What Next For US Equities?

Okay, very good morning. It is Tuesday the 11th of August. Hope you're doing well. Just a quick word here, as you can see I've got the Amplified Trading YouTube channel up at the moment, so don't forget to subscribe to the channel and click that bell icon to put on the notifications for whenever we release new content. You'll get an alert and a push on your phone or on your desktop. Um, just explaining quickly, there's 4 main categories to our YouTube kind of page. There's the morning daily briefings that I do, which go out every morning, and these go up slightly delayed on our YouTube channel because they go out live privately to our traders first on Amplify Live. And then we've got the weekly trade setups from Sam, much more technical based. Then we've got Markets Explained with Eddie, where he kind of does a deep dive into some of the key news stories in the headlines at that point in time. And then we have Milan Deep from our tech team who has done a good series about algorithmic trading, and he's got some new content coming soon as well, live sessions and so on. So plenty of content material hopefully that you'll find enjoyable. So do subscribe to the channel and hopefully you can make the most of that in your preparation for day-to-day trading. But let's push on and talk about what's moving markets this morning. And going to start with the charts and really talk about the market in, in quite a technical way. There's not too much in a way of distinct news flow, I would say, from the overnight session. If anything, we had a recovery on Wall Street. It was so interesting yesterday. I'm going to have a look at the NASDAQ here. The NASDAQ came under quite heavy selling pressure immediately at the open yesterday. I saw one guy and one infamous person on Twitter tweeting about, oh, the bubble's burst, this is it, the Nasdaq, you know, it's the end of days now. And I was thinking a little bit like, this is— he's just fallen into the classic trap here. The little bit of downside, uh, it's kind of like of the order would be keep calm and carry on. Look, the market narrative has not changed really here. If anything, as I'll discuss in this briefing, it's supportive of equity longs. Still. And any opportunity then the market corrects itself and moves down, it's just an opportunity to reassert longs. And that's certainly what we saw yesterday. So yeah, although it seems, uh, quite spicy at the time when the market's coming down quite heavy, particularly the underperformance that we saw. Obviously people are looking at the NASDAQ as the initiator perhaps of some kind of pop in markets, given how, how it's outperformed with these large-cap mega tech names. But yeah, as soon as we hit that low, it's just been returning ever since. And this morning, look, to the tick, we've reversed that entire loss already in what, less than a day, you know. So yeah, at the moment then, the NASDAQ— I mean, just looking at this, we might as well start on this chart here. And we're just coming up to— actually, it's quite an interesting technical level just from the near-term price activity. You've got that initial print just before the collapse that was seen at the open yesterday. That also coinciding with the retest of reopening of Globex trade at the beginning of the week on Sunday night. You can see here it was respected back on the 5th and also on the 6th, which acted as a bit of a floor for then the push up at the time to what was the retest and on the all-time highs. So yeah, quite a key level here just coming up in early European trade. Index futures off to a positive footing. Asia overnight, given the US recovery into the close on Wall Street, Japanese, Hong Kong equities were up more than 2%. Shares in Australia and South Korea were also positive. So generally just picking up the baton then here in the, the eurozone, in the UK. On a slightly bigger time frame, this is obviously that longer daily continuation chart we've been looking at. You can see that traded quite heavy because we broke a key level here in the NASDAQ yesterday at the open. And you can see we pushed all the way down, but quite to a strategic point, which was those previous, um, highs. And now what is a support point area around 10,939. That's pretty much where the market respected yesterday on that brief decline. But importantly, we, we closed the day above that more significant level at 11,058. And since that point, we've just continued to bounce ever since. Cents. While we're on the US equities, I guess we might as well talk about the S&P as well. And that just continues to claw away on its pursuit back up to all-time highs. So here we are, I've just broken out. The, the market was finding a little bit of resistance just before I came on here. It's just, just 7 AM now here in London. So we're knocking on the door a couple of times late in the Asia-Pacific session, it was holding. But now Europe's in, a bit more increased volume, we've just managed to break on the upside here. Um, on the technical levels, probably keep an eye on the bottom end of that late Asian range, and then probably here as well, which would encapsulate some of the highs that were seen from yesterday's session. These would be important support points on any pullback. But now, as we continue to move higher, if I go back onto a daily, you know, it's not, not a lot now technically, given we're trading at 3366 until we kind kind of claw it out now up to the 3,400, and 3,397.5 being that all-time high that was seen prior to the pandemic really kicking off in terms of the situation moving outside the borders of mainland China at that time. So all things looking fairly good at the moment for the S&P to eventually hit that target. I know Sam, for one, has been in that, that long trade for a number of weeks. So, you know, I would be surprised if he