This Week In Markets: 17th - 21st May 2021 (Incl. Bitcoin Review)

Very good morning, guys. Monday, 17th of May. Hope you had a fantastic weekend. Just quick shout out to the team for releasing now the revamped AmplifierLive.com webpage and portal. So not going to talk about it too much. Just please do check it out. One of the main things here is that it houses all of our best daily and weekly commentary, amongst other things. It really houses our community. Where we have traders from all over the world interchanging, uh, ideas, sharing their trades, and so on. Uh, do check it out. If you scroll down to the bottom, there's basically 3-tiered levels to get access to this portal, of which one is absolutely free. You don't have to put in any card details, nothing like that, uh, but it gives you a level of access to our private Discord room, technical analyst charts, uh, some other chat features as well. So do just check that out, AmplifyLive. Com. But getting straight into things, and let's talk about what's going on this morning and the week ahead. And I would say overall, compared to where we were just a short time ago, where people were getting a little bit apprehensive in markets about this idea of really ramping up inflation— remember last week equities generally were selling off through most of last week on this idea that the CPI number was going to be a blockbuster one. It came out higher than expected, but underlying and supporting that inflationary increase were a lot of measures that perhaps aren't sustainable, like the year-on-year base effects of the energy price almost collapse that we had this time last year, in addition to used car vehicle sale prices, so on and so forth. That, with more moderate-level data that we've seen, some other metrics like retail sales, industrial production, so on, I think just gives validity to the fact the Fed for the moment are adopting the right stance in being accommodative, being gradual, being cautious, about having any of these conversations about timing and also the reaction effect to the inflationary, uh, issue that's, that's coming because it is going to pick up. But then sticking by their, their view that it's going to be transitory. So at the moment, um, you can see here down in the bottom right-hand corner, just looking at the US 10-year, yields have continued to, to back off after that initial inflation spike that we saw. And so the 10-year has now reversed and we're trading above where we were at the point of when that data came out. Um, any further move upward, we're just around the R1 in the futures at the moment. Probably be keeping an eye then at that R2 at 23, which coincides with that high that we had back on the 11th. But also you can see here with the session high we printed back on the 4th as well. So just an area to keep an eye on if you're looking at the US 10-year following the trend up through that kind of range break from the CPI top from where we were trading as well on Friday afternoon. If we look in the equity space, generally equities recovering. And of course, this is a bit of an about-turn of how last week really started, which was quite a lot of weight, particularly in those tech names. Um, Apple, Tesla in particular had a really tough week last week. But if we start looking at the NASDAQ here, it, I guess, puts into a bit of context on how this month so far has performed. And you can see really last week we had that big shakeout during Monday and Tuesday sessions hit the eventual low that was seen down here at 12,915. But we've recovered a large portion of that move. And even if we just took a fib just roughly from that move on the weekly last week— well, if we go from the 7th, this was last Friday's— not Friday just gone, the week before. You can see we've retraced about 50% of that overall move. Already. We're at quite a key level here in the NASDAQ. This is looking, um, on a time frame of 120, and you can see you had that double bottom here from the 4th and the 6th, the breakdown, the backup to retest it on the 11th of last week, and then we've come around just a— just kind of resting point at that area at the moment. So be interested to see how we perform the If we do continue to recover on the upside, I guess the overall bigger targets on the week would be a push back up to that upper bound range that we're in consolidating through much of mid-late April, which was above really 13,700. So it'd be quite key to, to watch. At this point in time, you know, I really still think that I feel quite calm about the equity movement from last week. I think that's validated really by how the charts now set up this morning. And, you know, if we're looking elsewhere, everything plays tune with that view that the market has kind of settled on this inflationary fears. And you've got generally gold breaking out higher, equities higher, T-notes higher, kind of reversion back to that more looser monetary policy play on the cross-asset class move. Uh, gold, you can see here, reopened overnight kind of popped higher, came back down close proximity to that upper bound of the range that we've been in over the last week or so, and it's just pushed on up to the R1. And the futures trading now up $17, $18.55. Uh, just looking on the daily here, I think technically this is quite a key area that we've managed to break out of, and we trade above at the moment, which was that high that we were printing back in early part of Feb. And then that range we were just