US stocks move back to all-time highs, so where next?

Okay, very good morning to everyone. It is Wednesday, 24th of April. I hope you're all well. Going to look at a couple of things here. First off, have to give credence to my colleague Sam North. He's not here at the moment, but I was looking back on Twitter Mr. North put out a call that the S&P would hit all-time highs, and he said that I think it was on the 18th of January when the S&P at the time was about 450 points off where it is at the moment. So if you're watching this from New York, Sam, hats off to you, good call. But yeah, definitely gonna have a look at that. As you can see on the chart here, this is looking at the cash market. The S&P 500 surpassed its September record of 2930. Chiefly buoyed by corporate earnings being the last kind of element, if you like, to, to push us beyond the, the previous highs that were seen in the early part of, or late September, early October. From a social media point of view, Twitter outperforming. They saw a movement of around 16% to the upside. Snap outperformed as well, but you had larger-cap components that lifted the Dow as well, and the likes of United Technologies and Coca-Cola, positive guidance as well. So in a kind of environment where people are asking the question of, are we in the late phase of an economic long-term cycle, and should corporates be reining in their, their kind of forward-looking guidance? So some of those were very warmly received by the market, and enough in fact to help us lift to these new record high territory that we've had. So let's just have a look from a broader perspective what that looks like. So here is the S&P 500 chart, and I've marked it up with kind of a, I guess, the story of, of where we've been, the previous all-time high. And as you can see, I'm looking here at the futures market, so a little bit different in terms of getting right up there to the all-time high. Here we're just short of that at the moment by about 10 points. Uh, 2944.75 marks the all-time high that double top you can see here. But the area of consolidation that we were talking about yesterday, obviously the break technically through that previous weekly high last week that was seen at 2350, again the earnings sparking as the catalyst, and then this last little push-up that we've had. So again, I'd kind of rephrase almost the rectangle area of consolidation to now the new area of $23.50, I would say, probably act now as, as kind of near-term downside support and then upside resistance seen at, in the futures, the all-time high of $44.75. I'd probably be watching now going forward. Plenty more earnings to come, we'll have a look at that in a second. So definitely you need to be mindful of that going forward. Otherwise, from a, a kind of broader asset class move Uh, the top left-hand corner, you've got EURUSD and cable, which are both marginally lower. The dollar essentially holding on to some pretty decent gains seen yesterday, albeit this morning Dixie's basically flat. But the point is it's held on to those gains. We're going to have a look at one thing quickly here as well, which is the Australian currency, and it seems a decent move overnight. This is the headline, a little bit sensationalist, I must say, but it was a pretty decent move seen in the overnight session. Inflation miss rocks the Australian market, boosting rate cut bets. Now, this is the point that trimmed mean gauge rose 0.3%. It was below expectations. And essentially, this is heaping the pressure now on the RBA to trim its its interest rate from its current level of 1.5%. Now, the central bank was already growing, uh, kind of more dovish in their commentary and in their forecast and the outlook for the economy. And so this type of data on an inflation metric, which is so pivotal to the policy decisions, definitely is going to, uh, going to help the markets kind of price in that, that reality. And so this was the move overnight, looking on a, on a 30-minute candlestick, just to see how kind of violent the move was. Well, if I shorten that down to give you a bit more of an idea of how impactful that was, you know, we dropped from about basically a 71 handle down to a prevailing low seen in the Asia-Pacific session of 7036. So really decent move there that came. I guess in terms of the near-term price activity now, you've got the, the recent morning low at 41 and then that overnight low at 36. Looking on a slightly longer timeframe though, from a technical perspective, I guess from a medium term, and we have broken that trendline that's been in place since the beginning of March. You can see those, that level there, and then the various tests that we saw in the early part of April, and then the, the trigger point coming. We had a failed break of the, the trendline yesterday, but the overnight release of the CPI data enough to trigger a pretty strong move. And so now on any pullback, I'll be keeping an eye on that 7063. I guess directionally it kind of plays in the favor of maybe if it came back up for potential re-initiation of a short position targeting down to this type of area. Premise being from a fundamental perspective, you've got weaker Aussie story but stronger dollar on the narrative that earnings are positive and the economy is performing in the US. Equities up at these