North American News
Major indices erase the week’s declines. Now up on the week
- Strong gains with major indices closing at session highs
The major US indices are closing near session highs and also have erased the declines for the week. The two day losing streak to start the week was also snapped with the strong gains today.
Looking at the closing levels:
- Dow industrial average is up 434.79 points or 1.33% at 33248.03
- S&P index is closing up 75.64 points or 1.84% at 4176.88
- NASDAQ index is closing up 322.44 points or 2.69% at 12316.90
- Russell 2000 is up 42.84 points or 2.31% at 1897.67
On Friday last week, the closing levels showed:
- Dow industrial average 33212.97
- S&P index 4158.23
- NASDAQ index 12131.13
- Russell 2000 1887.85
With one more day in the holiday shortened week, the only thing the market has to get through is the US employment report tomorrow. Last week the S&P and NASDAQ snapped a 7 week losing streak. The Dow snapped an 8 week losing streak.
Recent price action in the US stocks has seen stocks moving higher on weaker data. The theory is that if the economy slows, so will inflation. That will keep the Fed from going full steam ahead into the tightening cycle, including a 50 basis point hike in September. That is why after Fed’s Brainard was more hawkish today, the stocks still managed to reverse and move back higher.
How will the market react after the employment number. The ADP job estimate today came in weaker than expectations at 128K vs. 300K estimate. The factory orders for April was also weaker at 0.3% vs. 0.7% estimate.
The expectations for nonfarm payroll data is for:
- non-farm payroll +325K vs. 428K last month
- unemployment rate 3.5% vs. 3.6% last month
- average hourly earnings 0.4% vs. 0.3% last month
Microsoft lowers there guidance on unfavorable forex impact
- Revenues and EPS lowered
In a pre-market announcement, Microsoft – a market bellwether – has lowered their guidance for revenues and earnings on the back of unfavorable foreign-exchange impact.
- They now see revenues at 51.94B to 52.74B vs the streets estimate of 52.87B
- EPS is seen at $2.24 to $2.32 vs. streets estimate of $2.33
Microsoft shares are trading down -$6.67 or -2.45% in pre-market trading.
US April factory orders +0.3% vs +0.7% expected
- US factory orders and durable goods orders revisions
- Prior was +2.2% (revised to +1.8%)
- Durable goods orders +0.5% vs +0.4% prelim
- Durable goods orders non-defense ex-air +0.4% vs +0.3% prelim
- Durable ex transport +0.4% vs +0.3% prelim
Commodities
Gold moves sharply higher and tests swing high from May 24
- Price moves above the 38.2% retracement of the move down from the May swing high
The price of gold is up up $23.40 or 1.27% at $1869.35. That takes the price above a swing area between $1863 and $1869. Within that range is also the 38.2% retracement of the move down from the April 18 high at $1866.93. The high price today reached $1870.53 so far, but has backed off modestly..
If the price can gather momentum above the 38.2% retracement/swing area, it opens the door for further momentum toward the 50% of the same move down at $1892.03. That level also corresponds with a swing high going back to May 6. Buyers are making a play today helped by the move above the 100 and 200 hour moving averages earlier in the session
Copper Price Analysis: Dr Copper Prescribes upbeat tone, marred by critical Multi-timeframe supply zone
- On the hourly time frame, the rally is parabolic and likely in need of a meanwhile correction in the coming hours.
- There is a case for the move back towards the prior highs near 4.4370.
There has been a more positive outlook for China with restrictions being eased which has been supporting base metals as bargain hunters pile in, encouraged also by positive economic data elsewhere, such as in the US and eurozone. US manufacturing activity unexpectedly advanced in May, with the ISM factory index rising to 56.1 from 55.4. The euro area PMI ticked up to 54.6 in May versus a flash reading of 54.4.
Copper has been leading the sector higher, with CFD’s trading higher by over 5% on the day so far. the contract is nearly 13% up from the May 12 lows after reaching a high of 4.567.
”With restrictions in Shanghai being to ease, the worst of the recent economic weakness may be behind it. Chinese officials are also ramping up efforts to boost economic activity,” analysts at ANZ Bank argued.
WTI crude oil futures settle at $116.87
- Up $1.61 or 1.4%
The price of WTI crude oil futures are settling at $116.87. That is up $1.61 or 1.41%. The gain comes despite OPEC+ agreeing to raise output by 648K barrels in July and August.
The increase initially sent the price lower. The low reached $111.20 but quickly rebounded. Later when the weekly crude oil inventory data saw a much larger than expected drop -5.065M (vs -1.35M estimate), more buying ensued. The high price extended to $117.56
Crude oil inventories see a draw of -5.068M vs -1.35M estimate
- Weekly crude oil data
- Crude oil draw of -5.068M vs. -1.35M estimate. Private API showed a draw of -1.2 million
- Gasoline draw of -0.711M vs 0.533M estimate
- distillates draw of -0.530M vs. estimate of 0.990M
- Cushing build of 0.256M vs -1.061M last week
- crude oil production came in at 11.9 million barrels unchanged from the previous week.
EU News
European major indices close higher
- UK and Italy are closed for the day
Both the UK and Italy are closed today but the German, France and Spain markets were open. Spain is closing near unchanged on the day , but Germany and France equity markets are closing with solid gains.
- German DAX, +1.05%
- France’s CAC, +1.27%
- Spain’s Ibex, +0.3%
Looking at the German DAX, the high for the day reached 14492.78. That was just above the 100 day moving average at 14488.69. However the closing level at 14485.18 is just below that level. The last 4 days has seen at 100 day moving average tested. It would take a move above with momentum, to increase the bullish bias. Key level for both buyers and sellers.
Other News
OPEC+ agrees to raise output by 648K in July and August – report
- Reuters report
This was rumored earlier.
The plan had been to raise output by about 430K barrels in each of July, August and September. This decision moves up the timeline by a month.
September had been the planned end date for full production, so they’ll essentially be done with the deal in August now, instead of September.
There will still be some baseline numbers in place in August/September so it’s not a total free-for-all but it’s heading in that direction. More importantly, nearly all countries are under-producing quotas now so the real amount of oil added will be nowhere near the 648Kbpd touted.
Many of these countries tout higher potential production levels (Saudi Arabia at 11.5m bpd, for instance) but they’ve never achieved that for any sustained length of time.
One school of thought in the market — and I’m sympathetic to it — is that oil can’t really take off until we see what OPEC is really capable (or not capable) of.
Cryptocurrency News
Smart Money Vs Dumb Money: Who Controls The Dogecoin Price?
- DOGE price is detrending from the bullish countertrend rally.
- Dogecoin price volume pattern is anomalous.
- Invalidation of the bullish thesis is still a close below $0.069.
Dogecoin price has begun to detrend from the bias developed in last week’s thesis. The target of $0.11 may not be achieved.
Dogecoin price has a big question mark
Dogecoin price has recently shown bearish re-entrance in the market. The bulls lost about 10% of gains made since the uptrend on May 27. The new decline throws off the trajectory for the DOGE price and now places a large question mark surrounding the notorious meme coin’s future.
Dogecoin price could continue to confuse investors in the coming days. The Volume indicator looks very questionable. Traders should wait for the week to finish before establishing a new position. Despite the erratic price behavior, there is one certainty traders can believe in. Smart money is involved with the DOGE price, but the direction they choose to send the popular dog coin is still unclear. Invalidation of the bullish scenario is still a breach and close below $0.069. If the bears can conquer this level, a devastating decline to $0.05 could occur, resulting in a 40% decrease from the current DOGE price.