North American News
Nasdaq and S&P lower. Dow holds on to a small gain
- 3 day win streak snapped in the NASDAQ and S&P
The major US stock indices are closing near there lows. The S&P and the NASDAQ index both closed lower on the day and snap their 3 day win streak. The Dow industrial average eked out a small gain extending its win streak to 4 trading days (but just barely).
A look at the final numbers shows:
- Dow industrial average is closing up 2.35 points or 0.01% at 31839.12
- S&P index is down -28.51 points or -0.74% at 3830.59
- NASDAQ index is down -228.11 points or -2.04% at 10971.00
- Russell 2000 is up 8.17 points or 0.46% at 1804.33
The lower yields in the US tried to help the price rebounded intraday. In addition Bank of Canada’s rate hike of 50 basis points which was less than the 75 expected helped. However the headwinds from major big caps including Microsoft (-7.72%), Google (-9.65%), and Boeing (-8.70%) was just too hard to overcome. Apple fell -1.92% and Amazon fell by -4.10%. Both will announce their earnings after the close tomorrow.
US treasury auctions off $43 billion and 5 year notes at a high yield of 4.192%
- WI level at the time will auction was at 4.210%
- High yield 4.192
- WI level at the time of auction 4.210%
- Tail -1.8 vs. six-month average of 1.2 basis points
- Bid to cover 2.48X vs. six-month average of 2.38X
- Directs 15.6% vs six-month average of 18.8%
- Indirects 68.0% vs. six-month average of 61.8%
- Dealers 16.5% vs 19.4% six month average
Atlanta Fed GDPNow rises to 3.1% from 2.9% on October 19
- Atlanta Fed GDPNow growth estimate for the 3Q of 2022
The Atlanta Fed GDPNow growth estimate for 3Q rose to 3.1% from 2.9% October 19. In their own words:
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2022 is 3.1 percent on October 26, up from 2.9 percent on October 19. After recent releases from the US Census Bureau, the US Department of the Treasury’s Bureau of the Fiscal Service, and the National Association of Realtors, the nowcast of third-quarter real government spending growth increased from 2.4 percent to 3.8 percent, while the nowcast of the contribution of the change in real net exports to third-quarter real GDP growth decreased from 2.23 percentage points to 2.19 percentage points.
US new home sales for the month of September 0.603M vs. 0.585M estimate
- US new home sales for the month of September 2022
- Prior month 0.685M revised to 0.677M
- New home sales 0.603M vs 0.585M estimate
- New home sales MoM %: -10.9% MoM
- new home sales YoY -17.6% of 0.732M
- Median sales price up 13.8% YoY at $470,600
- average sale price came in at $517,700
- sales inventory came in at 9.2 months at the current sales rate
- new houses for sale 462K
Commodities
Gold bulls on the verge of a significant breakout
- Gold is on the verge of a significant bullish turnaround, but it all depends on the Fed.
- Technically, the bulls need to hang on above hourly support and break a daily H&S neckline.
The gold price is higher by some 0.70% on the day as the US dollar continues to bleed out in a risk-on environment following the Bank of Canada’s dovish rate hike ahead of next week’s Federal Reserve interest rate decision. US bond yields have slipped on expectations that the Federal Reserve will temper its aggressive rate-hike stance starting December which has enabled the precious metal to firm up within a broader bearish technical picture.
DXY and yields on the backfoot
At the time of writing, XAU/USD is trading at $1,665 having travelled between a low of $1,649.81 the low and $1,675.00 the high. The DXY, an index that measures the greenback vs. a basket of currencies is losing some 1.00% on the day having dropped from a high of 111.135 to a low of 109.649 while the US 10-year yield is down 1.95% from a high of 4.113%, clinging on to 4%, just a touch above the lows of 3.997% as it moves in on technical support
Silver treads water above $19.50
- Silver prices’ recovery stalls at $19.50 area.
- A weaker USD underpins the precious metals recovery.
- XAG/USD needs to breach an important resistance hurdle at $19.65/75.
Silver prices are trading higher for the second consecutive day on Wednesday, with the white metal extending its recovery from the $18.80 low on Tuesday to two-week highs at $1975, where it seems to have found a significant resistance hurdle.
USD weakness underpinning precious metals’ recovery
The XAG/USD appreciated earlier on Wednesday, fueled by a broad-based US dollar weakness, as the investors start to price in a slowdown on the Federal Reserve’s monetary tightening path.
The positive price action, however, has stalled right below the $19.65/75 area, where the 100-day SMA meets the 50% Fibonacci retracement level of the October 4-14 decline and the September 23 high.
A successful break above that area would put the pair aiming for the $20.00 psychological level (and the 61,8% Fib level of the aforementioned decline) before aiming at $20.85 October 6 and 7 highs.
On the downside, the 50-day SMA, at $19.00 is defending the pair from further decline, so far, with the next potential support area at $18.80 (Oct 25 low) ahead of the October 14 low at Oct 14.
US weekly EIA oil inventories +2588K vs +1029K expected
- Weekly US oil inventory data
- Prior was -1725K
- Gasoline -1478K vs -805K expected
- Distillates +170K vs -1138K expected
- Refinery utilization -0.6% vs +0.3% expected
- SPR draw of 3.4m vs -3.4m expected
- Implied oil demand 20.587m vs 20.761m prior
- Gasoline implied demand +252k bpd
API data released late yesterday:
- Oil +4520K
- Gasoline -2278K
- Distillates +635K
EU News
European major indices close higher on the day as sentiment sees a shift
- Indices close near highs and erase earlier declines
The major European indices are closing higher and near their highs for the day. They also erased earlier declines. The Bank of Canada shift to 50 BPs instead of 75 BPs gave investors a “risk-on” bias. Stocks are higher. Yields are lower and the USD is lower.
A summary of the major indices shows:
- German DAX, +1.09%
- France’s CAC +0.41%
- UK’s FTSE 100 +0.61%
- Spain’s Ibex +0.98%
- Italy’s FTSE MIB +0.25%
Other News
IMF head Georgieva: Central banks should keep hiking rates until neutral level
- Remarks by IMF head, Kristalina Georgieva
- At this point, we look for getting to a neutral mode
- In most places, we are not quite there yet
- Central banks have to keep tightening policy, raise interest rates
- This is because when inflation runs high, that undermines growth and hits the poorest parts of the population the hardest
Cryptocurrency News
Bitcoin extends outside up and down consolidation range. Stalls near retracement target
- Tests 100 day MA as well at highs
Yesterday, the price of bitcoin moved up to test a topside swing area high AND the 50% of the move down from the September 12 high. That level came in at $20469. The high price reached $20411 – just below that target – and backed off.
The move lower off the high at $20411, saw the price move back down to test the broken 38.2% of the same move down at $19923. The low reached $19971 just above that target. Buyers returned and pushed back higher.
What now?
If the buyers are to finish what they have started by getting above the 50% of the move down from September high on the hourly chart, the price needs to get above the 100 day MA and stay above that key MA barometer. The last two attempts in September and before that in August could only move above for two days. This is the 3rd try.
Tomorrow will give traders the 2nd shot to move above that 100 day MA and stay above. Failure to do so, and it looks like August. It looks like September. Conversely, if the price can get and stay above the 100 day MA, the buyers have their shot to build on the break.
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