Stock Market Breadth
US and European futures are trading lower as traders are concerned about the health of the second biggest economy in the world, China. The GDP growth data released today showed that the country is struggling to maintain its growth momentum, and most of this is purely due to the lockdowns implemented to prevent the spread of covid-19. The GDP growth number came in at 0.4% for the second quarter missing expectations of 1%. Industrial production numbers for June were also weaker, and the data printed 3.9% against the forecast of 4.1%. The only silver lining was the retail number, which was better than the forecast. The actual number was 3.1%.
Traders will continue to pay attention to the US banking earnings as more investment banks report their earnings. The tone set by JP Morgan wasn’t impressive at all, with earnings not that appalling.
After dropping aggressively this week, oil prices are rising again as bargain hunters have started to step in. However, crude and Brent oil prices are trading below the critical mark of $100, and while the price continues to trade this price mark, the path is skewed to the downside. The reason that we saw a serious sell-off in the oil prices this week was chiefly due to the reason that traders and investors were worried about the effect of a potential recession on the US economy. The 41-year high inflation reading released earlier this week worried traders, and there have been hopes that Biden’s visit to Saudi Arabia could increase the oil supply.
Bitcoin prices have remained under pressure this week and have struggled to stay above the 20K mark. There have been more adverse news this week in the crypto market, and Celsius became another victim of higher volatility and the collapse of Terra Luna. The company filed for bankruptcy, making traders and investors lose faith in the crypto yield market, which promised unrealistic yields.
In terms of the price action, Bitcoin and Ethereum—the second largest cryptocurrency by market cap- are holding on to two crucial price levels; 20K for Bitcoin and 1K for ETH. Traders are hoping that the price recovery will take place soon.
The Asian stock market mainly traded lower on the week’s last trading day. The Nikkei index soared by 0.52%. The HSI index decreased by 1.61%, while the KOPSI index increased d by 0.07%. The Shanghai index dropped by 0.45%.
Dow Jones and S&P 500: Market Breadth
The Dow Jones’ market breadth lost further momentum. 31% of the Dow Jones stocks are trading above their 200-day moving average.
The S&P 500 stock breadth also confirmed some loss 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 Retail Sales and Core Retail Sales numbers. Both numbers will be released at 12:30 PM GMT, and the forecast for the Retail Sales m/m is 0.9%, while the previous reading was at -0.3%. As for the Core Retail Sales m/m, the forecast is 0.7%, and the previous reading was 0.5%.
Later today, we are also going to get the US Consumer Sentiment reading which traders will closely watch. The forecast is for 49, and the previous reading was 50.
The Dow Jones futures are trading lower, and the index has failed to break above the 50-day SMA daily time frame. The fact that the price has rejected the 50-day in less than two weeks indicates that the prices are likely to move lower, and more pain could likely be ahead of the index. In addition, the Dow Jones index continues to trade below the 100 and 200-day SA on the daily time frame, which further confirms that the path of the least resistance is skewed to the downside.
The RSI indicates that prices are becoming oversold once again on a daily basis. Currently, the RSI is trading at 35.
The near-term support is 29,298, while the resistance is 32,146.
Stock Market Rally
The S&P 500 stock index closed lower on Thursday, increasing by 0.30%. The material sector lowered the index, and nine sectors closed lower yesterday.
The Dow index plunged on the second last trading day of the week; the Dow stocks moved the index lower by 0.46%. 11 shares advanced, while 19 shares closed lower.
The tech-heavy index’s NASDAQ composite closed higher by 0.03% yesterday.
S&P 500 Leaders and Laggards: Qualcomm and Conagra Brand
Qualcomm Inc stock contributed the most significant gain, soaring 4.6%. Conagra Brand stock was the most considerable drag; it fell by 7.2%. The S&P 500 stock index is down 20% so far this year.
Dow Jones Leaders and Laggards: Boeing and Travelers comp
Boeing provided the most significant help for the Dow Jones; it advanced by 2.2%, while Travelers Comp was the largest decliner, it fell by 4.6%.