was to take any here and that he would hold it for a little longer on the premise that we do eventually get up closer toward that target. Otherwise, elsewhere then, the DAX obviously following suit. Uh, the DAX index is up around 150 points this morning. You can see here in the shorter term we've broken out of an interesting short-term level which is You've got this low print that was seen, uh, really late Asia session, a bit early for Europe to come in. But as Europe's come in, and as usual in the futures, in the DAX, it's just popped up higher, breaking out of that Asia-Pacific range. But that downside level, quite an interesting area of just support, which was kind of the range high of activity through last week. And now we're just seeing a bit of an extension. So you can see that period of consolidation really was a reflection of the break that came overnight in the commencement of the Asian session. So if I just put a box around it here, and now Europe's come in, we just managed to break the top end of that, which was also coinciding with the R1, just adding a bit of momentum. So that also filtering through into the European indices. Elsewhere, oil's a little bit firmer this morning. That also technically, we've just moving over and above the, the highs that were seen from yesterday. From a longer time frame, this is fairly interesting. Around this 4236 was an area of resistance back on the 21st, 23rd of July. That also then does open up the potential look and retest up at the 5th of August, 2nd of March low price point that was 4332, which defined the high from last week. A few headlines this morning, if I just quickly jump over, talking about oil rising with the prospects for US stimulus buoying demand outlook. Obviously, progress in talks between Democrats, Republicans still negotiating a broader additional virus relief package. This, this is still under debate at the moment, but most people would be of belief that at some point in the near future that a compromise of some sort will be seen in order to assist a further economic recovery of the US, which is obviously going to help boost the demand side of the equation. Not only that, a couple of other kind of alternate data I've been looking at in terms of the signs of recovering consumption— the quantity of commercial flights around the world rose about 6% in the 7 days to Sunday. Last week according to Flightradar24 data. And the average number of planes now is around 67,000 in the sky. It's still well below the 100,000 pre-COVID figure. However, in the last week, as I said, we're up 6%. So there's plenty of upside there for return of consumption with— as, as I'm going to discuss with COVID if the situation does improve and some of the stringency on air travel starts to loosen and allow that traffic to recommence and things like tourism gradually to start reopening in some key areas, well then that's going to also add to this idea, like the Saudis were saying at the weekend, that demand is going to recover to a fairly strong degree in the second half of the year, all things remaining equal, of course. So that also in the context of if that demand does return, don't forget that US active oil rigs at the moment are at their lowest they've been since July of 2005. So also as well, there's kind of a lack of available supply in that sense in the North American focus, if we were talking about the Permian Basin for example. So, um, yeah, quite a few things to remain, you know, kind of bullish about. I, I guess from an intraday perspective, oil and equities are kind of playing to the same— they're dancing to the same song at the moment in respect to they're both moving in a uniform fashion because it's dependent and based upon this this outlook over the economic picture going forward. As such then, just given some of the movements, T-notes pretty quiet, but we're down a tick. If I quickly go back to the charts, it does consolidate then the downward trend that was materializing through yesterday afternoon. If you actually look at the US 10-year, just from a technical basis, you can see we had a double top. This would have been last week, um, rejection around 1.4013. And if you look at it on a daily, that did come after we had seen a decent break higher out of a long-standing area of resistance that really shackled the price action on the upside through April, May, and also July. We broke out of that at the end of July, and we kind of petered out at 1.4013 towards the, the beginning of last week. And since that point, we've just grinded back down. So I'll be looking for an area of support here if I just zoom it in a little bit, you've got that, that previous strong area which will now turn support at 139.22. And I'm also just keeping an eye then, coinciding with that is a trend line forming from mid-June. It's had a retest on a couple of attempts, so quite a nice area of support here for the 10-year. So I wouldn't be surprised to see it come down another couple of ticks if equities remain firm today. If it does though, I'd be looking for support at around those areas. And then in the precious metal space, yeah, interesting morning for gold. Um, let me just move this over a touch so you can see it more clearly. These were the markups, of course, I was talking about at the weekend. And gold, there's nothing really specific that's come out from the headline. The dollar is flat at this point, so I'd say at the moment this is quite technical the way it's moving. You can see I've got these two rectangles which were defining what I was talking about as key areas that the market might respond to on any pullbacks. And certainly that first area was important. The market did bounce in the prior week, but it also bounced then on that initial retest as well. And there's also— was it— was a longer trend line I was keeping an eye on here, which having