North American News
Nasdaq snapped lower – Dow closes higher
- Snap rout leads to lower Nasdaq
The major US indices are closing mixed with the Dow, closing higher, but the S&P and Nasdaq falling. The Nasdaq snapped sharply lower after SNAP announced that earnings and revenues will be sharply lower than their own expectations released just last month. The shares fell -43.08% on the day.
A look at the closing levels shows:
- Dow industrial average up 48.38 points or 0.15% at 31928.63
- S&P index -32.27 points or -0.81% at 3941.49
- NASDAQ index -270.82 points or -2.35% at 11264.46
- Russell 2000 fell -27.93 points or -1.56% at 1764.82
Other big decliners included:
- Shopify, -11.85%
- Roblox, -10.41%
- AMC, -10.28%
- Robinhood, -9.44%
- Uber, -9.29%
- Block, -9.04%
- Goodrx, -8.76%
- Meta, -7.62%
- American Express, -7.46%
- Tesla, -6.93%
- Walt Disney, -4.01%
- Boeing, -3.76%
Gainers today included:
- Zoom +5.61%
- Northrop Grumman, +3.14%
- McDonald’s, +2.74%
- General Mills, +2.46%
- Lockheed Martin, +2.25%
- Verizon +2.03%
- IBM, +2.0%
- Costco, +1.92%
- Coca-Cola +1.85%
- Procter & Gamble +1.78%
- Raytheon +1.5%
- General Dynamics, +1.44%
- J.P. Morgan, +1.41%
- Walmart +1.25%
US treasury auctions off $47 billion of two-year notes at a high yield of 2.519%
- WI level at the time of the auction was 2.526%
- High yield 2.519%. The last auction high yield came in at 2.585%
- WI level at the time of the auction 2.526%
- Tail -0.7 basis points vs. six-month average of 0.0 basis points
- Bid to cover 2.61X vs six-month average of 2.59X
- Directs (a proxy for domestic demand) 22.09% vs six-month average of 17.8%
- Indirects (a proxy for international demand) 62.55% vs six-month average of 59.9%
- Dealers 15.35% vs six-month average of 22.3%
- The 2 year auction was met with strong demand from both domestic and international investors
- The auction high yield was -0.7 basis points less than the WI level at the top of the auction
- That compares favorably to the six-month average of 0.0 basis points
- Dealers were left with a small 15.35% compared to the 22.3% average over the last 6 auctions
US new home sales for April’s 591K vs. 751K estimate
- US new home sales for April 2022
- New home sales 591K vs. 751K estimate
- New home sales -16.6% vs. -1.7% estimate
- Lowest level since April 2020
- These numbers are contracts assigned in April
- Month supply is 9 months up from 6 months in March
Commodities
Gold Price Forecast: XAU/USD climbs and keeps above the 20-DMA, around $1860s
- The yellow metal is rallying in the week, gaining 1.07%.
- Gold advance is courtesy of a dismal sentiment, broad US dollar weakness, and falling US Treasury yields.
- Gold Price Forecast (XAU/USD): To hit a substantial resistance area around $1886-90, which once cleared would open the door for further gains; otherwise, Gold would tumble towards the 200-DMA.
Gold spot (XAU/USD) records solid gains and stays above the 20-day moving average (DMA), which lies at $1854.50, amidst a dismal market sentiment, falling US Treasury yields, and a weaker US dollar. At $1867.22, XAU/USD eyes to re-test the March 31 swing low-turned-resistance at around $1889.91.
Gold advances boosted by a softer greenback
Risk-aversion keeps riskier assets under pressure. Global equities are recording losses, while the non-yielding metal has seen an increase in flows towards its safe-haven status, while the greenback keeps tumbling, a tailwind for Gold prices. The US Dollar Index, a gauge of the buck’s value vs. a basket of peers, is falling 0.36%, down at 101.717.
Investors’ concerns that the US Federal Reserve would trigger a recession in favor of bringing inflation down weighed on the market mood. Additionally, China’s ongoing coronavirus crisis keeps the global economic outlook cloudy. According to the Global Times, Shanghai will allow convenience stores and drugstores to resume operations with a maximum occupancy of 50% before May 31 and 75% after June 1.
In the meantime, US Treasuries keep plunging, led by the 10-year Treasury yield, down 11 bps, sitting at 2.743%.
At the time of writing, Atlanta’s Fed President Raphael Bostic hit the wires. Bostic said he supports expeditious rate hikes to neutral but done “with intention and without recklessness.” Further added that he does not see clear signs of a wage-price spiral.
The US economic docket featured the US S&P Global PMIs for May, which illustrated mixed results, with the Services and Composite Indexes missing expectations while the Manufacturing PMI was unchanged. Furthermore, Richmond’s Fed Manufacturing Index plunged to -14 vs. 15 foreseen, adding to the Fed regional manufacturing reports showing deceleration or contraction.
Gold Price Forecast (XAU/USD): Technical outlook
XAU/USD remains neutral biased, despite exchanging hands above the 20 and the 200-day moving averages (DMAs), each at $1854.41 and $1839.36, respectively. The four-consecutive day rally continued, but the non-yielding metal will face substantial resistance levels around the 100-DMA and March’s 31 swing lows. If XAU/USD fails to reclaim the previously mentioned levels, Gold would aim south and re-test the 200-DMA.
Upwards, the XAU/USD’s first resistance would be the 100-DMA at 1886.84. Break above would immediately expose the March 31 swing low-turned-resistance at 1889.91, followed by the 1900 mark. On the flip side, the XAU/USD’s first support would be the 20-DMA at $1854.41, followed by the 200-DMA at $1839.36, and then the $1800 figure.
