North American News
Major US stock indices close higher for the 3rd consecutive day
- NASDAQ index leads the way with major big cap earnings ahead
The major US stock indices are closing the day with solid gains for the 3rd consecutive day (1st time since September).
The gains are led by the NASDAQ index. The Dow industrial average lagged today as market traders moved into the big cap growth stocks ahead of earnings over the next few days.
The final numbers are showing:
- Dow industrial average rose 337.10 points or 1.07% at 31836.75. The Dow industrial average is up 11.00% from its 2022 lows
- S&P index rose 61.75 points or 1.63% at 3859.10. The S&P index is up around 10.4% from its 2022 lows
- NASDAQ index rose 246.51 points or 2.25% at 11199.13. The NASDAQ index is up around 11.12% from the 2022 lows
- Russell 2000 index rose 47.75 points or 2.73% at 1796.15. The Russell 2000 is up 9.34% from its 2022 lows
US treasury auctions off $42 billion of two-year notes at a high yield of 4.46%
- WI level at the time of the auction 4.448%
The US treasury auctioned off $42 billion of two-year notes:
- High yield 4.46%
- WI level at the time of the auction 4.448%
- Tail 1.2 BP vs six-month average of 0.2 basis points
- Bid to cover 2.59X vs. six-month average of 2.57X
- Directs 25.28%vs six-month average of 21.8%
- Indirects 50.51% vs six-month average of 59.1%
- Dealers 24.21% vs six-month average of 19.0%
- The domestic (direct) demand was strong at the high yield
- Internation demand was weak
- Dealers were forced to take more of the auction as a result of the slack international demad.
- Bid to cover was not bad
- Tail was higher than the average
US October consumer confidence 102.5 vs 106.5 expected
- US consumer confidence from The Conference Board
- Prior was 108.0 (revised to 107.8)
- Present situation 138.9 vs 149.6 prior
- Expectations 78.1 vs 80.3 prior
- Jobs hard-to-get 12.7% vs 11.4% prior
Richmond Fed manufacturing composite index -10 vs. 0 last month. Expected -5.
Richmond Fed manufacturing index for the month of October 2022
- Composite index -10 vs. 0 last month. Expected -5
- services index -8 vs. 0 last month
- manufacturing shipments -3 vs. 14 last month
- new orders -22 vs. -11 last month
- backlog of orders -28 vs. -25 last month
- capacity utilization -9 vs. -4 last month
- capital expenditures 18 vs. 22 last month
- number of employees 0 vs. 0 last month
- wages 34 vs. 40 last month
- availability of skills needed -14 vs. -6 last month
- prices paid 12.81 vs. 10.34 last month
- prices received 8.62 vs. 7.66 last month
Commodities
Gold meanders around $1650, capitalizing on a weak US Dollar
- Gold price grinds higher by 0.24%, though facing solid resistance around $1660.
- If XAU/USD clears $1670, a test of $1700 is on the cards.
- A formation of a bullish flag in the XAU/USD hourly chart opens the door for further upside.
Gold price advances steadily during the North American session, though it remains capped below the 20-day Exponential Moving Average (EMA), despite falling US Treasury yields underpinning the yellow metal prices, as gold recovers after hitting a daily low of $1638.40. At the time of writing, the XAU/USD is trading at $1653 a troy ounce, above its opening price by 0.24%.
XAU/USD Price Forecast: Technical outlook
From a daily chart perspective, XAU/USD is downward biased, as it has remained since sliding below the 200-EMA in mid-June 2022. Worth noting that Tuesday’s daily high was shy of hitting a downslope trendline, drawn from October highs, which confluences with the 20-day EMA. So XAU buyers need to clear $1670, to exacerbate a rally towards the 100-day EMA at $1690, ahead of $1700. On the flip side, a daily close below Monday’s low of $1644 would cement gold’s downward biased, which would be unable to capitalize, despite lower US bond yields, opening the door for further losses.
Short-term, the XAU/USD hourly chart illustrates the formation of a bullish flag, opening the door for further gains. Worth noting that gold is neutral-to-upward biased, and once it clears, the October 24 high of $1670 will exacerbate a rally toward $1700.
The XAU/USD first resistance would be the R1 daily pivot at $1665, ahead of $1670. Break above will expose the R2 pivot at $1681, followed by the R3 daily pivot level at $1692.42, ahead of $1700.
On the other hand, if XAU/USD slumps below the confluence of several EMAs, lead by the 50, 20, and 200-EMA around $1647-$1651, would send the yellow-metal price toward the convergence of the 100-EMA and the S1 daily pivot around $1639-41. Once cleared, the following demand zone would be the bullish-flag bottom trendline around $1636.
Silver clears sold resistance, eyeing the 100-DMA around $19.60
- Silver (XAG/USD) advances sharply in the New York session after hitting a weekly low of $18.79.
- XAG/USD remains neutral-to-downward biased, though a break above the 100-DMA will pave the way to $20.00.
- Short term, the XAG/USD could clear the R1 daily pivot at $19.58, putting in play the 100-day EMA.
Silver price reclaims the 50 and 20-day Exponential Moving Averages (EMAs) on Tuesday amidst broad US Dollar weakness, as risk-perceived assets advance while US bonds rally. Consequently, US Treasury yields fall, a tailwind for the white metal. At the time of writing, XAG/USD is trading at $19.37, above its opening price by 0.77%.
