North American News
Solid gains for the major indices today Dow industrial average up nearly 2%
- The week is off to a good start
The major US stock indices are ending the day solidly higher with the Dow industrial average up near 2%. The Dow is looking to break and 8 week losing streak which has not occur since 1923. Both the S&P and Dow industrial average have been down for 7 consecutive weeks.
The final numbers are showing:
- Dow industrial average rose 618.60 points or 1.98% at 31880.51
- S&P index is up 72.43 points or 1.86% at 3973.79
- NASDAQ index is up 180.67 points or 1.59% at 11535.28
- Russell 2000 is up 19.49 points or 1.10% at 1792.76
The financials were big winners with J.P. Morgan up $7.20 or 6.14% at $124.54. Citicorp was up $3.03 or 6.09% of $52.78.
After the close Zoom reported better than expected EPS with revenues in line with expectations:
- EPS came in at $1.03 vs $0.87 estimate
- Revenues $1.073B vs $1.073 estimate
Their shares are trading at $104.44 after closing at $89.33
Chicago Fed’s April national activity index rose 0.47 from a revised 0.36 in March
- Chicago Fed’s April 2022 national activity index
- 3 month average 0.48 vs. 0149 in March
- 62 of 85 individual indicators made positive contributions
- 23 May negative contributions
- 47 indicators improved from March to April
- 37 indicators deteriorated from March to April
- one indicator was unchanged from March to April
- production related indicators contributed 0.26 up from 0.20 in March
- employment contributed 0.10 which was lower than the 0.17 in March
- The contributions of personal consumption and housing category moved up to 0.08 in April from 0.01
Fed’s Bostic: It is clear the economy can stand on it’s own feet
- Atlanta Fed Pres. Bostic speaking
- It is clear the economy can stand on its own feet him
- The Federal Reserve has a little more to go raising interest rates in the coming months
- It will take time for cash to flow out of consumers bank accounts
- Businesses are still having trouble satisfying demand
- full effect of Ukraine war has not been felt yet, upward price pressure for industrial inputs still to come
- Ukraine is a large, further sorts of uncertainty for the Fed
- The Fed needs to be ready to either move faster or slower depending upon data and how the economy reacts
- It may be the case that the Fed needs to go “super hard on rate hikes, but that is not the baseline
Commodities
Gold Price Forecast: XAU/USD records a fresh two-week high at around $1860s amid US dollar weakness
- Gold (XAU/USD) begins the week on the right foot, up 0.54% in the week.
- A softer buck and concerns of the US falling into a recession courtesy of an aggressive Fed lifts the prospects of the yellow metal.
- Gold Price Forecast (XAU/USD): Bulls need to reclaim the 20-DMA, if not a re-test of the 200-DMA is on the cards
Gold spot (XAU/USD) advances for the fourth-straight trading day and begins the week with an upbeat tone but retreats at the 20-day moving average (DMA) at $1856.45. At $1854.78, XAU/USD reflects the weak appetite for the greenback, albeit higher US Treasury yields, which are pairing last Friday’s losses.
The market sentiment remains upbeat, one of the factors that weighed on the US Dollar, which is trading at four-week lows. The US Dollar Index is plunging almost 1% and clings to the 102.000 mark, a tailwind for Gold prices. The buck’s weakness is courtesy of growing concerns of a US economic slowdown that could trigger a recession, as the Federal Reserve hikes rates aggressively to bring inflation down from above 8%. Investors’ focus would be on Friday’s Personal Consumption Expenditure (PCE), the US Fed’s favorite gauge of inflation
In the meantime, US equities are higher as the New York session begins to wind down, though they remain at risk of resuming the ongoing bear market correction. That would carry on towards the Asian session, which could witness the second straight session with a positive appetite. Reports that the US may consider lifting some trade tariffs on China was a piece of news cheered by traders, which turned to equities and lifted the major global indices.
Elsewhere, Atlanta’s Federal Reserve President Raphael Bostic said that the quick response in financial markets to tighten monetary policy offers hope that other parts of the economy may adjust more quickly.
On Monday, XAU/USD began its week of trading, just shy of the R1 daily pivot around $1858, and rallied towards the daily high at $1865.34, $25 short from testing March lows at around $1889.91. Furthermore worth noting that once the daily high was reached, the yellow metal retreated below the 20-day moving average (DMA), and it is settling around the $1850 area.
Gold Price Forecast (XAU/USD): Technical outlook
XAU/USD is neutral biased once traders lifted the non-yielding metal above the 200-DMA at $1838.97, opening the door for further gains. However, although Gold is rallying for the fourth consecutive day, it remains exposed to further selling pressure. At the time of writing, the daily chart shows that XAU/USD bulls failed to reclaim the 20-DMA at $1856.46, a level that, once conquered, could open the door for a re-test of March’s low at around $1889.91.