Silver Price Forecast: XAG/USD climbs steadily and tests the $22.00 mark
- Silver (XAG/USD) modestly advances but faces strong resistance around $22.00; so far is up 1.25% in the week.
- Risk-aversion keeps precious metals buoyant while the greenback and US Treasury yields fall.
- Silver Price Forecast (XAG/USD): A daily close above $22.00 would open the door for further gains; otherwise, the downtrend would resume.
Silver (XAG/USD) registers gains but appears to be glued to the $22.00 mark, as XAG/USD bulls failed to record a daily close above the $22.00 area for four consecutive days, albeit a dampened market mood. At the time of writing, the XAG/USD is trading at $22.05.
Precious metals climb on the US weaker economic outlook
US equities keep illustrating a dampened market mood in tone with the Asian and European sessions. S&P Global PMIs revealed that Europe and the US presented mixed results, increasing investors’ concerns that Europe and the US might suffer a possible economic slowdown. The supply chain issues continue, and higher costs from raw materials would keep inflationary pressures elevated.
Given the backdrop that the Federal Reserve is tightening monetary conditions in the US and is about to hike 50-bps in the June and July meetings, concerns about the US central bank achieving a soft or “softish landing,” as Fed Chair Powell said, look far to be done. That’s why market players keep the US stock market downward pressured and the US dollar softer.
The US Dollar Index, a gauge of the greenback’s value against a basket of its rivals, slides 0.24% and is down at 101.850. Failure to reclaim the 102.000 mark would open the door for a retest of April 21 swing low at 99.818. On the same note, the 10-year US Treasury yield grinds lower and loses almost ten basis points (bps), sitting at 2.761%, a tailwind for Silver prices.
Elsewhere, Atlanta’s Fed President Raphael Bostic crossed the wires, though he sounded less “hawkish” than usually. Bostic said that rate hikes won’t cause a recession and that the central bank can hike rates to deal with overly high inflation without sending the US economy into recession. He stated that the US central bank could pause rate increases in September to review how the economy performs.
Macroeconomic-wise, the US docket featured the US S&P Global PMIs for May, which illustrated mixed results, with the Services and Composite Indexes missing expectations while the Manufacturing PMI was unchanged. Furthermore, Richmond’s Fed Manufacturing Index plunged to -14 vs. 15 foreseen, adding to the Fed regional manufacturing reports showing deceleration or contraction.
Silver Price Forecast (XAG/USD): Technical outlook
XAG/USD is still downward biased, despite recording gains for the third day out of the last four. However, it’s important that XAG/USD traders, need to be aware that Silver has struggled at the $22.00 mark. Failure at the previously mentioned would resume the downtrend and open the door for further losses.
If that scenario plays out, the XAG/USD’s first support would be the May 19 pivot low at $21.28. Break below would expose the May 16 daily low at $20.84, followed by the YTD low at $20.45. However, if XAG/USD’s bulls accomplish a daily close above the $22.00 mark, that could allow further gains. The XAG/USD first resistance would be the psychological $23.00 mark. Once cleared, the next supply zones would be the May 5 swing high at $23.28, followed by a test of the 200-DMA at $23.57.
WTI crude oil settles at $109.77
- Down -$0.52 or -0.47%
The price of WTI crude oil futures chopped up and down in trading today. The low price was at $108.61. The high price was at $111.43. The prices settling between those levels at $109.77. That’s down -$0.52 or -0.47%.
EU News
Major European shares end the day with declines
- German DAX down -1.74%. France’s CAC down -1.66%
The major European indices are closing mostly lower. The preliminary closing levels are showing:
- German DAX, -1.74%
- France’s CAC, -1.66%
- UK’s FTSE 100, -0.38%
- Spain’s Ibex, unchanged
- Italy’s FTSE MIB, -1.06%
In the European debt market, yields moved lower with the UK 10 year leading the way:
- Germany 0.964%, -4.9 basis points
- France 1.497%, -3 point basis points
- UK 1.878%, -9.2 basis points
- Italy 2.973%, -6.6 basis points
- Spain 2.087%, -6.0 basis points
Other News
Bill Ackman implores the Fed to catch up, hike rates to neutral and stop inflation
- Tweets his solution to the stock market woes
Can the Fed stop inflation? Is the Fed too late? Will external forces (i.e., Ukraine war, China lockdowns, Supply chain, shortage of labor due to demographic shifts), make their job impossible?
Cryptocurrency News
Bitcoin has define the technical trading ranges – Awaits the next move
- 100 and 200 hour moving averages are resistance. Floor is at recent lows.
The price of Bitcoin move up to a topside the swing area during yesterday’s trade between $30,505 and $30,753 . Sellers leaned against that area and yesterday push the price back down through the near converged 200 and 100 hour moving averages. Since then, the price has remained below those moving average lines with the low price today reached down to test swing lows going back to April 14 and April 19/20th at $28,600. The low price today reached $28,632.40 – just $32 away from that key swing level.
The subsequent bounce higher saw the price of bitcoin stall near the 100 and 200 hour MAs at $29,568 and $29,706 respectively. The high price stalled at $29,603, between the MA levels
What now?
The technicals have defined the high vs the 100/200 hour MA (up to $29,706) and the low (at the swing area at $28,600). Buyers and sellers are battling it out between those levels, and awaiting the next shove.
- Move above the moving average and I would expect further upside momentum. Traders will look to target the high swing area between $30,505 and $30,754. Get above that level and the $31,000 level would be the next major target
- Move below the $28,600 floor plan I would expect further downside momentum . Below that watch the $27,700 level. That is the 61.8% retracement of the move up from the May 12 low. Below that and traders will start to look toward the May 12 low near $25,400.
In between the moving averages above, and the floor below, and the market bias is neutral and awaits the next shove.