broken that and that support area, I think is what's contributing to some of this downside pressure this morning in gold. So you know, just as quick as it can go up, it can also go down in that way when it breaches key significant levels. So on the downside now, as we come down, the next near-term target, 2900.5. You've got that previous momentary high that we had on the 2nd when we popped up to what was all-time highs at that point in time. Just looking here, that also coincides with the S2 on the daily pivot, so could be an interesting level there just to to keep an eye on, on this kind of momentum play, I'd say, on this deterioration in price we're seeing this morning. The more important key level though comes down this downside rectangle here. If I just move the, the box up over my video, so that being that, that level of symbolic importance, 2000, and was that key area of resistance now turned support. So kind of two key areas support looking here, uh, 2009.5 and then 2000 if we remain heavy. Could we break 2000? I'm not so sure. I still think that underlying fundamentals haven't really shifted or altered too much. The COVID stuff I'm going to talk about has developed, you could argue, in a more positive way, and that is some of the underlying positivity is emanating from that fact. But I still think there's enough kind of risks on the table. You've got medium-term risks, of course, in the form of the US election volatility. Given this whole mail-in ballot, it's likely to delay results for the election, which is going to create all kinds of uncertainties. So I think there's definitely right reasons to still have a gold position in terms of a portfolio mix for exposure. So if we come down to $2,000, I think people might look to kind of reload in some respect if we do get there. Today would be my, my kind of base view. All right, let's, let's quickly run through some currency news. Let's talk about cable for a moment. I was just looking at cable here, slightly more short-term, I guess. If I can just lift that up, you can probably just about make that out. I'm taking this trend line from, from the 30th here. You can see had a close retest on the 4th. Retested it on the 7th and on the 10th. So there's an area there definitely on the downside I'd be keeping an eye on, and that does then coincide in sterling with that S1, with the trend line, which would be in here. So I'd be looking around that kind of area, and then you've got the 1.30 and handle below, which would be those lows and the respective high. You can see it just off screen here, would be quite key areas of support. From a near-term price point of view. I'm not entirely that keen on this, this top trend line. It has been tested 3 times, but the market certainly did react to it this morning in early trade as the dollar is just resuming a touch of strength. In the near term, you've got the overnight Asia-Pacific low would come in at around the pivot level, and that also would coincide with around the low point that we had from yesterday. Evening. So quite an interesting area of support coming down, uh, around that 64 to 67 type area. Any break below there, then obviously there is a bit of clean air between there and really down to those more key areas of support I'd be eyeing, kind of around the 130.2930 type area. So quite interesting to see how it reacts at around this key area here at 130.64. If you missed that short opportunity further up on the— on that trend line and close proximity to the, to the overnight low in cable. So cable at the moment, I mean, that's the more zoomed in 30-minute picture. If you're looking, you're not that interested in getting too involved in some of the action intraday, then, you know, we're still within that broader area of consolidation between 130, really 130 and 132. And so it might be that if the market doesn't yet come down and you'll be looking for something more interesting more towards around the low that we printed down on Friday post-payrolls with some of that dollar strength that we had at the time. Um, quick look elsewhere at the euro. And yeah, just looking at the euro here, just a key area I think to keep an eye on on the upside, which might act as a strong area of resistance. It already has done actually this morning, so for any of the early birds might have got hold of a bit of that price action, just given some of the slight pickup in the dollar we're seeing at the moment, which is weighing on both cable and the EURUSD currency pairs. That being then, that low that we had, again similar mimicking the, the dollar reaction to the payroll move. So that was the Friday post-payroll low, and then the markets responded a couple times. You can see a reaction to around that price point at 1.1763, 64s, and the market's just drifted since that point. So So it doesn't look particularly too interesting where it is at the moment. I guess you could say it's having a little bit of a test around the area of which it's trading really at the moment. But unless it comes back up to that level, assessing all things at that point in time, I think that's quite an interesting ceiling to the price for the time being. That will be the key level to watch. Any further push to the downside, we just— I'm sure if you can see that just above my, my video camera but if you get back down to retest what was the overnight Asia-Pacific low, then that does bring into play the low that we had back on the, on the 4th as well in the short term. So yeah, that would be, be quite an interesting area to keep an eye on today in the currency market. Talking of cable, one thing we did have overnight, just so you're aware, in UK press, the Bank of England will step up quantitative easing if the British economy slows and struggles again. Uh, this was in the Times newspaper in the UK, citing the Deputy Governor Dave Ramsden. Uh, Ramsden