North American News
Rebound?US stocks move higher today, but still down on the week
- NASDAQ and S&P down for the 6th consecutive week. Dow down for the 7th consecutive week
The major US stock indices are closing sharply higher on the day. That’s good news. The not so good news is that for the week they are all lower.
For the NASDAQ and S&P index the index closed lower for the 6th consecutive week. For the Dow industrial average fell for the 7th consecutive week.
The final numbers for the day are showing:
- Dow industrial average up 466.36 points or 1.47% at 32196.67
- S&P index up 93.81 points or 2.39% at 4023.90
- NASDAQ index up 434.05 points or 3.82% at 11805.01
- Russell 2000 up 53.28 points or 3.06% in 1792.66
For the trading week:
- Dow industrial average fell -2.14%
- S&P index fell -2.40%
- NASDAQ index fell -2.81%.
From all time highs:
- Dow industrial average is down -12.87%. The low the index was down -15.49% from the all-time high to the site below.
- S&P index is down -16.49%. At the low the index was down -19.92%, just short of the bear market level at -20.0%
- NASDAQ index is down -27.18%. At the low this week the index was down -31.48%.
UMich May prelim consumer sentiment 59.1 vs 64.0 expected
- Consumer sentiment data from the University of Michigan
- Prior was 65.2
- Current conditions 63.6 vs 70.5 expected
- Expectations 56.3 vs 63.0 expected
- 1-year inflation expectations 5.4% vs 5.4% prior
- 5-10 year inflation expectations 3.0% vs 3.0% prior
- Consumers’ assessment of their current financial situation relative to a year ago is at its lowest reading since 2013
- Buying conditions for durables reached its lowest reading since the question began appearing on the monthly surveys in 1978, primarily due to high prices.
US April import prices 0.0% m/m vs +0.6% expected
- Import/export price data
- Prior +2.6% (revised to +2.9%)
- Export prices +0.6% m/m vs +0.7% expected
- Import prices +12.0% y/y
- Prior import prices +12.5% y/y (revised to +13.0%)
Commodities
Gold falls through $1800 Briefly to the lowest since early February
- US dollar strength is weighing
If you price gold in non-USD currencies, it’s doing well this year. There’s an argument for buying it on expected turmoil in emerging markets as inflation remains high.
That said, the momentum is what it is. Gold has had a hard time defining itself recently and it failed at $2000 again. Aside from being a big, round number, $1800 isn’t particularly relevant on the chart. $1780 should offer some support but it’s concerning that gold can’t find a bid lately on either the risk-on or risk-off days.
Silver trades to the lowest level since July 2020 on dollar buying and bearish technicals
- Price falls below floor between $21.42 to $22.01
The price of silver has been on a sharp move to the downside. Since it’s last peak at $26.21, the price has been down 16 of the last 18 trading days. Today, the price made a new cycle low but has seen a rebound and trades higher on the day. The low price today reached $20.46 before rebounding. The price is currently at $20.99 .
The run from the high on April 18 to low today subtracted $5.75 from the price or near -22%. The sharply higher dollar along with negative technicals have helped to push the price lower.
Technically, looking at the daily chart above, on April 25 the price fell below the converged 100 and 200 day moving averages. Earlier on March 30, the price bounced off its 200 day moving average. The fall below both it and the 100 and 200 day MA turned the buyers to sellers.
More recently, this week the price fell below a technical area between $21.429 and $22.01. It would now take a move above that swing area to give the buyers a victory. Absent that and the sellers are more in control.
Drilling to the hourly chart below, the trend to the downside has been able to stay mostly below its 200 hour moving average. There were brief move above that moving average on May 5 (on 2 Separate occasions) but those breaks failed and by May 6, the price has moved below the 100 hour moving average and has stayed below that moving average since then.
The current 100 hour MA comes in at $21.36. A move above that level, and then the 200 hour MA at $21.938, is needed to give the buyers more control. The 200 hour MA is near the high of the swing area on the daily chart at $22.01. Getting above $22.00 is therefore a key target to get to and through on move higher next week. Absent that, and the sellers remain in full control.
WTI crude oil futures settle at $110.49
- Up $4.36 or 4.11%
WTI crude futures are up for the 3rd straight week after squeezing above the closing level from last week at $109.72. Today the price settled at $110.49. That is up $4.36 or 4.11% on the day. For the week the prices up $0.77 after dipping as low as $98.20 and trading as high as $110.64.
