Pre-Market: Business as Usual?
First a note to non-US traders: as North America shifted to daylight saving time yesterday US markets will open and close one hour earlier than usual for the next two weeks.
Other than that, it seems that equities are back to normal, at least concerning the leaders of the market. The Volatility Index (VIX) is at 15, which is still higher than before the February crash but it’ far from the danger zone for bulls. The major indices are set to open even higher than the Friday highs, while other risk assets are showing a mixed picture.
The Nasdaq is at an all-time high yet again, and although the rest of the market is still well off the record levels set in January, the leadership of the large cap tech stocks is clear. With a week full of key economic releases ahead, especially the tomorrow’s US CPI report being in focus, we expect an answer to the most important question, which part of the market is right.
For now, the short-term buy signals are still intact in the US benchmarks, and we wouldn’t fight the trend, despite the divergences.
Nasdaq vs. DAX, 4-Hour Chart Analysis
The chart above shows the negative divergences that we noted several times, and still, despite the Nasdaq’s impressive run, we can’t report healthy progress from the laggards, and the tension just grew recently.
There is a staggering 16% difference in the year-to-date performance of the Nasdaq 100 and the Dax, and the same could be said for the majority of the key global indices.
Forex Markets Quiet, Commodities Broadly Lower
EUR/USD, 4-Hour Chart Analysis
Treasury yields are stable today, and thanks to that the Dollar is also little changed, with traders waiting for tomorrow’s inflation data to set the tone for the whole week. The risk-on pairs are still not showing enthusiasm, and the Yen is drifting higher despite the risk-on mood in equities.
WTI Crude Oil, 4-Hour Chart Analysis
Oil is losing ground today, as although the WTI contract is still above the $60 per barrel level, the commodity is clearly under pressure. Industrial metals and precious metals are also slightly lower, and that weighs on commodity currencies on this very quiet day.
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