Daily Analysis: Tax Cut Delay Rumors Send Small Caps Lower

Tuesday Market Recap

Asset Current Value Daily Change
S&P 500 2582 -0.15%
DAX 13,379 -0.66%
WTI Crude Oil 57.05 -0.26%
GOLD 1277.00 -0.23%
Bitcoin 7115 0.55%
EUR/USD 1.1599 0.10%

The divide between the majority of the US stock market and the leading mega-cap companies just got even wider, as the Senate Republicans continue to debate crucial details and the timing of the plan. Small caps, which benefited greatly of the initial draft, turned sharply lower, while the Dollar also got under pressure towards the end of the session. The NASDAQ 10o and the Dow held up well amid the broad sell-off, but the Russell 2000 lost as much as 1.5%, as the rally is getting narrower and narrower.

European equities also tumbled from their highs, as the political turmoil in Saudi Arabia and the Middle East got even trickier, as the Lebanese-Hezbollah connection of the events got into the spotlight. That said, oil’s surge got halted by a surprisingly small inventory draw in the US, and the long-term outlook of the commodity remains questionable.

Long-dated Treasuries remained very strong thanks to safe-haven flows, which pushed the Yen higher again too, and the yield-curve continued to flatten, as troubles are looming on the horizon, despite the rosy surface.

Russell 2000, 4-Hour Chart Analysis

Despite the slight weakness in the Dollar, the underlying trend in the Greenback remains positive, with the Dollar Index still hovering around its 5-month highs, and the EUR/USD pair trading near the 1.16 level. Commodity currencies retreated from their Monday highs, as oil and gold both fell moderately while the Great British Pound remained stable after its recent bounce, trading near 1.3170 against the Greenback, while hovering around the 0.88 level in the EUR/GBP pair.

Dollar Index (DXY) 4-Hour Chart Analysis

Cryptocurrencies

Altcoins continued to broadly outperform Bitcoin in the segment, as the total value of the coins remained stable just below the $200 billion mark. Ethereum suffered a slight hit, and caused some volatility among altcoins, while Litecoin, Dash, IOTA, and Monero showed strength. LTC was especially bullish, breaking out from a lengthy consolidation pattern and surging past the $60 level. The recently strong Ethereum Classic fell as much as 10% top-to-bottom in a short-term correction, while Bitcoin traded around the $7000 level in a choppy fashion, also getting close to a double-digit dip, as the session was consistent with the long-term setup in the segment.                                            

LTC/USD, 4-Hour Chart Analysis

Key Economic Releases on Tuesday

Time, CET Country Release Actual Expected Previous
05:30 AUSTRALIA RBA Rate Decision 1.5% 1.5% 1.5%
05:30 AUSTRALIA RBA Statement
10:30 UK Halifax HPI 0.3% 0.2% 0.0%
11:00 EUROZONE ECB President Draghi Speaks
21:30 US Fed Chair Yellen Speaks

Key Economic Releases on Wednesday

Time, CET Country Release Expected Previous
Tent. CHINA Trade Balance 275 bill 193 bill
05:30 CANADA Buiding Permits 0.7% -5.5%
10:30 US Crude Oil Inventories -2.5 mill -2.4 mill

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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.