record highs. If that fuels the dollar like it did yesterday in the wake of then the divergence against a weaker backdrop for the Aussie fundamentals, then potentially look to kind of re-enter here on the push down and perhaps targeting, uh, down at the initial overnight low to take some off, with the second target down at that previous low that was seen lower down at the handle. Or just above it at 70.06 in the futures possibly. So yeah, Aussie, decent move in the overnight session, does warrant pointing out. Moving swiftly on, other things to have a look at. And obviously, as we, we talked about yesterday, Brexit returns to the fold. Not that there was a great degree of new or interesting news from yesterday, but, but certainly it's now a talking point once again. And yesterday did see a pretty decent move lower actually in cable. I was looking here, it came predominantly in the afternoon at 1:30. Looking on a slightly longer time frame for cable here, this was what I was looking at. I mean, this encapsulates basically the second right-hand side of the chart is 2019. To bring in the recent highs from a technical perspective, we've got to go back to kind of Q Q3, Q4 of last year. But it was really this multiple test around this level, looking at the futures here in sterling at 1.3027, and the 1.30 obviously acting as a psychological level as well. And that's just got broke fairly violently yesterday. And so it does open up— you can see here there's not a great deal of, of real clarity to any near-term support points that would jump out from a longer-term perspective. Not until we get down to this kind of area here, the 1.2853, which would bring into play that kind of mid-Feb low. And so I guess if anything, this is kind of the, uh, just the overall bearishness bedding in again, given the fact that this Brexit situation continues to remain a high degree of uncertainty to it. With that being said, This is the latest: May considers latest gamble to get Brexit done within the next month. Now, although they've kind of kicked the can, if you like, to the new formal deadline of the 31st of October, the real deadline for the government, or at least a Theresa May-led government, as the way people are looking at this, is the 22nd of May. 22nd of May, basically between now and then, she needs to get some kind of way withdrawal bill ratified in Parliament in order for then for us to withdraw out of taking part in European parliamentary elections. That can be done from a technicality point of view up to 24 hours just before the vote in itself takes place on the 23rd. So with all this being said, there's a ticking, you know, time bomb for Theresa May here, and this is what's heaping the pressure on her. And what she's got to do basically is is try to find a way to get her withdrawal bill voted through in the coming weeks. And what's being talked about in the press this morning is, even though her current bill has been rejected 3 times, could she bring it back via this kind of proxy instead, which is a piece of legislation that would enshrine her deal in law that would enable basically amendments to be done by the opposition party. Um, tough though to see this going through at this point given the current status of the fact that yes, talks with the Labour Party have been in a positive way, they've really lacked any credible substance yet to, to, to make serious headway in these conversations. So basically, long story short, the kind of pressure is mounting mounting on Theresa May. This is not new, I would say, but it, you know, a replacement of Theresa May at this particular point, my own point of view, it makes zero difference to the current status quo. So I don't, I still don't see much in the way of a credible threat to her leadership at this point, even though there's been a lot of talk that There was that backbench 1922 committee meeting last night where apparently they're looking at ways of basically changing Conservative rules in order to have a revote on a no-confidence in Theresa May. But a lot of this is just a management, I think, of the internal conflict within the Conservative Party. So all of this being said, as you can tell, it's complicated and it's uncertain. And so from a trading point of view, I guess, in the short, medium term, it's a negative for the pound. And I think that's just what's happening at the moment and what happened yesterday, that with technical breaches of quite a key support zone as we were looking at, as it's just kind of assisting the downside. So it's time to look out for— inside to be on the watch out for going forward. All right, moving our attention elsewhere to a different asset class, let's take a look at crude oil. So this is a look at WTI crude. And obviously we've pushed up to very elevated levels that we've not seen in a long time. That being now in the futures space, 6660 marks this fresh kind of multi-month high. If we were looking here, this is the long-term daily continuation. The multi-year high that we printed back before the, the big downturn in October was up north of 75. The recovery here puts us back to levels not seen since essentially the November period of 2018. Now, we had the Iranian breaking news, and that really fired things up for the crude market on the holiday-impacted Easter Monday. And likely