looking at on a tighter time frame just a moment ago on the previous chart. So here then, I think it does open up technically now room for a push-up to 1875. Uh, that would bring us up to those horizontal areas that you can see here of resistance that we had back at the beginning of the year in January, um, on the 21st and on the 29th. So weekly-wise, that would be a key level, uh, to watch for sure. And obviously just above there, then next target would be 1900 if we were continuing to that upside moving in precious metal and gold. In the currency market, as far as the DXY is concerned, for this morning we are trading up about 0.1%, but I want to talk about just currencies from a more broader perspective. This is one of the things from last week. So net non-commercial dollar positions basically were seen adding to their dollar shorts last week. And I think, you know, when you, you strip back the kind of equity sensitivity, you know, last week what was quite interesting was from a multi-asset class point of view although equities were trading heavy through pockets of last week, the rates market and the FX market much lesser so. Now equities are recovering, everything is kind of shaping up more to this idea of a strong recovery, but not one that's so strong that it's going to require the nod towards discussions on tightening from the Fed. So, you know, underlying this is people just increasing their dollar shorts. And so I I think that's quite telling as well, as well as some of the movements we're seeing in those other products, as I said. And so for the major currency pairs, I think this opens up quite an interesting prospect overall. There's a few things to have a look at here. Looking at cable firstly, cable obviously has had a really good run of late. We saw that breakout the end of the first week of May. And we came back down last week, and we've got a really nice technical setup. There's a nice floor of support now for cable and the pair, and that was what we were looking at last week, which was the, the March-April resistance and the breakout that we had last week really nicely on the 13th, so last Thursday, acting as support then for the push-up from the 140 up to 141 again. As we're sitting at around 141 right now, but this week is quite a big week for sterling. I'll just give you a highlight of, of what the analysts at ING are looking at, which is basically 4 key things you need to be aware of if you're trading the pound. And the first one is, is of course today is the reopening of indoor hospitality. So the next meaningful kind of downgrading of the UK lockdown, only one more to go. However, that in itself is looking fairly precarious. PM Johnson said on Friday in a press conference with Chris Whitty that they do not need to delay the reopening for right now, but they're going to accelerate second doses to over 50s. I believe they're going to reduce that time frame on the second dose to 8 weeks from previous 12. UK Health Secretary Hancock has said over the weekend that the government will decide on the 14th of June about what it's going to do on the 21st of June. The big point there, of course, is there's a new COVID-19 variant, the the Indian variant, which is seen even more transmissible than the very transmissible Kent variant we had at around Christmas and New Year. And that will likely— how that performs, as we'll track it closely over the coming week or two, whether or not then that final step can go ahead. So one of the key things here then is part one, Monday's reopening for indoor hospitality has gone ahead, and this obviously will help that more constructive view about the reopening of the UK economy and further economic performance going forward. At least for the time being. We will yet to see whether we'll conclude that matter with the June 21st deadline being met or not. My thoughts on that at the moment is, again, that I think Boris and the team have already been setting the stall out to lessen people's expectations that that deadline will be met. So being rolled over, I don't think it's too much of a surprise. But economically, I think today's reopening and what that entails will have an economic kind of impact on our economy in a positive sense. The other things that we've got this week from the UK are 3 major kind of data points— so 4 major data points in fact. First off is employment. So going in chronological order, on Tuesday we're going to get the latest jobs data out of the UK. Now a couple of interesting things here that, that ING was saying is that the jobs market has turned a slight corner since the start of the year. We've obviously had the furlough scheme being rolled over to shield some of those hardest-hit sectors, particularly things like hospitality and leisure. But what that basically has, has led to is that it's bought time for the economy then to reopen. And if you think about things like restaurants at the moment, as of today, not only outdoor— and you know, the weather's been shockingly bad— but now indoor, that's going to then require more employees to come back into the workforce for those really hard-hit industries. So it's almost like furlough, although costly to the government, has bought enough time now for jobs to become available once again and to be filled going forward. So that should be a net kind of positive factor overall going forward over the medium term. So while unemployment is still likely to rise to around 6% through this period, what ING analysts