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Daily Brief: Stock Markets Consolidate as Bearish Pressures Persist

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Daily Brief: Stock Markets Consolidate as Bearish Pressures Persist

Introduction

Thursday Market Recap

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Current Value Daily Change
S&P 500 2,350 0.45%
DAX 12,093 0.18%
WTI Crude Oil 47.70 -0.02%
GOLD 1,247 -0.05%
Bitcoin 1,006 -4.87%
EUR/USD 1.0801 0.17%

 

Donald Trump suffered a slight defeat yesterday, as the health-care vote got delayed, and that spooked traders in the second half of the afternoon. The decline didn’t last long, though, and the bounce resumed in overnight trading. The major stock indices are slightly higher today compared to Thursday’s closing prices. The most important asset classes are still in correction mode, as we predicted, but the Tuesday extremes are well within striking distance, and the final hours of the Wall Street session could very well hold some surprises.

This morning’s favorable European manufacturing and services PMIs gave some confidence to traders, but overall, bulls can’t be satisfied with the weak bounce. Oil remained stable throughout the day, as it still consolidates following the key breakdown that we have been monitoring. The Pound gave back some if its recent lofty gains, while the US Dollar only managed a meager bounce and remains under pressure. Safe-haven assets such as the Japanese Yen, Swiss Franc, and Gold are holding on to their gains, despite the slight drift lower.

Cryptocurrencies had a busy day, as Bitcoin dipped below 1000, continuing its violent correction, with still an eye on the 880 support. Etherum looks to be heating up, as it flirts with the crucial resistance zone near 45. The strong move in Ripple stalled right at the widely watched 0.01 level, but it should remain on the watch-lists of investors.

Technical Picture

S&P 500 Index, Hourly Chart

The sideways price action continued this morning as the dominant short-term downtrends remain intact across the major stock exchanges. With the all-time highs still in sight, The S&P 500 is hovering around the confluence of the 2350 support level and the 38.2% Fibonacci retracement level, while the MACD is nearing neutral territory thanks to the consolidation. Short-term traders could already be looking at entry points on the short side, although a push higher is still a distinct possibility.

Key Economic Releases on Friday

Country Release Actual Expected Previous
EUROZONE Manufacturing PMI 56.2 55.3 55.4
EUROZONE Services PMI 56.5 55.4 55.5
CANADA CPI (monthly) 0.20% 0.20% 0.90%
US Core Durable Orders (monthly) 0.40% 0.50% 0.00%

 

US core durable orders were slightly lower than expected in February, but the slightly negative news didn’t rock the market, as the bullish European numbers supported stocks. The Canadian CPI index was perfectly in line with expectations, as the local economy continues to recover from last year’s oil shock.

Key Economic Releases on Monday

Time, CET Country Release Expected Previous
9:00 EUROZONE German IFO Business Climate 111.2 111.0

 

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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.

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