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Stock Market Breadth

Stock Market Breadth

Stock Futures Trade Lower 

The US and European stock futures are trading in a mix today as investors continue to digest US earnings and the geopolitical landscape. There is no doubt that tensions are only escalating as Russia continues to demand more payment for its energy products in Ruble. There are also speculations a losing Putin scenario is more dangerous than a winning Putin scenario because of the potential use of nuclear weapons that Russia has at its disposal. 

Earnings 

Amazon: The retail giant failed to impress Wall Street in its quarterly report last night. It reported earnings of $7.38 per share, adjusted against the expectations of $8.36. Its revenue came in at 116 billion versus $11. billion expected. The share price plunged as much as 10% in the extended trading hours as the company’s reported that its growth rate is at its lowest since the dot-com bust in 2001. It also posted an eye-watering loss of $7.6 billion on its investment in electric vehicle maker Rivian. 

Apple: The iPhone maker posted impressive revenue growth of 8% year over year. It’s earnings per share was $1.52 vs. estimates of $1.43, and revenue came in at $97.28 billion against the expectations of 93.89 billion. The iPhone revenue numbers were $19.82, while the estimate was 19.72 billion. However, the company’s stock traded lower and declined over 4% in the after-market hours as the company warned about supply chain challenges that could hurt its sales figures by $8 billion.   

Twitter: Elon Musk has sold around $4 billion in Tesla stock as part of his pursuit of the $44 billion Twitter purchase. He stated on Twitter that he had “no additional Tesla sales planned.” According to sources close to Musk, when negotiating funds, he raised the possibility of eliminating both employees and expenditures at Twitter. Twitter has fallen further below the offer price as investors are concerned about the financing strategy. Tesla dropped following the market.

China’s Zero Tolerance 

China will not budge on its Covid Zero policy, and in fact, officials must work more strongly and quickly to purchase time to immunize more people, according to a top health official. According to Liang Wannian of the National Health Commission, the program does not guarantee zero illnesses, and not all cities would need to be quarantined. If restrictions are lifted, the medical system will be overburdened for the time being.

Forex 

In the forex market, all eyes remain on the dollar index. The index retraced from its highs yesterday on the back of the US GDP data, which confirmed a lot more weakness than expectations. Traders need to keep a close eye on the USD/JPY pair, which touched the price level of 130, and speculators believe that it is only a matter of time before it reaches the price mark of 150. 

The EUR/USD is also an interesting forex pair as it fell below the 1.06 price level and currently trading near 1.0552. There is no doubt that the ECB wants to bring its monetary policy back to its normal level, and a rate hike is expected this year. However, for now, it is more about the dollar strength. 

The Bank of Russia is expected to slash rates again, this time by 200 basis points to 15%. From the outside, it appears that, despite the sanctions, the central bank has restored stability. However, capital constraints have enabled the shift, which underlines the necessity to sustain a shattered economy. 

Asian Markets 

The Asian stock market traded mostly higher on the final trading day of the week. The Nikkei index increased 1.75%. The Shanghai index dropped by 1.10%, while the HSI index fell by 4.17%. The ASX index increased by 0.73%.

Dow Jones and S&P 500: Market Breadth

The Dow Jones’ market breadth gained a bit more momentum during the last session. 46% of the Dow Jones stocks traded above their 200-day moving average.

 The S&P 500 stock breadth also confirmed an improvement in its momentum. 44% of the shares traded above their 200-day moving average. 

Dow Jones Futures Today

The Dow Jones futures are trading modestly higher today. In terms of economic data, investors will be looking at the US Core PCE Price Index and Revised UoM Consumer Sentiment. The Core PCE index data will be hitting the terminal at 12:30 GMT, and the forecast is 0.3%, while the previous reading was at 0.4%. As for the Revised UoM Consumer Sentiment, it is expected to be released at 14:00 GMT, and the forecast is for 65.8

The Dow Jones futures have logged three consecutive days of gains, but the price continues to trade below the three important moving averages, which are 50, 100, and 200-day SMA. This shows that bears on the driving seat and fully control the price. Having said that, more recently, the price has come a long way away from its recent lows of 33198, and it is in the process of challenging its 50-day SMA, which is currently at 34118. 

As for the RSI, it is rising and moving away from its oversold region of 30. The current reading of the RSS is 46, which shows that the DJ30 price isn’t rich nor cheap. A level of 30 on the RSI is associated with the price being low, and a level of 70 on the RSI is considered as the price being too rich. 

The near-term support is at 33,198, while the resistance is at 35,068.   

Stock Market Rally

The S&P 500 stock index closed higher yesterday; the index increased by 2.47%. The communication sector led the index lower, and all 11 sectors closed high. 

The Dow index also moved higher on Thursday; the Dow stocks moved the index higher by 1.85%. 27 shares advanced, while 3 shares closed lower. 

The NASDAQ composite, the tech-heavy index, closed higher by 3.06%. 

S&P 500 Leaders and Laggards: Meta and Align  

Meta stock contributed the biggest gain, soaring 17.59%. Align Technology stock was the largest drag; it fell by 15.47%. The S&P 500 stock index is down 10% so far this year.

Dow Jones Leaders and Laggards: Salesforce and Amgen Inc 

Salesforce provided the biggest help for the Dow Jones; it advanced by 6.32%, while Amgen Inc was the largest decliner, it fell by 4.82%.