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Daily Analysis: Stocks Quiet But French Election Looms

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Daily Analysis: Stocks Quiet But French Election Looms

Introduction

Wednesday Market Recap

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Asset Current Value Daily Change
S&P 500 2346 0.35%
DAX 12028 0.24%
WTI Crude Oil 52.80 -0.04%
GOLD 1279.00 -0.32%
Bitcoin 1202 -0.81%
EUR/USD 1.0709 0.17%

 

Stock markets bounced back slightly from their Tuesday lows, as no new developments surfaced regarding the US-North Korean conflict. Despite the calm conditions, tensions are high under the surface, as the French presidential election keeps traders worried. The option skew of the Euro STOXX 50 index which shows the amount of protection bought by options traders, spiked higher than before the Brexit vote, as the latest polls continue to show a very tight race.

The Great British Pound continued higher yesterday after the surprising announcement by Theresa May, although the Euro is slightly weaker compared to its peers. Safe-haven assets retreated somewhat, as geopolitical tensions eased, with gold and the Japanese Yen both drifting lower from their multi-month highs. Oil continues to consolidate near its recent highs, although commodity-related currencies like the Australian Dollar and the Canadian Dollar remain under clear pressure.

Option hedging in the EU-STOXX 50 Index (source: Zerohedge)

NEM exploded to a new all-time high today taking over Monero concerning market capitalization after the 30% jump. Ethereum Classic also popped up on the cryptocurrency-radar once again today, with yet another break-out to a ten-month high this morning. The altcoin is right at the $3 level, as trading volumes continue to rise. The other majors are little changed so far today, only Ripple is down by a meaningful amount, but it remains well inside its dominant trading range.

Ethereum Classic 4-Hour Chart Analysis

Technical Picture

The DAX has been drifting lower for the past two weeks after losing its relative strength. European stocks might remain under pressure this week, investors remain cautious ahead of the first round of the French election. The long-term uptrend line has been broken, putting the long-term trend in danger, while the MACD indicator is headed to a slightly oversold territory. The S&P 500 had a choppy, but slightly more bullish week so far, as it trades below the crucial 2350 level, following last week’s breakdown.

DAX, 4-Hour Chart Analysis

 

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
11:00 EUROZONE Final CPI 1.50% 1.50% 1.50%
16:30 US Crude Oil Inventories -1 million -1 million -2.2 million

 

Key Economic Releases on Thursday

Time, CET Country Release Expected Previous
14:30 US Philly Fed Index 25.6 32.8
14:30 US Unemployment Claims 241,000 234,000
17:30 US BOE Governor Carney Speaks
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Mate Cser

Mate Cser

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.

Comments
  • user

    AUTHOR Ershad

    Posted on 5:36 pm April 19, 2017.

    Hi mate what are your views regarding the movement of gold and the French elections? Is the price of gold likely to reach the $1310-1320 due to the upcoming elections in France or fall?

    Thanks
    Ershad

    • user

      AUTHOR Mate Cser

      Posted on 6:33 pm April 19, 2017.

      Hi Ershad,

      as for me, I’m out of gold for now (short-term, I have a core long-term position), as the momentum faded this week. That said, at the current levels, gold is a good way to play a negative outcome on the French election. Sadly, I don’t know what the results will be, but the $1315 level will be easily achievable given a negative outcome. The polls are so close that I don’t think that gold will hit $1315 before the election, but a strong reaction is expected from markets due to the uncertainty.

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