similar to what we're looking at in the setup in the, the kind of equity markets, but this over a longer time horizon, several years, where we've really got above a really crucial area of resistance. So even over a medium-term picture good area of support here to help provide a floor for price. So if we don't even go higher now, we go higher later. I did read some pretty bullish notes coming out of Citi yesterday about their long-term or medium-term view over gold, and again, they're pretty bullish, all things being considered at this point in time. All right, gonna leave it at that. Um, once again, don't forget to like and subscribe to the channel. Really appreciate it if you could follow and help grow our community. Lots more videos as well for not just me but the rest of the team going forward, so I look forward to, to catching you guys then. All right, take care, have a good session ahead.