A Week Forward: Post-opening Rally to Suffer on Earnings Consequences; Advanced Bitcoin

  • The tech sector is making a comeback on worsening economic outlook
  • Earnings statements could boost the market in the coming week

With the chance of political drama weighing on markets now less likely, after a peaceful transfer of power to the recently wavered President of the United States, Joseph R. Biden, Wall Street blew up on Friday, turning in a performance mixed on the last day of last week’s trade. The US indices receded from all-time highs on a more bleak COVID-19 preamplifier and the possibility that the much-awaited new stimulus is not necessarily a forgotten conclusion.

However, according to the Wall St. Journal, “analysts said they believe the market has the potential to continue climbing as long as earnings continue to show companies weathering the coronavirus pandemic.” And with earnings season now in full swing, markets could continue higher this week with Apple (NASDAQ :), Tesla (NASDAQ 🙂 and Facebook (NASDAQ 🙂 among others, on the way.

Strong Post-Inaugeral Performance According to US Indices

The Index deteriorated on Friday, for the first time in four days, after news emerged that the first-reported coronavirus variant in the UK was more dangerous and infectious. British Prime Minister Boris Johnson warned that the strain was 30% more deadly than the original virus and was also expected to be 50-70% more infectious. Nevertheless, two top US health officials said “more data is needed.”

While the SPX fell 0.3% on Friday, it rose 1.9% for the week. What was evident during last week’s trade: stocks were boosted by tech companies, having underperformed at previous rallies. it outperformed the week, (+ 5.4%), followed by shares (+ 4.25%).

Last week’s earnings were built on the ongoing rally over the past nine months. Each of the four major benchmarks – the, S&P 500, and —each carved new highs during the week, resulting in the strongest post-opening performance for the US market since 1932. The S&P 500 Index added 14% of value that day. .

The second-best inauguration proceeds occurred when John F. Kenney took office in January 1961, having won against then-Vice President Richard Nixon in the 1960 election. The SPX gained a much lower 9% that day.

While last week’s gains appear to be largely the result of installing a new administration, a confluence of a few triggers is in fact: the Trump administration guiding vaccines that revived the hopes of an economy that reopens even in the midst of coronary deaths and hospitals: a, since the January Senate runoff in Georgia, anticipation of further impetus, something that seems more possible with a Democrat-controlled Congress.

Add to that optimism: those two specific drivers are also among the first priorities of the new administration.

Yet there is still much debate about the viability of a market that has been roaring even higher, hitting record after record divorced from the current economic reality. Although we agree that valuations are high, remember that the situation was similar in 2005, yet it took another three years for the stock market before it crashed.

We were bearish in 2015-16, but Trump’s victory re-awakened the animal spirits of the market. We were also bearish in February, but despite the March immersion, that sentiment did not pan out either.

The market seems to be disconnected not only from the economy, but from the market dynamics themselves. The one component that has been introduced to the economy and market since the 2008 crash has been quantitative easing, echoed since the inception of COVID through postal financial aid checks. While encouraging spending, they also artificially inflate assets, as shown in the following S&P 500 chart.

SPX Monthly 2016-2021

We warned of a potential crash in early 2020, and warned of one again in late 2020, but each time the SPX reached the top of a massive Expansion patch in operation since January 2018 and then moved higher. However, the upside-down cut now increases the duration of a continuous rally, with the previous peak down.

VIX Daily

On Friday, the number fell below its uptrend line since Nov. 27, completing the equivalent of the H&S continuation pattern. On the other hand, on Friday he may have completed Morning Star. The downtrend (dotted) line of the head may be the test of the stronger technical driver.

Yields, including for the Treasury note, also support a bullish view of stocks.

UST 10Y Daily

Penny, bullish rates formed after the previous advance, as investors sold Treasures. The fact that the penny developed on top of a rising channel increases the likelihood that its bullish view will end with an upside down, as the Treasury brings up gear to push yields beyond the limitations of the current channel.

As the trading week came to an end, the opportunity missed to take over the downtrend line since the March peak.

DXY Daily

This happened as the 50 DMAs, which have been falling off the 100 DMAs since late November, pushed it back below a downtrend line since December, as well as below its rising channel since 6 January low, when terrorists attacked the Capitol. . However, there is a need to be cautious as the trend line from December 7, to the low 6 January can be the focus of the bottom of H&S, which can of course change to the bottom.

The path for it is unclear, as it moves between its status as an inflation hedge and a safe haven.

Gold Daily

The yellow metal is trading within an imperfect raising flag – imperfect, due to indifference forgery – which is bearish after the previous collapse that puts it squarely back to its collapsing channel. Note, the DMA 50 and 200 converge. This is an indication that this price level has the potential for an explosion.

its first weekly decline suffered a setback since September, but its trading pattern argues for another rally ahead of it.

BTC / USD Daily

The leading cryptocurrency by market cap has been developing a flag in the fall. That’s bullish on an upside breakout, following the $ 18,756 surge between Dec. 24 and Jan. 8.

it collapsed on Friday, but closed far from its lows.

Oil Daily

The WTI move occurred after it bounced off the bottom of a range, which met the uptrend line. The commodity has been trading within a falling, bullish banner, on an upside down cut, following the $ 6.69 jump over the seven sessions, from Jan. 5-13.

The Week Ahead

All times listed are EST

Monday

3:45: Eurozone –

4:00: Germany – : is seen to be edging to 91.8 of 92.1.

Tuesday

2:00: BLACK – : previous print came in at 64.3K.

10:00: UD – : it is expected to margin up to 89.0 from 88.6.

19:30: Australia – : to fall by more than half QoQ, to 0.7% from 1.6%.

Wednesday

8:30: UD – : probably cracked up to 0.5% from 0.4%.

10:30: UD – : previous weekly reading showed down move of -1.975M.

14:00: UD – : it is forecast to remain steady at 0.2%.

Thursday

8:30: UD – : it is forecast to dive to 4.0% from 33.4%

8:30: UD – : it is forecast to decline to 878K from 900K.

10:00: UD – : it is seen to rise to 860K from 841K.

Friday

4:00: Germany – : expected to surge to 3K from -37K.

8:30: Canada – : to remain steady at 0.4% MoM.

10:00: UD – : it is seen to rise to -0.6% from -2.6%.

Saturday

20:00: China – : to edge up to 52.0 from 51.9.

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