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Market Overview

Tech Rollover Weighs on S&P 500 and Nasdaq; Verizon Earnings Propel Dow to New Highs

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U.S. stocks finished mostly lower on Thursday but avoided bigger losses after upbeat corporate earnings offset a volatile tech sector.

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Tech Sector Rollover

After a spectacular month of gains, technology shares declined sharply on Thursday. Profit-taking was the likely culprit for the decline. The S&P 500’s technology index closed down 0.8%. The large-cap index fell 0.1% as a result.

The Nasdaq Composite Index, which is more heavily exposed to tech shares, declined 0.6%.

Verizon Saves the Day

A stellar earnings report from telecom blue-chip Verizon saved Wall Street’s bacon on Thursday. The telecom giant earned 96 cents per share in the second quarter on revenue of $30.55 billion. Investors were especially stoked about the success of Verizon’s unlimited data plan, which helped attract more customers.

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Verizon shares spiked 7.7%, which triggered a 5.2% rally in the telecom sector. The Dow Jones Industrial Average rose 0.4% as a result, reaching its highest level on record.

Verizon joins a growing list of blue chips to report strong quarterly results. Financial research firm FactSet will publish its weekly earnings recap on Friday.

Volatility Reaches Multi-Week High

The CBOE VIX Volatility Index closed above 10.00 on Thursday for the first time in more than two weeks. To get a sense of how low that is, it’s important to remember that Vol trades on a scale of 1-100. Anything below 20.00 is considered weak.

Investors on the hunt for volatility should look anywhere but stocks these days. The currency market has seen its fair share of volatility, with the U.S. dollar falling to 15-month lows. (At the same time, the euro, Canadian dollar and Australian dollar have reached multiyear highs.) Commodities are also highly volatile, although that has played into the hands of oil this week. U.S. crude futures are up 7% over the past five days.

The Look Ahead

Investors can expect a deluge of economic data on Friday headlined by preliminary U.S. gross domestic product (GDP). The broadest measure of economic growth is expected to show 2.6% expansion in the second quarter.

Energy traders will also be monitoring weekly rig-count data courtesy of Baker Hughes Inc.  Last week, Baker Hughes said active rigs fell by two, as producers seem to be slowing the relentless pace of drilling witnessed in the first six months of the year.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 332 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Rally Fades in Stocks as Apple Weighs on Nasdaq

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We warned yesterday that stock markets got vulnerable as the major US indices reached short-term overbought readings, and after a choppy Wednesday session, equities turned lower today in early trading. Apple fell by more than 2% in early trading on a supplier report regarding declining orders from the smartphone giant, and the sliding stock dragged the tech segment lower.

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S&P 500 Futures, 4-Hour Chart Analysis

While the short-term technical picture deteriorated, the losses are muted so far, and the rising short-term trendlines are holding up. Volatility ticked higher, with the VIX bouncing off its two-month lows, but the index is well below the levels seen in the beginning of the month, as Syria-related fears continued to ease and the Chinese-US trade spat also took the back seat in the mainstream media.

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DAX, 4-Hour Chart Analysis

Stocks finished broadly lower in Europe, while Asian equities reversed their early gains, with trading volumes still being low across the board. The economic calendar was almost empty today, with only the much worse than expected British retail sales figure adding to the string of negative surprises coming out form the UK this week. In the US, the Philly Fed index came in higher than expected, while weekly jobless claims were in line with expectations.

Dollar Stable as Short Yields Hit New Highs

2-Year Treasury Yields, 4-Hour Chart Analysis

Treasury yields resumed their rise in the quiet environment, and as the short end of the curve continues to outperform the flattening of the yield curve continues in earnest. While forex markets are still mostly flat, the Dollar is drifting higher against most of its peers in US trading.

AUD/USD, 4-Hour Chart Analysis

Commodity-related currencies are little changed, although both the Aussie and the Canadian Dollar are off their recent highs, and should they roll over, the bullish case would receive another hit.  Despite the weakening of the risk rally, crude oil continues to hit multi-year highs, with the WTI contract getting close to the $70 per dollar level today. Gold fell back below $1350, as the choppy consolidation pattern is still intact, and the slight risk-off shift wasn’t enough to trigger meaningful safe-haven flows.

Featured image from Shutterstock            

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 224 rated postsTrader 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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Market Overview

Market Update: S&P 500 Notches Third Straight Rally on Earnings; Cryptocurrencies Hit $340 Billion

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U.S. stocks finished mostly higher on Wednesday, as earnings optimism lifted the S&P 500 Index and Nasdaq to their third consecutive daily advance. Meanwhile, cryptocurrencies resumed their uptrend after a two-day pause as bitcoin returned above $8,000 and bitcoin cash surged double-digits.

