US Stocks Bank In Sight Of Record Highs

Okay, very good morning. It's Friday, 23rd of July, so hope you're doing well and hope you've had a great week so far. Before I begin, as per every Friday, don't forget to check out the latest Market Watch podcast on the Apple Podcast platform, Google, or Spotify. A slightly different change-up because the head of trading, Piers, who I normally talk to, is away. On vacation at the moment, so going to be joined by senior trader Tim Duggan, and we're going to talk about cryptocurrencies and some tips around trading crypto because Tim, as much as having spent the last several years trading the futures market, is very active trading in that space as well. So hopefully he can offer our community some advice about how best to tackle that more kind of volatile asset. But otherwise, let's get straight to it and let's talk about what is going on in markets this morning. And following on from a positive close on Wall Street, the Nasdaq outperformed, technology really driving stocks back up. We can have a look at some of these charts as well at the, at the moment after we discuss general overall sentiment. But the Nasdaq's tapping on record highs once again in the futures market. The S&P 500 marked its best 3-day rally now since April. And that seems a far cry from where we were on Monday, which when I was off, I was reading headlines like equities are tanking, the VIX was the biggest one-day jump since February, oil was down in New York 7.5%, and here we are end of the week talking about record highs. So it feels like a bit of a broken record, to be quite honest. But look, let's kick things off and look at some of these equity charts, and then we'll look around the broader asset classes as well from a technical perspective. Not too much for me to update you on from a news perspective, um, and so we should be able to get through this fairly quickly. I know it's a Friday after all. So looking at the NASDAQ here, technically, as we've seen earlier in the week, quite a nice technical response. And the S&P kind of has a very similar setup, and when you get these kind of synchronized technical setups across the major equity indices, it does tend to add then some more validity to the technical response that you see in these charts. And yeah, certainly the late June, early July lows, which acted as a bit of a floor for that rout that we saw commence at the end of last week and then hit the, hit the floor on, on Monday, has been a decent target. You can see here the Nasdaq back up retesting those highs and Perhaps if we look at the world on a slightly more narrow time frame, on a 30-minute chart, you can really see here in the overnight apex session we actually hit that previous double top that we had going back to what, Tuesday, Wednesday of last week. A bit of profit taking, so range-bound for the moment now as we wait really for the US to come back into markets for the rest of the session. And we've got a range of 14,965 to 15K now as the big target, obviously on the upside. Having been within 2.25 ticks of that in the overnight session. Yeah, but quite a phenomenal rally you can see here that we've seen over the course of the last few days. And, and as I said, that's the Nasdaq, and the S&P looks fairly similar in its shape, certainly on the daily chart, which we'll look at first, which is that slightly longer-term multi-month trend line we've been keeping an eye on The market obviously got close to that on the pullback that we saw back on Monday, which was quite a key inflection point for price over the last few months on the horizontal basis, just above 4200. And the price has come all the way back up, and here we are within sight again of all-time highs. Short term, from an intraday perspective, I've just got a trend line on from what was the overnight session from yesterday, and that's been respected as resistance, now turned support, and just helping the price squeeze up to the APAC highs now here in the futures as Europe has come and just reacting to generally the more positive close that we had on Wall Street. Asia overnight, fairly quiet. There's a holiday in Japan for Sports Day, very timely because the Olympics kick off tonight in Tokyo. So good luck, Team GB. But the overall region was pretty flat. The Hang Seng was perhaps a slight underperformer. Still a lot of conversation about Didi Global, which is that car, car-hailing firm. Regulators in China weighing a range of potential punishments for the firm. This is all to do with their cybersecurity and Beijing being uncomfortable that this company is just listed on a US exchange. And they're considering things like a fine, a suspension of certain operations, or the introduction of a state-owned investor. They've also considered possibly forcing a delisting or withdrawal of Didi's US shares, although it's unclear at this point in time which particular option is going to be chosen. But Didi shares, which do obviously now trade in New York, were down around 11% yesterday, and that's kind of just souring the notes over, overseas in the Hong Kong market overnight. Otherwise though, the broader sentiment is generally positive. A big thing for this week has been earnings, of course, and we did have a couple last night namely Twitter. Um, their shares were up as much as 9% last night. They actually settled more with a gain of around, uh, 6% or so. They had a strong outlook and they posted their fastest revenue growth since 2014. On the flip side though, the world's biggest semiconductor maker Intel didn't fare quite so well. They were down around 2.5%. They did beat on their EPS and their revenues. Um, let me just transition here. They did beat on their EPS and revenues, but they guided on their non-GAAP gross margins of 55% in Q3, which was down quite a notable drop from around the 59.5% that we saw in the prior quarter in Q2, which investors didn't generally like that much. So overall though, on the week, you know, this is what it's looked like. And as I said yesterday, of all the companies that reported thus far, about 85% of those have exceeded expectations with their earnings reports, and thus has provided a bit of a more positive catalyst for equities amid then some of the question marks over the spread of the Delta variant globally and what that could do in terms of impeding the speed and shape of the economic recovery that perhaps we were, we were expecting before the latest outbreaks. That have been happening. In terms of earnings today, you've got a couple slightly larger cap— Amex, Schlumberger, Honeywell, Kimberly-Clark— probably the most notable names. Nothing really too much that's going to be an index mover or sentiment changer, more relevant for the single stocks themselves. Otherwise, a quick look at some of the other charts in the FX space. The dollar index pretty flat this morning, but I'm quite conscious of just keeping a half an eye on the euro at the moment from a range perspective. We are in close proximity to the weekly range, which is generally held through Tuesday, Wednesday, and Thursday. A bit of volatility on the back of the ECB. Long story short, great quote, um, that, you know, it's kind of an old wine put into a new bottle, I heard someone write, which is obviously a reference to the fact