Looking at the daily chart, the price is trading right around and a downward sloping topside trend line (give or take a few cents). The price did inch above that level level at the high today. The trendline will be a key barometer going into the trading week next week. Move above would be more bullish. Stay below, and we could see a rotation back to the downside.
At the low this week from Wednesday’s trade, the price tested the lower trend line and bounced.
So for the week, the trend lines on the daily chart have been instrumental in up and down week. The price is closing near the topside trend line which gives the buyers the better feeling. However, if that resistance holds, the “ups and downs”, may reenter a “down” bias next week.
EU News
European major indices close with solid gains
- UK, Germany, France markets rise over 2%
The major European indices are ending the session with solid gains. The UK, France, the German indices all rose over 2%. Italy lagged but was still solidly higher.
A look at the provisional closes shows:
- German DAX, +2.1%
- France’s CAC, +2.5%
- UK’s FTSE 100,, +2.6%
- Spain’s Ibex +1.7%
- Italy’s FTSE MIB, +2.0%
For the trading week:
- German DAX, +2.57%
- France’s CAC, +1.6%
- UK’s FTSE 100, +0.5%
- Spain’s Ibex +0.27%
Other News
US: Consumer Sentiment hit from everywhere – Wells Fargo
Data released on Friday showed University of Michigan’s Consumer Sentiment Index fell to 59.1 in May from 65.2 in April, the lowest reading since 2011. According to analysts at Wells Fargo, there is no shortage of factors to blame for the decline in consumer sentiment, from inflation to rising interest rates and financial market instability.
Key Quotes:
“It is tough to find a silver lining for consumers so far in 2022. Inflation is as bad as it has been in decades. Rising mortgage rates make housing even less affordable. Gas prices are at an all-time high. Supply chain problems are still making everything from infant formula to household appliances hard to find. A selloff in financial markets and the associated dent in retirement accounts weighs on future prospects. Small wonder then that against this grim backdrop the University of Michigan’s survey of consumer sentiment came in at its lowest level since 2011 when the economy was just emerging from the recession that followed the financial crisis.”
“The selloff in financial markets is not new, but it certainly worsened in recent weeks. Financial market instability is clearly taking a toll on sentiment.“
“We’ve made the point previously that consumer sentiment tends to be more impacted by inflation than by the labor market, but it is uncanny how that divergence is playing out. Inflation is so bad that it is able to swamp what is a unique period of labor market strength. Over the past 30 years, in prior periods when the unemployment rate was below 4%, the average level of consumer sentiment was almost 99, 40 points higher than it is today. This points to how bad other factors (particularly inflation) are at this particular moment.”
Cryptocurrency
Has the crypto market hit bottom?
- This could be both the start of an extended buying wave and a trap for the bulls.
Bitcoin added 0.6% on Thursday, ending the day around $28,600, a modest gain but a significant intraday win. Bitcoin managed to find support near $25K on Thursday morning, reversing a multi-day decline. Since the start of the day on Friday, the rate has moved back above $30.5K (+6.9%).
This could be both the start of an extended buying wave and a trap for the bulls. After serious oversold previous days, altcoins rose at a double-digit pace in the last 24 hours. Ethereum is adding 16%, once again above $2K. The top 10 other leading altcoins are soaring from 25% (Solana) to 41.4% (Cardano). Total crypto market capitalisation, according to CoinMarketCap, jumped 14% overnight to $1.32 trillion.
The bitcoin dominance index lost 0.3 percentage points to 44.4% due to weaker altcoins. The cryptocurrency fear and greed index was down 2 points to 10 by Friday and remains in “extreme fear”, but it largely ignores the optimism of recent hours. Thus, the indicator’s current low levels might also attract “buy when you are scared” buyers.
Do Kwon, head of Terraform Labs, presented a recovery plan for the UST stablecoin. Against this backdrop, the cryptocurrency LUNA lost nearly 100% of its value. The Terra blockchain has halted. According to media reports, Do Kwon was previously behind Basis Cash – another failed stablecoin blockchain project.
The USDT stablecoin price tested the $0.94 level on Thursday amid market turbulence. Paolo Ardoino, technical director of issuer Tether, said the company has enough reserves to buy back all assets at a 1:1 ratio to the US dollar. Tron founder Justin Sun saw signs of an imminent attack on the USDD algorithmic stack coin launched on the Tron network in May. Sun announced a $2 billion allocation from the TRON DAP Reserve organisation to prevent such a scenario.