If that scenario plays out, XAU/USD’s first resistance would be the 100-DMA at $1886.33. Break above would expose March’s low at $1889.91, followed by the $1900. Mark. On the flip side, XAU/USD’s first support would be the 200-DMA at 1838.97. Once cleared, the next support would be $1800, followed by the YTD low at $1780.18.
BRENT CRUDE FUTURES SETTLE AT $113.42/BBL, UP 87 CENTS, 0.77%
WTI crude oil futures settle near unchanged at $110.29
- Up $0.01 or 0.01%
The price of WTI crude oil futures are settling at $110.29 That’s up $0.01 or 0.01%.
The price high reached $111.96. The low price extended to $109.15.
On the daily chart, the price remains within a channel connecting recent highs and lows going back to April. Last week the price did extend above a topside trend line only to fail and move back toward the middle of the range. The topside trend line. The topside trend line cuts across at $115.44 and moving higher. The lower trend line cuts across near $110.40.
Meanwhile in the natural gas market, prices are soaring and up 8.19%.
After moving lower earlier in the session and testing its 200 hour moving average in the process, buyers re-entered against the 200 hour moving average (green line) and then broke above the 100 hour MA (blue line at $8.28 currently).
The next target came in at the highs from last week near $8.60, and extended even higher. The $8.60 is now close risk. The high from May 6th is the next upside target at $9.02.
EU News
European provisional closes are showing solid gains in the major indices
- German DAX +1.32%.
The preliminary closes for the major European indices are pointing to solid gains on the day:
- German DAX +1.32%
- France’s CAC +0.89%
- UK’s FTSE 100 +1.58%
- Spain’s Ibex +1.5%
- Italy’s FTSE MIB +0.07%
In the European debt market,
- German 10 year 1.013%, +6.3 basis points
- France’s 10 year 1.534% +5.5 basis points
- UK 10 year 1.971% +10.0 basis points
- Spain’s 10 year 2.128%, +2.0 basis points
Other News
IMF’s Georgieva: A recession is not out of the question for some G7 nations
- Remarks by IMF managing director, Kristalina Georgieva
- Expects 2022 to be a tough year for the global economy
- The economic horizon has ‘darkened’ since the last round of IMF forecasts
I would say the more immediate threat of recession risks perhaps lies with Europe and the UK.
JP Morgan (quants) modelling shows a 41% probability of US recession
JP Morgan’s Kolanovic leads the quant analysts at the bank. Says thier recession probability model now exceeds 41%
- Adds that the market is discounting a much higher probability than that implied from economic data
- And warns that using financial indicators alone has produced false positives.
Cryptocurrency News
XRP price prompts fear amongst investors as technicals signal another sell-off
- XRP price is displaying bullish fatigue on the Relative Strength Index.
- Ripple price is coiling into a triangular pattern.
- Invalidation of the bearish thesis is a breach at $0.465.
XRP price has investors questioning how low the digital remittance token can fall. As other cryptocurrencies are positioning for an anticipated countertrend spike, XRP price action diverges from the pact, hinting at another drop in the coming weeks.
XRP price is coiling for a breakout
XRP price displays slightly bearish signals to start this week’s trading session. The XRP price is printing lower highs and higher lows as the bulls and bears continue in the tug of war at $0.4250. The forming triangle pattern is undoubtedly set to send the XRP price into a strong rally. The directional breakout from the triangle could go either way. Still, this thesis will be written to justify a short-term bearish outlook while keeping an invalidation level tight to capture profits from the alternative bullish scenario safely.XRP price most important cautious signal is the Relative Strength Index.
The Ripple price continues to gain profitable grounds. At the same time, the RSI values the uptrend’s power similar to the April 3 $0.80 when the XRP price also failed to produce a bullish breakout from a much larger triangle pattern. This subtle cue could be inducing XRP price into bullish fatigue as the bulls are not gaining much profit while competing with minimal support. If the technicals are correct, a fall into $0.31 could wipe out day traders’ liquidity stops before a strong rally into $0.50 occurs.
Still, invalidation is necessary to make sure some profit can be captured to counterbalance the risk of being early on the wrong side of the trade. An invalidation for the bearish trend line lies at a break at $0.4650. If the bulls can breach this level, an immediate buy entry can be placed while keeping the safety stop at the swing low at $0.3869. The bulls should be able to reconquer $0.50 and possibly $0.54 resulting in a 27% increase from the current XRP price.
Weekend WSJ reports of insider trading of crypto
Wall Street Journal with the report over the weekend, that “several anonymous crypto investors profited from inside knowledge of when tokens would be listed on exchanges”.
WSJ cites an example of an account amassing Gnosis coins, and offloading them when Binance, 7 days later, said it would list the coin:
- The price of Gnosis rose sharply, from around $300 to $410 within an hour
- Four minutes after Binance’s announcement, the wallet began selling down its stake, liquidating it entirely in just over four hours … netting a profit of about $140,000 and a return of roughly 40%