3 Things You Need to Know About the Market Today

1, Strong Earnings vs. Technicals On Wall Street

VIX (US Volatility Index), 4-Hour Chart Analysis

After yesterday’s steep losses, the US stock market recovered well, with especially Dow flexing its muscles thanks to the better-than-expected earnings reports by index-members IBM (IBM) and Procter & gamble (PG). Shares of the battered IT giant are up by 10%, while the consumer goods behemoth rallied by more than 5%, getting close to its all-time high.

PG’s numbers in China were especially encouraging, and after several reports of slowing demand in the country, we finally got some positive news regarding the Chinese consumer. That said, PG’s products are way less cyclical than the for example Apple’s, and the struggle of the native Chinese companies also confirm the sharp slowdown in growth.

Despite the bounce, technicals remain troubling for bulls here, with the major indices being overbought after one of the strongest short squeezes in history, and with global markets still being stuck in bearish trends. The Volatility Index (VIX) which formed bottoms near the 17 level in the past three months when stocks topped out, bounced off hard from that area again yesterday, and although we still confirmation, it seems that a topping process is underway in equities.

2, Deutsche Bank in the Crosshairs Again

Deutsche Bank, 4-Hour Chart Analysis

Deutsche Bank (DB), also known as the best friend of short sellers, is yet again under scrutiny, this time due to its possible connections to the Estonian Danske scandal. The branch conducted suspicious payments totaling more than $200 billion in a decade, and DB has been a correspondent bank for Danske in Estonia.

Now the FED launched an investigation in the matter, and that just adds to the worries regarding the overleveraged but systemically crucial bank, which experienced at least a 50% decline 6 out of 8 years since 2011. The bank is trading at less than half of its crisis low form 2009, while being almost 95% off its all-time highs, while being a perfect example of the structural problems that the European banking system is facing, even in Germany, which is the economic powerhouse of the continent. Should the bank complete yet another 50% decline this year, a bailout or a full-blown nationalization of the bank could be very close.

3, Pound Hits Two-Month High On Likely Brexit Delay

EUR/GBP, 4-Hour Chart Analysis

Yesterday we saw strength in the Great British Pound thanks to the better-than-expected employment report, and today, the currency is trading at fresh two-month highs against its most important peers. The possible delay of the Brexit process, which triggered the rally in the Pound in the first place, got much closer, as the a group of cross-party MPs proposed a legislative delay of the exit process, and a vote is expected on the proposal next Tuesday.

The Pound is now trading near 1.31 against the USD, while the EUR/GBP pair fell to 0.87, even following yesterday’s dip in risk assets. Volatility is expected to remain elevated in the Pound-related pairs, and traders should be prepared for wild swings on headlines in both directions, but should the delay materialize, the worst-case scenario, a no-deal Brexit would be off the table for a while, which could further lift the currency.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Nasdaq 100 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Gold Futures, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

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Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.

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