Daily Analysis: Stocks Retreat from Highs as Trump Targets North Korea

Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2470 -0.09%
DAX 12154 -1.12%
WTI Crude Oil 49.33 -0.32%
GOLD 1277.00 1.16%
Bitcoin 3285 -2.92%
EUR/USD 1.1202 0.07%

The summer lull was interrupted yesterday by an unusually – even with Donald Trump standards – aggressive tweet regarding North Korea that sparked a significant sell-off in risk assets globally. While it’s hard to judge how the POTUS really intends to respond to the growing threat of the communist nation, for sure the current situation comes handy for him as his domestic position is getting weaker and weaker. The major indices all turned lower from their all-time highs in late trading yesterday, and they are still under pressure today, with the Dollar’s strength also weighing on US equities.

NASDAQ, 4-Hour Chart Analysis

Asian and European stocks joined the sell-off, confirming that the Euro-strength narrative is fading away, with the common currency dipping below 1.17 today in early trading. That said, even the short-term supports are still in place for the US indices, and the low volume environment will likely persist throughout the week despite yesterday’s dip. Gold is being bought aggressively again, and the precious metal breached the $1275 level again, while crude oil is still fighting with the $50 per barrel resistance following today’s mixed US report that showed another increase in shale production.

Oil, 4-Hour Chart Analysis

Cryptocurrencies

The crypto segment entered short-term correction led by Bitcoin after a late day spike higher yesterday, as the most valuable coin hit $3500, while Ethereum rose above $300, to an almost 6-week high. The other majors followed the two giants through the moves, as even the previously weaker Ripple and Ethereum Classic both tried to rally before being stopped by their respective declining trendlines.  Litecoin, Dash, and Monero continue to look strong, with the latter being the closest to its all-time high, while NEM is consolidation its recent gains.

BTC/USD, 4-Hour Chart Analysis

Technical Picture

The DAX is flirting with the crucial support near 12,100 as even the dip in the Euro couldn’t spark a meaningful bounce in the relatively weak German index. The Trump sell-off pushed the benchmark back to 4-monht lows, and with the declining trend being intact, and the MACD being back to neutral, another leg lower seems likely. The shallow correction didn’t even reach the 12,375 resistance, while primary support is now between 11,850 and 11,915.

                                                                           DAX, 4-Hour Chart Analysis

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
3:30 CHINA CPI Index 1.40% 1.50% 1.50%
3:30 CHINA PPI Index 5.50% 5.60% 5.50%
14:15 CANADA Building Permits 2.5% -1.8% 10.7%
14:30 US Nonfarm Productivity 0.9% 0.8% 0.0%
16:30 US Crude Oil Inventories -6.5 mill -2.6 mill -1.5 mill

Key Economic Releases on Thursday

Time, CET Country Release Expected Previous
1:50 JAPAN PPI Index 2.3% 2.1%
10:30 UK Manufacturing Production 0.0% -0.2%
10:30 UK Goods Trade Balance -11 bill -11.9 bill
14:30 CANADA NHPI 0.5% 0.7%
14:30 US PPI Index 0.1% 0.1%
14:30 US Initial Jobles Claims 244,000 240,000
14:30 US PPI Index 0.1% 0.1%
14:30 US Initial Jobles Claims 244,000 240,000

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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.