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US Futures Trade Higher, Coronavirus Spikes

US Futures Trade Higher, Coronavirus Spikes

The Dow Jones futures are trading higher as traders celebrate the rolling back of a regulatory measure—the Volcker rule-and weigh prospects of additional stimulus. Despite this, traders are likely to remain mindful of the biggest one-day surge in coronavirus cases in the US and how it has constrained the re-opening process.  

There is no doubt thatthe news of a second coronavirus wave has been glum, and it may maintain thisnarrative for some time. Still, the fact is that smart money does see the Texasgovernor’s recent action of halting the further re-open efforts as a positivesign. For them, this is the step in the right direction to stamp out thecurrent spike in Covid-19. Measures like this have put an end to the drumbeatof negative coronavirus news

The S&P 500 futures along with Dow Jones futures are likely to remain sensitive to the lack of a clean re-opening of the economy in the US, and this particular event is going to influence the recovery efforts adversely.  Geopolitical tensions between the US and China continue to simmer in the background. 

Gold trading prices continue to retrace from their recent high of $1,779 as investors reward riskier assets and betray gold. Investors are likely to focus on the upcoming US personal spending and income data, and both numbers are likely to determine the future course of the gold price for the rest of the day. Other risk-off assets such as the VIX index have also shown retracement, and the index dropped over 5% yesterday.

The global stock market has been encouraged by the late rally on Wall Street, and most of the Asian markets have closed positive today. European futures are also building on this optimism, although it is critical to point out that bulls are back in town for a vengeance.

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S&P 500 Stocks In Trouble?

The S&P 500 chart shows large hedge funds (net non-commercial) have increased their short positions to the highest level in nearly nine years. This switch indicates two things: firstly if they are right, the stock market could experience a wild and sharp move to the downside. Finally, if the hedge funds are wrong, we could see some serious capitulation taking place. That can provide rocket fuel for the coronavirus stock market rally.  

DJIA Index And S&P500 Index: Market Breadth

The stock market rally breadth has improved once again today. The DJIA index market breadth confirms further improvement as 33% stocks trade above their 200-day moving average. The number of Dow stocks that traded above this moving on Wednesday was 27%.

The S&P 500 indexdoesn’t show any significant change in bull strength. The difference betweenWednesday’s close and Thursday’s close was only 1%.

Dow Jones And S&P 500 Futures Today

TheDow Jones futures are trading flat while the US stock market continues tostruggle to post weekly gains. Once again, the Dow Jones futures have seesawedbetween gains and losses during the early morning price action.

TheDow Jones futures chart shows that the Dow ’s price has bounced from its 50-daymoving average, but the DJ30 index is still below its 200-day moving average ona daily time frame.  Bulls may struggle to keep this stock market alive ifthe Dow Jones is unable to move above the 200-day moving average.

The DJIA index’ weekly chart shows that bears still command the control on a bigger time frame, and the bigger time frame always has more importance in trend analysis. The Dow index is trading below the 50 and 100-week smooth moving averages. But, bulls are likely to hold on to their long bets because the price has dropped below the 200-week average.  

TheS&P 500 index found its strength near the 50-day moving average on a dailytime frame and as long as the S&P 500 futures price stays above thisaverage, we have strong chances for the coronavirus stock market rally tocontinue its upward journey.

Stock Market Rally

TheUS stock market rally isn’t giving up hopes. Speculators are ready to jump into support the price and bag some bargain. For these investors, the coronavirussituation is not a new issue. They know that we have gone through the worstperiod and the current Covid-19 spikes which are labelled as second coronaviruswaves are a small hiccup for the economy.

Traders liked the fact that the US unemployment initial claims data is maintaining its downward trend, and there is also an echo of this in the continuous claims data. The US durable orders number have made them more optimistic about the future of the economy as they know that orders are there, and it is up to consumers and workers to start supporting the economic activity. However, the jury is still out, and it may be immature to think that we are out of the woods.  

TheS&P500 index recovered its losses yesterday and finished the day withdecent gains, with S&P stocks closing with a gain of 1.10%. The informationtechnology sector led the gains for the index. Bank stocks also flew higher ona regulatory rollback that will free up capital.  The S&P 500 index is9.13% below its 52-week high formed on Feb.19, 2020 and it is up 40% from itsCovid-19 low formed on March 23. The index’s dividend yield is 1.96% on atrailing 12-month basis.

The Dow Jones index made a remarkable comeback yesterday. It closed higher by scoring 299 points or 1.18%.   The tech-savvy index, the NASDAQ composite jumped by 0.99% yesterday.

Coronavirus: Trump To End Federal Funding For 13 Sites

Coronaviruscases reached their most significant single-day surge in the US with 39,000people testing positive for Covid-19 yesterday. Hospitalization reached theircapacity levels in Arizona while the situation continues to remain stressful inother States such as Florida, California, Oklahoma, and Texas. The governor ofTexas has halted efforts to further re-open the economy. North Carolina hasalso paused its plan to loosen restrictions any further, with an echo of this comingfrom Kansas and Louisiana.   

Trump Ignores Record Coronavirus Spike

DonaldTrump, president of the United States, hasn’t said much about the recent spikesof coronavirus cases in the country. However, he tweeted last night and pointedout that the deaths caused by the virus are “way down”. He believes that theeconomy is “roaring back” and “will NOT be shut down”. Vice president MikePence is expected to hold his first coronavirus meeting in nearly two monthstoday.

Tensions Between Trump and Angela Merkel’s

PresidentTrump’s recent threat of new tariffs on the EU has triggered a more favourableresponse from Europe. To appease Trump, Spain, Italy, UK, and France suggestedcurbing the breadth of a proposed global digital tax.

Tensionscontinue to simmer between US and Germany as the German Chancellor, AngelaMerkel is preparing retaliatory measures if Trump continues to press onshutting down the Nord Stream 2 pipeline. Germany is likely not to act alonebut will use the EU to maximize the blow, and as a result, tensions mayescalate between the transatlantic allies