Stock Market Breadth
US and European futures are trading flat, although bargain hunting is taking place, as we saw in yesterday’s price action. The Nasdaq is down over 27% year-to-date, and speculators are now looking at stocks with solid balance sheets and trying to buy them while they are low.
On Thursday, we had the US GDP data, which confirmed that the US economy is shrinking as the number fell short of expectations. Traders are worried about this economic weakness because the Fed increases the interest rate when there is economic weakness. The weakness in the economic data wasn’t only in the GDP q/q numbers, but the US Weekly Jobless Claims numbers also failed to show that the labour market is strengthening.
There is a real fear of recession taking place in the UK as consumers are getting crushed due to higher inflation, driven by several factors such as the war in Ukraine, higher oil prices, and slowing growth. British Finance Minister Rishi Sunak outlined a slew of measures to address the country’s cost-of-living problem on Thursday, including a “windfall tax” on oil and gas revenues and cost-of-living subsidies to low-income households and seniors.
In the crypto world, bulls are nowhere to be seen as the Bitcoin price continues to fall. The fact that Bitcoin price is struggling to stay above the 30K price level indicates that the path of the least resistance is skewed to the downside.
We saw a severe sell-off yesterday in the altcoin market, and cryptocurrencies like Ethereum, Solana, Polkadot, XRP and Cardano took a serious beating. If the BTC price continues to fall, altcoins will likely fall even further.
Overall, it seems that the last night of the crypto winter is still far away.
The Euro continues to bounce away from its lows against the dollar, which formed two weeks ago. The EUR/USD pair is on track to record a second consecutive week of gains. This is primarily due to two factors: firstly, the weakness in the dollar index. Secondly, the ECB has adopted a hawkish stance, and members of the ECB Council believe that the bank can increase the interest by 50 basis points in Q3 of this year.
Brent and crude oil prices are having a decent week and are on track to close in positive territory this week as supply issues drive prices. Traders firmly believe that the conflict in Ukraine and Russia is only on the escalation path as Russia continues to make progress in Ukraine. Traders are also keeping a close eye on the prospects of an embargo on Russian oil, and likely, this embargo may see daylight soon.
From the technical perspective, the Brent oil price is trading above its critical support level of $100, and as long as the price continues to trade above this price level, we are likely to see bulls controlling the price action.
The Asian stock market traded higher on the week’s last trading. The Nikkei index jumped 0.56%. The HSI index increased by 2.50%, while the KOPSI index soared by 0.92%. The Shanghai index increased by 0.30%.
Dow Jones and S&P 500: Market Breadth
The Dow Jones’ market breadth gained further momentum. 29% of the Dow Jones stocks are trading above their 200-day moving average.
The S&P 500 stock breadth also confirmed an improvement in its momentum. 32% of the shares traded above their 200-day moving average.
Dow Jones Futures Today
The Dow Jones futures are trading lower today. In terms of economic data, investors will be looking at the US core PCE index, which is expected to come in at 0.3%, while the previous reading was also at 0.3%. The data will hit the tape at 12:30 GMT.
In addition to this, we also have Fed member James Bullard speaking today at 11:35 GMT, and any hawkish stance from his side is likely to bring higher moves for the dollar index.
The Dow Jones futures are trading higher, and the index staged a strong rally this week. The index has almost erased all of the losses it recorded last week. The index continues to trade below the 50, 100 and 200-day SMA daily, confirming that bears are still in the driving seat. Traders need to pay attention to the 4-hour time frame for the index, where the price is showing strong momentum and is trading above the 50 and 100-day SMA.
As for the RSI, it no longer indicates that prices are oversold on the daily time frame. Currently, the RSI is trading at 51.
The near-term support is 30,842, while the resistance is 33,825.
Stock Market Rally
The S&P 500 stock index closed higher on Thursday; the index increased by 1.99%. The consumer discretionary sector led the index higher, and ten sectors closed higher yesterday.
The Dow index rose on the second last trading day of the week; the Dow stocks moved the index higher by 1.61%. Twenty-seven shares advanced, while three shares closed lower.
The NASDAQ composite, the tech-heavy index, closed higher by 2.68% yesterday.
S&P 500 Leaders and Laggards: Dollar Tree and Kraft Heinz
Dollar Tree Inc’s stock contributed the most significant gain, soaring 21.86%. Under Kraft, Heinz stock was the most considerable drag; it fell by 6.014%. The S&P 500 stock index is down 17% so far this year.
Dow Jones Leaders and Laggards: Boeing and Merck & Co
Boeing Co provided the most significant help for the Dow Jones; it advanced by 4.64%, while Merck & Co was the largest decliner, it fell by 1.53%.