XAG/USD Price Forecast: Technical outlook
The XAG/USD daily chart portrays silver as neutral-to-downward biased, even though it reclaimed the 20 and 50-day EMAs. For XAG/USD buyers to further cement the case of turning the bias to neutral, they need to reclaim the 100-day EMA at $19.61, which could send XAG/USD rallying to $20.00 a troy ounce, before testing the 200-day EMA at $21.65. Additionally, the Relative Strength Index (RSI) at bullish territory, with a minimal-bullish slope, suggests prices could aim higher, opening the door for a test of the 100-day EMA.
In the near term, XAG/USD is neutral-to-upward biased, as depicted by the hourly chart, with prices oscillating around the daily pivot level at $19.30. The Relative Strength Index (RSI), around 58.64, is in bullish territory, though directionless. Therefore, XAG/USD might consolidate amid the lack of a catalyst.
Upwards, the first resistance would be the R1 daily pivot at $19.58, followed by the October 24 high at $19.67, ahead of the R2 pivot level at $19.95. On the flip side, the XAG/USD first support would be the confluence of the 50 and 20-EMAs at $19.23 and $19.18, respectively, followed by the S1 daily pivot point at $18.94. Break below will expose the 100 and 200-EMAs, each at $18.90 and $18.78, ahead of the S2 pivot level at $18.65.
WTI crude oil settles at $85.52
- Up $0.74 or 0.87%
The price of WTI crude oil is settling at $85.32. That’s up $0.74 or 0.87%
The high for the day reached up toward $86.01. The low was at $83.08.
Looking at the natural gas market, the current price is trading up $0.43 or 7.63% at $6.13.. The last 2 days have skimmed the lows from the end of June and July near $5.33, but found support buyers on each day. The inability to move below those levels, gave buyers the go-ahead to push back to the upside from a technical perspective.
EU News
European equity close:
- Closing changes in Europe
- Stoxx 600 +1.4%
- UK FTSE 100 flat
- French CAC +2.0%
- German DAX +0.9%
- Italy MIB +1.2%
- Spain IBEX +1.5%
As expected, Jeremy Hunt to remain as UK Chancellor of the Exchequer
- Sunak filling out his cabinet
As expected, Jeremy Hunt will remain as UK Chancellor of the Exchequer. The former PM Truss, brought in Hunt in a last ditch effort to save her PM term. It helped calm the markets but it did not help Truss hold off the inevitable.
Other News
Six major central bank decisions are coming up in the next 8 days. Here’s what’s priced in
- The Bank of Canada kicks it off tomorrow
The next eight days will be a wild ride of central bank decisions are slated to include a collective 400 basis points of hiking, which is the biggest jump in a small strectch of time in decades.
The moves these central banks make will set the stage for an ongoing hawkish stance or a crescendo of hikes before a shift to a slower pace.
It all starts on Wednesday.
1) Bank of Canada on Oct 26
74% priced in for 75 basis points with the remainder at 50 bps. Talk and pricing of a dovish surprised has picked up.
2) European Central Bank on Oct 27
93% priced in for 75 bps with the remainder at 100 bps. Could it come with a dovish pivot on retreating energy prices.
3) Bank of Japan on Oct 28
No change 94% priced in with 6% for a 10 bps hike. The ultimate wild card, could they abandon yield curve control?
4) Reserve Bank of Australia on Nov 1
92% priced in for 25 bps with the remainder at 50 bps. The RBA has signaled a slowing pace of hikes as they near 3%.
5) Federal Reserve on Nov 2
93% priced in for 75 bps with the remainder at 100 bps. The Fed pushed back on Friday against a +5% terminal peak.
6) Bank of England on Nov 3
58% priced in for 75 bps with the remainder at 100 bps. They were burned by a too-dovish decision that contributed to Truss’ demise and now they face another test. Can they maintain credibility?
Cryptocurrency News
Bitcoin sharply higher and looks toward the 50% midpoint and recent highs
- The 50% midpoint of the range since Sept 13 high cuts across at $20469
Today, dip buyers did do a good job of basing the digital currency near the 100/200 hour MA. Eventually, buyers used the clue (and perhaps risk-on flows) and started to push the price sharply higher.
What next?
Risk focused sellers should lean against the 50% retracement area (and swing highs) with stops on a break above with momentum. For traders looking for more upside momentum, getting and staying above that 50% is obviously a target that would need to be broken to keep the bullish move going.
On a correction off the 50%, traders will look back toward the 38.2% at $19923 as the downside target. Stay above or near that level, and the price can base and make the next run to the upside.
So traders have seen a nice move to the upside today and broken above some key levels. However, the biggest target going back to September 13 remains in play at the $20469 area. Key level for buyers and sellers. The battle is on.
Ethereum hits a one-month high as risk appetite returns
- Ethereum up 8%
The crypto winter is thawing today and ethereum is the big winner, climbing 8% in its best day in months. It’s up $109 to $1460, which is the best level since September 17.
The jump comes after a period of malaise that came after the ‘merge’ pump-and-dump. It was constructive how ethereum was able to trade flat in the past month and stay well-above the summer lows desptie weakness in equities and high USD volatility. That set up today’s big gain.
What’s next?
All the correlations in markets have gone to 1 in the past few months. Crypto right now is the same bet on a Fed pivot as equities and it’s not entirely without merit. US data is beginning to roll over and the Fed pushed back against a terminal rate above 5% last week. The FOMC decision on November 2 will write the next chapter.
For now, ethereum bulls will want to stay comfortably above $1400. Today’s highs and $1500 are going to offer some resistance but there’s no rush to get there, it would be healthier to see some consolidation before more gains.
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