Daily Analysis: Markets Settle Down After Tax Plan Excitement

Thursday Market Recap

Asset Current Value Daily Change
S&P 500 2506 0.09%
DAX 12704 0.37%
WTI Crude Oil 51.61 -1.02%
GOLD 1291.00 0.23%
Bitcoin 4167 1.19%
EUR/USD 1.1784 0.31%

Stock markets around the world wobbled as traders and investors tried to evaluate the US tax reform proposal, and the odds of it being accepted. Equities turned lower overnight as analysts expressed their skepticism regarding the plan, although US small caps, the most affected asset class, remained bullish, with the Russell 2000 still trading a hair below yesterday’s all-time high. The US Dollar lost some of its recent strength, especially compared to the rallying Euro, but the other majors also gained ground on the Greenback as markets digested Trump’s proposal.

Russell 2000, Daily Chart Analysis

US stocks are still showing bullish signs, and global equities are also still in strong short-term uptrends after the recent consolidation. That strength has been pushing safe-haven assets lower, and gold is still trading well below the $1300 level, although the $1275 support is not in danger, and long-term uptrend remains intact in the precious metal. Crude oil has been rallying thanks to the tensions regarding North Korea and the Kurdish independence elections, but although the WTI contract traded at the highest level since April, technical signs still suggest that the long-standing trading range will remain intact and we will see sub-$50 price levels soon.

Gold, 4-Hour Chart Analysis

Cryptocurrencies

The segment remains in a bullish state, despite a slight downturn today, as the recently rallying majors, NEO and Ripple entered a sharp short-term correction without pulling the rest of the market below the rising trendlines. Bitcoin and Ethereum continue to trade near crucial support/resistance levels, at $4150 and $300 respectively, while the previous market leaders, like Dash, Monero, and  Litecoin are weaker, as the healthy rotation in the sector continues. All signs point to another leg higher in the crypto boom, as volatility is back to normal levels, most of the patterns that defined the deep correction are broken, and the majors are building fresh short-term uptrends.

Ethereum/USD, 4-Hour Chart Analysis

Technical Picture

The German index held up very strongly after the election disappointment of the weekend, and today the benchmark rallied to a new 2-month high above the 12,700 level. The short-term uptrend is intact despite the recent consolidation and the DAX looks set to test the 12,850 resistance in the coming days. The weakness in the Euro helped European equities recently, but the strong correlation between the common currency and stocks broke down, and the benchmark got higher even today, as the Euro bounced back.

DAX, 4-Hour Chart Analysis

Key Economic Releases on Thursday

Time, CET Country Release Actual Expected Previous
10:00 GERMANY Prelim CPI 0.1% 0.1% 0.1%
10:15 UK BOE’s Carney Speaks
14:30 US Final GDP 3.1% 3.0% 3.0%
14:30 US Unemployment Claims 272,000 269,000 259,000

Key Economic Releases on Friday

Time, CET Country Release Expected Previous
3:45 CHINA Manufacturiing PMI 51.5 51.6
8:00 GERMANY Retail Sales 0.5% 0.6%
10:30 UK Final GDP 0.3% 0.3%
10:30 UK Current Account -15.8 bill -16.9 bill
11:00 EUROZONE CPI 1.6% 1.5%
14:30 CANADA GDP 0.1% 0.3%
14:30 EUROZONE Personal Spending 0.1% 0.3%
15:45 US Chicago PMI 58.6 58.9

Featured image from Shutterstock

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.