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Stocks Finish Mostly Higher

Two out of the three major U.S. indexes notched gains, with the S&P 500 Index edging up 0.1% to 2,708.64.

Four of 11 sectors contributed to the rally, with energy shares jumping 1.6%. Other commodity-sensitive sectors such as materials and industrials also reported firm gains.

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The biggest laggards on Monday included consumer staples and financials, which fell 0.9% and 0.4%, respectively.

The technology-laden Nasdaq Composite Index rose 0.2% to finish at 7,295.24.

Meanwhile, the Dow Jones Industrial Average fell 38.56 points, or 0.2%, to close at 24,748.07. The blue-chip index is coming off two straight sessions of 200-point gains.

A measure of implied volatility known as the CBOE VIX rose 2.3% to 15.60, which was still well below the historic average near 20. Volatility has been creeping lower in anticipation of strong quarterly earnings from U.S. firms.

The first round of Q1 reports have not disappointed, with major banks and technology companies reporting above-trend growth. Analysts at FactSet are forecasting the strongest quarter of year-over-year growth since 2011.

Cryptos Extend Rally

After initial hesitation, the cryptocurrency market rose on Wednesday as the end of tax season offered temporary reprieve to volatility.

The total market cap for all cryptos in circulation reached a high of $342 billion, according to CoinMarketCap. That was a gain of $19 billion on the day and the highest in almost a month.

Bitcoin cash (BCH) was the biggest gainer percentage-wise, climbing nearly 16% to $880 per coin on the major exchanges. Original bitcoin (BTC) advanced 3.4% to $8,190. However, its total share of the market fell below 41%.

Other major cryptocurrencies also contributed to the rally, with Ethereum adding 3.3% to $521 and Ripple XRP gaining 7.6% to settle at $0.71.

There was no immediate catalyst for the recovery, although tax relief may have played a role. The IRS extended its deadline for U.S. tax filing by one day after servers overloaded on deadline day.

Americans cryptocurrency holders may have owed as much as $25 billion in capital gains taxes, according to Tom Lee of Fundstrat Global Advisors. However, data from Credit Karma showed that less than 100 of its 250,000 filers have reported cryptocurrency-related capital gains.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 332 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Pre Market: Short-Covering Bounce Continues but Markets Look Vulnerable

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Stocks continued to drift higher gradually but relentlessly, as sentiment is still improving, quarterly earnings have been a tad better than expected so far, while the oversold momentum readings that developed in March are now erased.

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S&P 500 Futures, 4-Hour Chart Analysis

While we maintained a slight bullish bias amid the choppy consolidation, and the major US indices left the triangle patterns on the upside, the rally is far from being convincing, and we think that it’s time to look for entry points to trade the short side.

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Shanghai Composite, 4-Hour Chart Analysis

Trading volumes have been progressively declining as stocks rose, the momentum of the advance has also been suspicious, and Asian and European markets are still in much worse shape than their US peers, despite today’s early rally in most markets, with the Shanghai Composite actually breaching its February low just today, as we warned earlier this week.

As the easing of trade war fears was one of the main catalysts of the rally, the continued back-and-forth announcements between China and the US could rattle the weak trend, even as the escalation of the Syrian situation halted, for now. With the technicals now favoring a downswing, the market could be more vulnerable to negative news, so bulls should keep their stops tight here.

Another Calm day for Currencies as Commodities Jump

Gold Futures, 4-Hour Chart Analysis

Gold is showing surprising strength today, as although the Dollar is weak, safe-haven flows are still negative. Despite that, the precious metal is closing in on its crucial resistance zone near $1360 again, and given the lengthy consolidation phase, a breakout could setup a huge momentum move, especially if the current risk rally fades.

The oil rally also resumed after a brief correction, with the WTI contract reaching the $68 per barrel level for the first time since 2014 before today’s US inventory data. Although commodity currencies are stable, given the bullish backdrop, the performance of the Aussie and the Canadian Dollar is rather disappointing, and that also adds to our suspicions regarding the rally in equities.

The Great British Pound is the most active major fiat currency, but now the Pound is dropping following the miss in both producer and consumer prices, which cooled down rate hike expectations further together with yesterday’s lower than expected wage growth figure.

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 224 rated postsTrader 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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