Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Stocks At Record High Before A Huge Week Of Data

By Greg McKennaMarket OverviewJul 25, 2016 13:33
au.investing.com/analysis/us-dollar-stronger-and-stocks-at-record-high-before-a-huge-week-of-data-200143730
Stocks At Record High Before A Huge Week Of Data
By Greg McKenna   |  Jul 25, 2016 13:33
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Quick Recap

Stocks continue to push higher in the US with another new weekly high close. But signs are there that a top is forming. Elsewhere the US dollar (AX:USD) remains strong with the Euro (AX:EEU) and Aussie under pressure. Likewise the crude complex remains heavy.

What You Need To Know

It’s a huge week ahead both here at home and across global markets. Wednesday is the big one with the release of Oz CPI, UK Q2 GDP, US Durable Goods and of course the FOMC announcement. No move expected but there is a really big chance that the Fed signals that the next meeting in September is live.
Thursday has Japanese CPI in the run up the BoJ Meeting on Friday – Helicopter Kuroda anyone? – and then of course because it’s Friday we get big data from the US to end the week in the form of US Q2 GDP. EU GDP is also out.

International

  • It’s been a pretty good couple of week’s for the trends we talked about before I went away. Gold is down, Crude Oil is drifting, and stocks kept rallying (that said the Aussie is down however). But even though US stock markets kept rallying and finished the week at a new all time high (S&P +0.46% at 2175, and Dow +0.29% at 18750) there are signs we may be seeing a topping pattern in stocks.


I know I’ve been away but when I look at my charts, and add in the looming Olympics and August holidays, you get a topping pattern on the S&P 500 and the Dow. Not bearish per se but 2133 on the S&P 500 seems a reasonable target over the next couple of weeks.
Here’s the chart of the combo of futures and physical S&P 500 markets.

  • G20 was on again in China over the weekend and the talks seemed to be dominated by fears about Brexit, protectionist policies and non-inclusive growth. BUT in the G20 statements and communique I get a real sense that politicians are using Brexit as an excuse for potential economic woes it just hasn’t, and won’t, cause in order to push domestic political agenda’s.
  • Take the one off post-Brexit UK PMI release we saw Friday. The data showed a big collapse in the Services (47.4) and manufacturing (49.1) purchasing managers indexes from where the printed on the last read. But what the heck do you expect purchasing managers to say when everyone is telling them things are going to be bad – this is a confidence read and I reckon you can dismiss it for now. That’s particularly the case given EU PMI’s (services 52.7 and Mfg 52.8) – also released Friday showed Europe is shrugging off Brexit.
  • Which gets me back to the G20. Reuters reports “the world's biggest economies will work to support global growth and better share the benefits of trade, policymakers said on Sunday after a meeting dominated by the impact of Britain's exit from Europe and fears of rising protectionism”. The communique said global growth is “weaker than desirable” and the G20 said it will use all tools “monetary, fiscal and structural” to generate “strong, sustainable, balanced and inclusive growth.” Inclusive – interesting.
  • On inclusive Japan’s finance minister Taro Aso had a pop at China and the weakening Yuan rate. No doubt he’s jealous China is doing something he can’t but it, along with leaders saying Britain has to get on with it and blaming Brexit for uncertainty, is a sign that policy makers have no idea what to do next. Except blame the other guy – externalities, it’s not my fault.


Australia

  • 5530 could be the high for this run on the S&P/ASX 200 if the Dow and S&P slow their ascent. The SPI 200 is giving no lead today with a gain of just 4 points on Friday night after the physical market closed at 5498 on Friday.


  • Slides in oil, gold, and iron ore could weigh on stocks a little but US financials did okay Friday. The big question really is really the appetite for more gains after a 500 point rally in the past month.
  • Nothing out datawise today of note so we’ll be watching what happens in Asia as a guide today.


Forex

  • The release of the UK PMI’s knocked Sterling for 6 Friday. But it’s a relative 6 these days and it’s back at 1.3141 in early trade this morning. USDJPY is at 106.28 as Tara Aso looks wistfully at the crash of the Pound since Brexit and the Euro slide is continuing in slow motion at 1.0982. Here's the Euro chart - as discussed before my break it's trending lower and could go lower yet.


  • The Aussie dollar broke out of the 2 month uptrend on Thursday night and is at 0.7458 this morning. No doubt the looming CPI Wednesday, which is expected to be a trigger for an RBA cut by most pundits, is weighing along with the general US dollar strength. But there are tentative signs of a turn for the Aussie. Here's the chart.



Commodities (short and sharp)

  • Gold is back with stocks higher but at $1322 is $5 an ounce of last week’s lows. $1306 is important trendline support.
  • Crude is down again as concerns continue about gasoline stocks and actual levels of demand. We are seeing a neat little mapping out of the bearish pattern we talked about before I went away. WTI is at $44.19 and Brent is at $45.69. Here's WTI.


  • Copper continues to hang tough at $2.2360 a pound.


Today's key data and events (all times AEDT)

  • Australia - Nil
  • New Zealand - Nil
  • China - Nil
  • Japan - Corporate Service Price (YoY) (May) (9.50am)
  • Germany - IFO - Current Assessment (Jul), IFO - Expectations (Jul), IFO - Business Climate (Jul) (6pm)
  • EU - Nil
  • UK - Gfk Consumer Confidence (Jul) (9.05am); Nationwide Housing Prices s.a (MoM) (Jul), Nationwide Housing Prices n.s.a (YoY) (Jul) (4pm); BBA Mortgage Approvals (Jun) (6.30pm)
  • Canada - Nil
  • US - 3-Month Bill Auction, 6-Month Bill Auction (1.30am); 2-Year Note Auction (3am)

Have a great day's trading
Greg McKenna
Chief Market Strategist AxiTrader

Stocks At Record High Before A Huge Week Of Data
 

Related Articles

Stocks At Record High Before A Huge Week Of Data

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email