Stocks Retreat from New Highs as Mrs. Yellen and the Fed remain in Focus

Thursday Market Recap

Asset Current Value Daily Change
S&P 500 2443 0.13%
DAX 12633 0.05%
WTI Crude Oil 45.87 0.81%
GOLD 1217.00 -0.13%
Bitcoin 2372 -0.73%
EUR/USD 1.1404 -0.07%

Janet Yellen and the Fed are still all over the news today, as the central banker continues her testimony on monetary policy. After yesterday’s surprisingly dovish words by Mrs. Yellen global financial markets staged a healthy rally, with some of the major indices hitting new all-time highs in the process. That said the rally stalled in the leaders of the recent correction, the DAX and the NASDAQ, exactly at the major resistance levels which act as lines in the sand before a new leg higher would be confirmed. With that in mind, and given the internal weakness in the major markets, we lean towards a deeper correction in the coming weeks, no matter what our favorite bankers do.

Currencies are little changed today after the volatile Wednesday session, although the New Zealand Dollar and the Aussie got a strong boost from the much better than expected Chinese Trade Balance data. The Chinese index also rallied after the favorable release, but interestingly industrial commodities, led by copper failed to join the party. Oil, on the other hand, is slightly higher after recovering from yesterday’s late sell-off, while gold is a bit lower in the low-volume environment.

Shanghai Composite, 4-Hour Chart Analysis


The major coins are mixed so far today, with most of the currencies retreating from yesterday’s highs. Ripple, Ethereum, and Especially Ethereum Classic rallied hard overnight, and several smaller coins recovered a part of their recent losses following the majors higher, while Bicoin settled down near the $2400 level. Stratis, Bytecoin, and Bitconnect were among the strongest small caps during the bounce. Dash and Litecoin, last week’s strongest majors, are still consolidating below their highs, as investors remain cautious after the deep correction of the last months. While the long-term picture is definitely healing, choppy trading is expected to continues as sentiment remains bleak among short-term traders.

Bitcoin, 4-Hour Chart Analysis

Technical Picture

The NASDAQ turned lower exactly from the confluence zone that we pointed out yesterday, with the 5800 level still being in focus after the rally of the past few days. A close above that resistance would be bullish for the tech benchmark and the whole market, but for now we still remain bearish on the index, and we expect a move below 5725 in the coming days.  The short-term MACD is in overbought territory, suggesting at least a consolidation near the current levels.                                                                      NASDAQ 100 Futures, 4-Hour Chart Analysis

Key Economic Releases on Thursday

Time, CET Country Release Actual Expected Previous
Tent. CHINA Trade Balance 294 bill 273 bill 282 bill
9:30 SWITZERLAND PPI Index -0.1% 0.0% -0.3%
14:30 CANADA NHPI 0.7% 0.2% 0.8%
14:30 US PPI Index 0.1% 0.0% 0.0%
14:30 US Initial Jobless Claims 247,000 244,000 248,000

Key Economic Releases on Friday

Time, CET Country Release Expected Previous
14:30 US CPI Index 0.1% -0.1%
14:30 US Core CPI 0.2% 0.1%
14:30 US Retail Sales 0.2% -0.3%
15:15 US Industrial Production 0.3% 0.0%
16:00 UK Prelim UOM Sentiment 95.2 95.1

 Featured image from Shutterstock

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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