that they had their strategic review. So there was some communication tweaks But overall policy remained the same, and so not too much, a great deal has changed, and thus we're kind of resuming back to normal trend here. And I'd be quite keen to keep an eye on the dollar today and that lower bound levels in the euro if we were to see any type of breakdown in price. If we did, then you've got the early 5th of April low seen not too far below the weekly low point that would come in at 1.1754. And the overall low that was seen year to date came in late March, which would be at 1.1721.5. So the euro chart still reflecting very much so the shift that we've had commenced from the 16th of June, which is this biggest red candle here, which is, of course, you'll remember that memorable two hike, two hike dot plot we saw, surprise from the FOMC. rate decision. For cable at the moment, yeah, another trend line just keeping an eye on from Friday, uh, that's held both yesterday and in the overnight Asia-Pac session as an area of resistance. You could also probably stick a horizontal line here as well from what was yesterday evening's high to the APAC high with the trend line. It's all working out quite technically quite nicely this morning. We're just drifting back down, um, the thereafter towards pivot. You probably would have read a couple of headlines about the UK this morning already. UK government is rolling out daily coronavirus testing for workers in critical services in England to allow them to avoid self-isolation. This is because of all of the, the pinging that people are getting, which is seeing a lot of people not being able to attend work, and then the knock-on implications that can have for things like food at supermarkets and so on and so forth. Potential sectors that could be covered in this new program include food production and supply, most notably energy, waste, water, medicines, emergency services, order or border control, and local government. The process is only intended to run until the middle of August, August 16th, because as the government have already outlaid, when fully vaccinated people who come into close contact with someone with COVID-19 they will be exempt from self-isolation from after the 16th of August. But the problem is, is until we get to that point, this latest rule is now being implemented to avoid the fact that the number of people in self-isolation on a week-to-week basis is going up very rapidly, and that's having some consequence then on, on the ability for the economy to, to function. And so is that important for the pound this morning? No, I don't, I don't think so. I think it's more of a political government slight mishap rather than it is that something that's going to worry markets, because I would feel that the move that they have now made is somewhat inevitable and as to be expected. Otherwise then, a quick look on the final charts to be aware of, and let's have a quick look in the commodity space. Short term, just from pure technical perspective, gold's been um, just respecting kind of more broadly a range this week, um, in the second half of the week, that is from Wednesday between really 1795, which you can see was the low that we printed on Monday. On Wednesday had a bit of a rough break of that, but, um, inconclusive if you like, on Thursday session. And then you've got the S1 in close proximity to that, it's around the 1795 on the low side. On the high side you can see here We're just testing up at around the APAC highs again, which we're holding from late US session, late European afternoon. So worth keeping an eye on 1808.5. If we did see the dollar start to move lower, could act as a catalyst with a technical break. Wouldn't be surprising to see gold quite quickly run up toward the high that we printed, um, back midweek, and that would be up around the R1 and that high at 1813.14. So you could see a pretty quick run of a couple of bucks if we see a technical breakout of that range. Oil markets, as I said, down on Monday 7.5%, come back Friday up 7.5%. So this is the world we live in at the moment. It's, uh, quite incredible price action really. I mean, you can see this kind of U-shaped movement. Again, from a technical perspective, really nice respect of a trend line going back to Friday. You can see it really held nicely as a point of resistance on Wednesday and Thursday. We broke out yesterday morning above that. We came back on a pullback to that level before then seeing a pretty consistent bid through the US session into the, the close and resistance being found at the previous highs that were printed back last Friday. So technically from an execution point of view, quite, quite a nice setup. Fundamentally, I don't think you really need to overinterpret the moves too much. I think the global moves are quite in sync at the moment from an equity oil perspective, obviously tied to some of the, the COVID concerns and the, the alleviation, if you like, of those concerns that then happened thereafter in the second half of this week. The OPEC kind of deal, it's kind of done and dusted and out the way now, so that's not too much implications for the price. Price here and now. At the moment, we still keep half an eye on COVID, but the market seemingly from the price activity here have kind of reacclimatized to the current state of the, the Delta situation for the time being. So from a range perspective, probably the pivot today I'd be keeping an eye on, which brings into play that peak of yesterday morning's price activity, and then obviously that resistance point and around the psychological as well, $72 handle will be quite key for, for oil in the intraday environment. Um, but that is pretty much it. So quick look at the calendar. We've already had the UK retail sales come out, but they were pretty dull, to be quite honest. Month on month, 0.5%, which was basically in line against 0.4% expected. So hence the minimal movement seen in sterling. Um, and then just having a quick look at the rest of the morning, there is some important information coming out. Today is the flash PMI day. So you get the eurozone this morning, France 8:15, Germany 8:30, eurozone 9:00, UK 9:30, US at 2:45. These will really be the key data points. Generally speaking, the PMIs in eurozone at least have been particularly strong last time. Some analysts looking for slight moderation just given the, the delta situation and how that's playing out in mainland Europe. So be interested to see see how that plays out. But that's pretty much it as far as the calendar is concerned. From an earnings perspective, we've already covered, as I said, nothing really index-moving or sentiment-changing, just much more from a single-stock perspective to keep an eye on for the likes of Amex and Honeywell and so forth. So that is it. So I'm going to conclude and say don't forget to check out the podcast whether today or this weekend when you're out and about and you need a little 15-minute blast in the ear to get you up to speed. And again, going to be quite an interesting chat with someone who trades crypto on a daily basis, and hopefully he can pass on some, some good advice if that's a market you're interested in. All right, with that, enjoy the session ahead and have a fantastic weekend. Take care.