is quite interesting. He, he actually on the hawk-dove spectrum, um, sits kind of center hawkish. Um, I don't think anyone's really we could classify as being hawkish at this point. It's just less dovish, but he does tend to sit leaning that side. So quite interesting here. He's, to me, this is basically saying we don't really want to do negative interest rates, because what he's effectively saying is, look, the nearest and clearest tool that we could use here is, even though we've expanded quantitative easing, the asset purchase facility, by £100 billion at two meetings ago, we could quite appropriately increase that £745 billion further if needed. So for me, it just puts more steps in before they get to negative. So it is Although, although as it on a surface level it might sound dovish, actually I actually think it's more on the hawkish side, if that makes sense, if anything. So overall I wouldn't over-interpret this. It's not really going to be something— this is more repetition if you think about what the Bank of England said at their last meeting. It's not that much different, to be honest. The other thing from a UK perspective, British consumers spent the most last month since the country went into coronavirus lockdown in March, as pubs, restaurants, barbers, beauty salons all reopened according to data from Barclaycard and the British Retail Consortium as well. Over the overnight session, we saw that data come out. So again, I would eradicate these news stories. I'm bringing them to your attention so you're aware of them. Really, it's the technical levels and the dollar movement that's really driving the movement this this morning. Just a quick look then at a couple— I talked about COVID briefly, and some of this risk on definitely is emanating from the fact that, you know, the key areas we've been monitoring, of course, throughout this whole pandemic has been North America, mainland Europe, and really the Far East and China. China generally has been relatively stable. If anything, their economic data has reflected that, albeit, you know, we continue to remain kind of vigilant for developments going forward, of course. In mainland Europe, there was a flutter of activity where people were getting a little bit nervous about 3 weeks ago or so, with Spain particularly in focus and France. But that as well has kind of dissipated a little bit. But then in North America, which was obviously the key defining one given it's the world's largest and most important economy, it has been quite interesting because if we were looking at a couple of these graphics So just looking at the general trend that we've been saying— seeing, there's a couple I'm going to cycle you through. This is looking at the number of positive COVID-19 cases per day, and you can see if we look at the 7-day average, it's decelerating at a fairly rapid pace at this moment in time. The other one that quite a few people are looking at here is that markets are taking some degree of comfort from the fact that New York, California, Texas are all reporting falling hospitalizations. So if you remember, there was a bit of a disconnect at the time when hospitalizations were, were soaring back about 4 or 5 weeks ago, and we thought then the inevitability that death rates would pick up, but they never really quite saw a rapid pickup. They certainly did in terms of the number per day started to consistently, in terms of deaths, go over 1,000. However, now if that was then a kind of— if hospitalizations was kind of a lagging indicator, well then now they're declining and they're declining at a fairly consistent pace from the peak that we saw during the first episode of the first wave in the kind of tri-state area in the Northeastern America. So this is another kind of positive sign as well that's emerging. And then if we're looking at week-over-week percentage change of 7-day average deaths, then that in kind has also followed suit suit. And although the number is still a positive 2.9%, the idea here is then it has continued to decrease and now coming back down to potentially moving into negative territory, which we wouldn't have been seeing ever since then, uh, before we had the, the outbreak in the, in the Sunbelt region, in those more southern, south and west states in America. The other thing then, as this develops, is the kind of consumer behavior, because obviously consumers getting out, back out there and regaining confidence and going about their normal activities, whether work, dining, shopping, where it's permitted of course. But Google search interest has also started to decrease down to levels that haven't really been seen in a long time. As you can see, worldwide search interest in COVID-19 is at levels far below its previous peaks that we've had. And I do think that that's an important component from the psyche point of view for the critical component of an economy to function and recover more thoroughly, which is that of the consumer. So there definitely is a couple things here, I think, that, uh, that are still supportive of this idea that equities can continue this, this kind of gradual rise. I don't think that the, the pop that I mentioned that someone on Twitter was mentioning yesterday, I think it's a little premature to call that just yet. So that doesn't mean we won't be without some, some bumps in the road where we see situations like what we had at the open yesterday with the case of the NASDAQ. But what I still think will happen is that people will buy into those, those pullbacks. So yeah, that's it. That's your, your morning briefing. So hopefully that was useful. A couple of charts there. I'll share those in the, the private Zoom chat channel we have for our traders, so you guys will have those to hand. Cool. Alright guys, have a good day and I will catch you tomorrow. Any questions, just let me know.