are basically suggesting is that, well, that's fine. This is just part of that transition period to reopen and then for businesses to get back to work, people to go back to work in step. On Wednesday, you then get the inflation figures. A couple of things. Of course, the UK inflation number similar to what we had in the US. If you think about what happened in April of last year, we had a really— this was kind of like the— from a price point of view, it was the low point of the pandemic. Remember, we went into pretty much full board lockdown in March, April, everything was closed. We had that catastrophic drop in some energy prices. So the rate of headline inflation will likely increase considerably in this week's reading from the previous, kind of like what we saw from the US, predominantly buoyed by those energy impacts or contributing factors. We know, um, ING note that CPI is likely to exceed the Bank of England's target, but then this is kind of the point— it's transitory and then it fades. And so as such then there's no need for the Bank of England to make any noises about acting or reacting in that, in that sense. And then the final thing is retail sales and PMIs. These are going to come in tandem, both on Friday morning. More timely spending data points to another decent rise in retail sales linked to shops reopening in April. If you remember, as part of the previous lockdown strategy that we've had, the broader economic outlook, aided by rising consumer business confidence, as the vaccination program offers greater optimism and durability about the ongoing economic recovery as well. So all in all, when you put all of these pieces together, is, you know, any uptick that we see short-term employment, people look through. Generally it's more positive as certain hard-hit industries start to reopen. Inflation, again, not to coin that phrase, but is seen as, yes, it's going to move up, but it's people will look through the underlying noise in that data as transitory, then retail sales is only going to get better as the economy reopens. Of course, the, the tail risk is the Indian variant of COVID and if that gets worse and starts requiring certain lockdown measures, so on, then we start to reverse that a little bit. But if you think about it, if we go from the idea of, uh, dollar short positionings building up everything we're talking about predominantly here in the UK is a net positive, go back to the cable chart, it definitely feels more favorable on the weekly outlook to be biased to the long side, I would say. So going from where we are at the moment, uh, the weekly high from last week was 1.4167, and then the high then year to date was seen up at the 24th of February at 1.4245. And then obviously we've got to start going quite a bit further back then, and that would help us target up and around a multi-year high starting to get up to 144 would be the big target. I'm not saying we'd necessarily get there this week, but you know, who knows. I mean, that definitely technically— I prefer the long bias here for sterling than I do the short for the time being. Rather than a talking medium term, just slightly more intraday focus for the euro. Just looking here on, on just the technicals of the chart here on, on the 30-minute candlestick. Just this area of resistance that we had on the 12th, and we've respected that overnight in the Asia-Pac session before we drifted a little lower. We've got pivot on the downside, didn't quite get there, but just finding a bit of a floor at the moment. We're basically unchanged in euro, so just be keeping an eye on that upside level there. Beyond that point then, you've got the range high from the prior, prior 2 weeks in fact, up at 121 85. But again, looking a little bit more favorable at the moment of continuation of just generally a weighted dollar in context of, you know, even in Europe vaccination rates are picking up nicely, economies are starting to go through their own respective reopenings. You've got things like inflation, GDP data coming out of the eurozone to have a lookout for this week. And on that, on that fact, on the calendar, eurozone inflation hit its highest level since the start of the pandemic last month in March. That rise, however, was largely driven by one-off factors such as the energy prices, which we've mentioned. A further rise though in April— and that inflation data is due on Wednesday from the eurozone— some analysts say the ECB could lead them to start reducing the pace of bond purchases at its June policy meeting. So we should see how, how that plays out. As far as the other headlines are concerned, the other one I just quickly wanted to mention then, just to wrap up a few things, is Bitcoin. Let's just bring in— I don't have the actual price of Bitcoin because I just look at futures in tandem with all the other products I'm looking at. So here's a, here's a look at the daily chart on Bitcoin, and you got the all-time high up here, which we were trading at not that long ago. This was only literally a month ago or so, um, when we were trading up as high as $66,500. You then had that Xinjiang blackout which caused that gap down, uh, and just weighed on the price from those record levels. And then last week it really got quite heavy because Tesla stopped Bitcoin payments. You had a couple of Musk tweets as well, kind of pivoting out of questioning of Bitcoin on its energy consumption impact. And then it's gapped down again last night. There's a lot of