that kind of exacerbated some of the severity of that move, i.e., kind of overextended somewhat to the upside. We kind of had a period of consolidation through the best part of yesterday session, a bit of seesaw price movement. Then it took off again at the NYMEX open, or the, the traditional NYMEX pit floor open, and then we pushed up to define this now 6660 high. Now where we are at the moment is looking at this ellipse. We had of course 9:30 US markets were open as per normal on Monday, so we had the API crude oil inventories, and as you can see that kind of weighed a little bit on price price action at the time of release, but also gradually kind of filtered in through the Asia-Pacific session before we've got to this kind of price point where we are at the moment. So bearish numbers, what were those numbers? So just to recap, we had a crude build of 6.86 million against expectations. This was a far greater build than expected. You had the first built in 10 weeks. Remember, we had multiple consecutive drawdowns for a long period of time, the best part of, uh, almost just over 2 months in the gasoline figure. But that's flipped now to be a build of 2.163 million. Cushing, though, was a draw, just shy of 400,000. Still, it was a draw, just shy of 900,000. But one thing I was looking at was this, and this is kind of a map of looking at US weekly stockpiles And actually, if you start looking at overall stockpiles in the US, we are around the highest level since late of 2017, as defined here by the, the kind of black bars you can see. So from it, from a supply point of view, you know, we're the most that we've seen since 2017. And looking at the demand side, yes, things have been picking up. This kind of recession risk has kind of ebbed away a little bit as things have stabilized and the market's recovered over Q1. But that's not to detract from the point that the market is getting quite oversupplied at the moment. And although we have things like a threat of the Iranian waivers not being renewed, will this actually take place? We know that, you know, what happened before was that Trump said he was going to do it, and then he gave 8 countries, of course, exemptions, which meant that actual Iranian supply was little impacted. Now, what we're seeing then on the back of that point is this point where Saudis are planning a cautious response to tighter sanctions on Iran. So what should happen here is that as the Iranian production drops, now that countries like China and India and Turkey and so on can't buy Iranian crude, then what should happen here is that Saudis should now pump more to fill the gap, so to speak, and that should then suffice for the US in order to mitigate any further rising in prices. However, the Saudis are highly cautious about doing that because last time Trump said he was going to sanction Iran, the Saudis actually moved their production levels to record highs, only then for Trump to say, actually, all these other countries are exempt. Iran production was not impacted, the sanctions had no bite at all, and what happened was we had an almighty collapse in crude prices. Good for Trump, very bad for the Vision 2030 of Saudi Arabia, which needs to generate a decent income of north of $80 in the price of oil to fiscally break even at that point. So, you know, part of this is now if the Saudis are going to be cautious to do that, where does this leave the kind of current status quo with the supply side of things? So yeah, much to, to watch going forward. Obviously we'll get the DOE numbers later, so from an intraday point of view there's definitely forthcoming volatility. I was just looking at a couple of kind of broader trend lines here of price activity. The upside one seems to have held relatively well, 3 tests, and we're starting to move a little lower now on this trend line from, uh, post the Iran-inspired lift that we had. Any breach of this then, uh, in near-term levels, I'd be looking here. And then as we kind of track the move lower down, if I remove this line here, you've got the S1 level, which kind of brings in at around that price point of where we bounced from what would have been yesterday afternoon before the move and acceleration to the upside. So probably looking around here, and then the next move down to that lower bound of the range that we've had after the Iran move. So kind of looking down here. Flip side, of course, you got pivot 6612. Pivot does tend to fit relatively nice, I guess, around some of these areas here of the previous high highs and an area it's responded to. So kind of around that 66.1215, uh, if not, then be looking up at pushes up to the, uh, the kind of late US session high and then prevailing high at 66.60. So if I was looking at crude, not wanting to get too much in the way of second-guessing market direction at this point, not certainly when you've got something as volatile as the, the release of the, uh, the data coming out from the DOE. One thing to bear in mind, correlation of course can be quite mixed. The API is obviously pointing to a bearish release. Now that the market's in that mindset, should we get a drawdown of any suitable size, then we'll be looking for a decent response back up to the upside on the back of that. From a longer-term perspective, again, this was what I was looking at with