Daily Analysis: Small Caps Surge on Trump Tax Plan

Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2507 0.49%
DAX 12657 0.45%
WTI Crude Oil 52.12 0.48%
GOLD 1288.00 -1.01%
Bitcoin 4160 6.19%
EUR/USD 1.1753 -0.34%

Donald Trump’s much-awaited tax cut proposal got leaked in all its glory, and it is mostly in line with expectations. The plan’s focus is on reducing the weight on small businesses and corporations, and the Russell 2000, the US small-cap index, acknowledged the proposal by a surge to new all-time highs today. While some analysts stated that the cut is smaller than expected, and the major US benchmarks dipped lower after the leak, the plan is a step in the right direction, if it makes it through Congress and the Senate that is.

Russell 2000, Daily Chart Analysis

The Dollar continued its recent rally in early trading, but the advance stalled after the leak, and the currency retraced some of its gains against the majors. That said, the Yen, the Pound, and the Loonie are all significantly lower compared to the greenback, although the Euro is slightly up since yesterday, currently trading at 1.1750. Global stocks have also been bullish today, while gold dipped back below $1300 on the continued strength of the Dollar.

DXY, 4-Hour Chart Analysis

Cryptocurrencies

Cryptocurrencies are on the rise once again today as all of the majors are well in the green, and with NEO, Ripple, and Ethereum Classic leading the way higher with double-digit gains. Bitcoin and Ethereum are all above key resistance levels, $4000 and $300 respectively, as the post-crash rally continues to dominate the market. The previous leaders, Dash, Monero, and Litecoin are still lagging regarding the short-term performance, but all in all, the segment continues to heal, and the deep correction left the long-term uptrends unscathed.

Ripple/USDT, 4-Hour Chart Analysis

Technical Picture

The NASDAQ recovered from its recent dip well today, as the broad rally in equities pulled the tech benchmark out of its short-term correction. The index is still below its all-time highs, lagging the other major benchmarks, but the 5850 support held up, and a rally above the 6000 level is still the most likely scenario. The likes of Apple (AAPL) and Facebook (FB) have been dragging the index lower in recent days, but given the bounce in those stocks, and the strong showing in small-caps, bulls should hold on to their short-term long positions, even considering the clear valuation issues with US equities.

NASDAQ 100, 4-Hour Chart Analysis

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
14:30 US Core Durable Goods 0.2% 0.2% 59.3
14:30 US Pending Home Sales -2.6% -0.5% -0.8%
16:00 US Crude Oil Inventories -1.8 mill 2.9 mill 4.6 mill

Key Economic Releases on Thursday

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

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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.