Tabula rasa - clean blackboard

Tabula rasa - clean blackboard

22 June 2020Reading time: 3 minutes

Friday meant quadruple witching on the New York Stock Exchange. That means expiry of outstanding derivatives like options, futures etcetera. It´s a day that can give a new trend to the market. A new play – no strikes to defend and traders start with fresh cards. It may take a few days for the trends to set in, but it is an important time for anyone interested in the market to watch closely.

 

The S&P500 has created a clear, lower peak which is otherwise a warning that the market may have rolled over into a new negative trend. Note the MA20 as well as MA50 is rising. A new gap has been formed just above where the index is trading which surely is the focus of many traders. EMA9 has turned sideways. MACD at the bottom has generated a weak sell signal.

Swedish OMXS30 fell on Friday and is now hoovering right above a cluster made up by EMA9, MA20, MA200 and Fibonacci 61,8 around the 1 660-level. Note that EMA9 as well as MA20 is upwards sloping. The first resistance can be found around 1 690 followed by the 1725. But as for S&P 500, MACD has generated a weak sell signal. In case of a break to the downside, support can be found around 1 610 where MA100 meet up.

German DAX is like OMXS30 supported by a rising EMA9 and MA20. 12 500 is the first resistance level on the upside followed by 12 940. MACD has again generated a weak sell signal. A break below 12 240 and MA200 around 12 150 serves as the next support followed by MA20 around 12 030:

American tech-heavy index Nasdaq is still alive and kicking trading well above a rising EMA9 and MA20. Thus, the rising trend is still the strongest for Nasdaq. However, note that the distance between EMA9, MA20 and MA50 is quite large and has been for some time. An adjustment may thus be in the cards. When they are in such beautiful rising trends, price falls may serve as good opportunities to buy.

But there is no problem in finding reasons for the market to go down as continued weak macro figures weigh as well as continued high growth of Corona cases in the US and Brazil that has prompted the WHO to issue new warnings.

Apple was in focus after the company released the news that they are closing business again due to the Corona virus. However, the share dropped by a modest 0.6 percent on the news and managed to stay above the rising EMA9 and MA20 serving as first and second support level on the downside:

In all the bad, Netflix may be a winner in case of increased restrictions. Note how the previous top from May is being tested. Concerning is the negative divergence with MACD. The question is if the share has enough energy to break above.

On the other hand, central banks and states continue to pump out support. However, note from the top that the Fed is reducing something on its balance sheet now. It may be tactical to parry other central banks to increase their support or they might think they have done enough to deal with the emergency crisis.

Brent oil is trading above the rising EMA9 and MA20 and can be on its way to test Fibonacci 50 inside of the gap for a second time:

The USD has strengthened as worries about a second wave of restrictions has increased. The pair EUR/USD closed last weeks trading below MA20 meaning that the short-term trend is again falling. MACD has also generated a weak sell signal. A break below 1,118 and the next level can be found around 1,114.

Gold has gained some strength and is testing resistance around 1 745 USD per ounce. Note MACD that has generated a weak buy signal. The next level on the upside can be found around 1 770:

Legal notice

This information is in the sole responsibility of the guest author and does not necessarily represent the opinion of Bank Vontobel Europe AG or any other company of the Vontobel Group. The further development of the index or a company as well as its share price depends on a large number of company-, group- and sector-specific as well as economic factors. When forming his investment decision, each investor must take into account the risk of price losses. Please note that investing in these products will not generate ongoing income.

The products are not capitalprotected, in the worst case a total loss of the invested capital is possible. In the event of insolvency of the issuer and the guarantor, the investor bears the risk of a total loss of his investment. In any case, investors should note that past performance and / or analysts' opinions are no adequate indicator of future performance. The performance of the underlyings depends on a variety of economic, entrepreneurial and political factors that should be taken into account in the formation of a market expectation.

29/10/2020 00:30:22

 

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