crude. I think now the way that this been working is quite well with the technicals. So in any type of pullback that we do get around that— we're trading 6591, 6574, which was the previous kind of level of resistance and support that we've had in recent days. And you can see here back with some relevance in October. I'd be looking at that as potentially a platform again for the next kind of phase, like here where you have a kind of area of consolidation there where another fundamental catalyst can break us out either direction. Whether or not the DOE could be that, we'll find out later on this afternoon. Okay, other things to update you on from a news perspective, just so we're fully on point. You've got US— just pause this video— you've got US-China officials to resume trade talks on April 30th in Beijing. None of this article really detracts from the current expectations. They're looking at a kind of a signing summit to take place at the end of May. This then would act as a precursor for Trump, who's going to be at a meeting in Japan to meet the new Crown Prince, which is happening there domestically. And then with that, the signing summit could happen on kind of neutral territory, if you like, within the Eastern region in Japan. China comes signs the deal, and then there's a G20 that happens in June. That's the kind of timeline that we're looking at, which does make some sense. All of the details of what is being discussed at the moment is pretty similar to what we had before. Is a mechanism of enforcement is really the key. It seems they've kind of got agreements on most of the other nitty-gritty trade, you know, IP rights these types of things. It's just about how is this going to be monitored and adhered to going forward is the case. So if anything, we kind of know the timeline. The only risk I would say around this situation is markets are fairly bullish, let's say, with equities back in the cash markets at record highs. If this were to break down now, and the one thing I'd say is Donald Trump, you know, is difficult to kind of Um, he's quite unpredictable in his approach often, and so I'd see it as small because it's almost self-inflicting by him disrupting these talks. But I guess that's one tail risk to be aware of that could see a bit more of an aggressive pullback now that equities have pushed so, uh, on to where they've got to. Okay, a few other things to be aware of. I wanted to mention this because it's one of the larger components of the DAX stock index. And this is SAP. Their new cloud bookings have increased by 26% in the first quarter. They've increased their outlook on cost cuts and growth in that cloud division. So positive news for one of the largest companies in Germany. From a data point of view, one of the isolated, I guess, important things that are coming out from, from Europe from a data perspective is about an hour's time. You've got German IFO business climate, and as you can see here, we had a little bit of reprieve for what had been a deteriorating sentiment amongst German businesses, where, you know, morale, if you like, saw its first increase in 7 months in the last reading. So a lot of questions, if you remember, about 4 or 6 weeks ago. I think it was Goldman Sachs and Morgan Stanley put forward calls about have we got to a bottom in the European kind of economy in terms of these economic data prints. Obviously things have been deteriorating, but they were quite bullish that we bottomed out and we're going to look to bounce back. And so going forward then, I guess, are we going to see further momentum here for, for a bounce back? How much is this going to move the market? Well, Well, let's have a quick look at the euro. I don't think it's going to be too impactful, to be honest with you, but IFO definitely, if it was to breach below 98 and so therefore put us back down into that negative trend— we obviously know the PMIs have been struggling. The manufacturing PMI in Germany, which was the key culprit for this sell-off in the euro at the, what, Thursday last week, I think definitely, uh, if anything, there could be a downside surprise. And if negative enough, breaching the lower bound, which for IFO would be, yeah, 97.9, then potentially technically we're at a fairly interesting point, I guess, in the euro. If I look at this on a daily continuation, this is kind of what I'm looking at. So you'd have to put this into context. If I could just move the chart a little bit here. Um, this is— this area here was the 12th of November low from last year, and you can see we've kind of had a test of that close in the early April. Now we've broken that trend line with the PMI pushing us down. We've had a test of that and a bounce yesterday, so technically it's played out as support so far, but any retest down at 1240 4.5, that opens up the prospect then of a push back down lower through the 112 handle to 111.84.5. If we were to breach lower than that, then really we've got to go back then. We've not been at these levels since all the way back in the summer of 2017 for the euro. So things could get interesting pretty quick, I'd say, if we can break through that, that near-term level of which we basically bounced off yesterday, which is the S was the S1 level today, pretty much to the tick, lines up nicely with the low print from