tit for tat. Elon couldn't help himself but start responding on Twitter to a couple of the trolls last night, and he sent it lower again. But he has come out this morning, and you can see this quite large extension on this wick. We actually printed $42,000. We're now trading up at $44,000, nearly $45,000. So we've had a decent turnaround here in the very short term, in the intraday environment. He has come out and tweeted just a moment ago that, to clarify speculation, Tesla has not sold any Bitcoin. And the reason why he's saying that is because over the weekend Musk implied Tesla may sell cryptocurrency. It's one of those cryptic kind of messages that he put out. And so at the moment here, as far as Bitcoin is concerned, Uh, the biggest level, I guess, to the downside, um, unsurprisingly would be $40,000. That area was the previous all-time high, obviously, from the beginning of 2021, which we failed to breach until we got through till the 8th of February. Then it really started to pick up and exploded higher. And yeah, downside, I'll definitely be keeping an eye on that this week. A breakdown of that price could be, could be interesting to see how heavy the selling pressure gets and I guess if you're looking at the most clearest technical point, uh, you're kind of looking down to these, these double bottoms then going back to $27,000. Um, and even then, even further still back to then when we were breaching $20K was the big ones. But look, I'm certainly not calling those levels, uh, right now, but you wouldn't put it past a product like Bitcoin to see that type of excessive volatility. Uh, but let's see. Otherwise, uh, quick look at the calendar for the US side of things. Um, for the US calendar, it's pretty light actually this week. There's not a great deal going on. Uh, April housing starts, new home sales are going to come out tomorrow on Tuesday. Uh, the highlight probably is going to be the FOMC minutes. We'll get those on Wednesday. Not really expecting a great deal of reaction to that. Um, the key takeaway from Powell's press conference when they had that actual meeting was that now is not the time to talk about tapering. And just given the context of where the market's heads are at, at the moment, having stabilized from any of that kind of inflation yield movement that we had that was spooking markets beginning of last week, I think that that has now— we've moved on from that point. So the minutes, yeah, perhaps worth just tuning in on Wednesday to have a look at. I wouldn't be expecting any fireworks, a great deal of movement for that to be a major event for the week. If I'm being quite, quite honest. A few other final points I did wanted to mention on an equity side of things was maybe just keep an eye out on Netflix shares at the market open later on today in the US. AT&T is said to be near a deal to create a $150 billion streaming giant with Discovery, combining its content unit WarnerMedia with their rival Discovery. So I'm interested to see if that has any translation over to some of those streaming services. And then overnight as well, just so you're aware, you did have some Chinese data. I don't really think this is impacting the open as far as Europe is concerned, but just so you're aware, industrial production in China overnight year-on-year for April 9.8%, that was in line with expectations. Uh, the retail sales year-on-year 17.7% against expected 24.9%, so a little bit soft on the retail sales side. Um, so while China's exporters enjoying generally strong demand and global, global supply chain bottlenecks and rising raw material prices are weighing slightly on production is what some of the analysts were saying at the time of release from the overnight session. All right, um, final chart, uh, final few charts just to have a quick look at. One was the DAX because I did get a question about this this morning. So yeah, if you're just looking at— I know my head in the corner of the video is blocking it slightly, but The DAX is at the top end of this, this kind of relative range we've been in over recent weeks. So you can see here you've got the high that we had this time last week, in fact. And then if you move just above that, you start going to mid-April, a little bit higher. But on the daily chart, you know, really nice technical reaction to the Fib 382 from the low that we printed back on the 26th of Feb. to the high that we had on the 16th of April. And we come back down, we've had— it's a just a really nice technical entry for any more kind of swing medium-term traders. You've got that high on the 18th, came down to that level perfectly to the tick pretty much on that fib, and then we've pushed back up. So now on the upside, of course, just keeping an eye on that range high if we get any breakout. But again, I'd want to be seeing probably a further continued recovery, uh, in the likes of those US indices, uh, as well, continue to reverse course of some of the selling pressure. But you can see here the outperformance, if you like, if anything, on the recovery of the DAX, which is already more than taken back any of that selling pressure. It's right back up here again, testing these, these record levels once more. Okay, with that, gonna finish, let you guys get on with the day. Any questions at all, let me know. Leave a comment, uh, don't forget to like and subscribe and check out AmplifyLive.com. Hopefully I'll see you as part of the community, uh, online. All right, have a good week, guys.