yesterday. So I'd be watching that with great interest, any movement through there. And again, if we get positive earnings, if that fuels up the dollar again because it brings about the idea of, you know, do the Fed need to adjust and kind of ease off this extreme dovish view and become a bit neutral, that could fuel the dollar and subsequently we could break lower. So definitely something to be watching as we go through the day. On the, on the kind of the premise of earnings being important, if we focus here on Wednesday on this graphic, I'll see if I can make this just a little bit bigger. So you can see before the open you've got Boeing and Caterpillar. I'd suggest that those two are probably the two key ones pre-market that you should definitely keep an eye on, and both for different reasons. For Caterpillar, for the more kind of the element of it being a bellwether indicator of overall economic kind of prosperity from a growth perspective. And then from Boeing, for the fact that it is the largest component of the Dow. Now yesterday you had the likes of Coca-Cola report, you had— I think it was United Tech report report. And a couple of names then that helped fuel the breakout in the, the Dow to the upside. Now, Boeing accounts for roughly 9.5% of the entire Dow Jones stock index. So remember, it's 30 companies, and this one company accounts for, you know, one-tenth of the entire index. Now, Boeing— later on in the week, you've got 3M, which is the third largest. So you know, I did post this in the chat room yesterday. This crib sheet, particularly useful to cross-check on the days when you've got these types of things coming out. So if we go back, um, who else have we got? AT&T, Biogen. So a lot of these are non-DAO related, but again, it's a, it's a process of due diligence, I think, if you're going to be looking to take a speculative position before market open in the futures. Otherwise, aftermarket, it's equally interesting. You've got Facebook, um, and Microsoft. I would suggest they'll probably grab much of the headline attention. You've also got Tesla, um, and interesting to see with people like Twitter and Snap outperforming sharply yesterday, how will Tesla fare? Obviously highly volatile to their earnings releases and particularly their forward-looking guidance. Um, from a Facebook point of view, uh, what are people looking at? Well, there's a good article in the, the FT, and question marks are, can they repeat the performance that they had last quarter? You remember back in January, their shares actually rose more than 10% after their corporate earnings. It was a really strong report where the growth was largely driven by robust advertising spend. Now, what people are looking at and what Facebook have been indicating, or Zuckerberg has been pushing is the monetization of these platforms like Instagram and WhatsApp. So how successful that has been could be really key, because if you look at this graphic here, this is what Facebook are looking at in terms of looking to generate revenues from the Instagram ad platform in billions. So, you know, we're looking at a change from 2017, which was just short of $5 billion, and they're anticipating that in essentially 3 years' time they're going to be generating in excess of, of $25 billion on the back of Instagram ad values alone. Now what's interesting about this and how they've been trying to push this is they've been looking at a new shopping format on the platform, which basically then they get a cut of commissions on how that works. I don't know if you've seen that, it's called new kind of Shopify aspect onto the Instagram platform, which has obviously a substantial and growing subscriber base. Other things, of course, around the privacy and the impact that that's had on the business on the cost side. We've obviously have seen volatile movements in their share price in previous earnings reports on the back of the fact that costs and margins margins have been squeezed, costs have gone up because the fact that they've had to adhere to more stringent privacy rules going forward. So yeah, a couple of things to think about with Facebook. That'll be aftermarket. All right, well, that is pretty much it. Otherwise, if we just bring over the calendar here, other things to be aware of, and I guess this is more for anyone in the trading live room, trading other currencies The CAD, of course, we'll be looking out for, looking for as always not so much a rate change but the commentary and accompanying monetary policy report, the MPR for the Bank of Canada. That'll be at 3 PM, will be very important. Oil inventories coming out at 3:30 will define the US session, and then you get the Poloz, the Governor Wilkins speaking post the BoC rate decision at 4:15 London time. For any Bund traders, German fixed income, you do have a Bund auction for €3 billion coming out later on this morning. And then as I said, you've got German IFO coming out at 9 AM this morning. All right, that is it. I'm gonna leave you with that. I will see you in the trading live chat room. If you are watching this on YouTube and you've made it all the way through to the end, well done. But remember Remember to like and subscribe to the channel, uh, we'll have further updates coming in the future. Alright, thanks very much guys, have a good day.