Stocks indecisive as investors weigh soft data against dovish central banks
Fawad Razaqzada February 11, 2019 3:52 PM
After a big rebound in January, the US stock markets appear a little tired. Investors are weighing the negative impact of soft economic data on future company earnings against the positive impact of interest rates remaining low for longer, with several major central banks recently turning dovish.
After a big rebound in January, the US stock markets appear a little tired. Investors are weighing the negative impact of soft economic data on future company earnings against the positive impact of interest rates remaining low for longer, with several major central banks recently turning dovish. In addition, some market participants must be wondering whether the positivity surrounding the US-China trade talks might be priced in by now. As a result, we have seen some indecisiveness in the markets, with neither the bulls nor the bears appear to be in full control of the current trend. Indeed, reflecting this indecisiveness, the S&P 500 created a doji candle on its weekly time frame last week (see the inset). But as it still managed to close marginally above the week’s opening price, this ensured of a positive close for the seventh consecutive week. However, the shape of the candlestick and its location – near the 61.8% Fibonacci retracement against last year’s all-time high – points to potential weakness going forward. We have already seen the German markets tumble last week, while pockets of weakness have been apparent in a few other regions too. What’s more, prices of crude oil and copper are looking heavy again. And with the bulk of US earnings now out of the way, we wouldn’t be surprised if stocks were to start easing back a little here. That being said, for us to turn decisively bearish again, we need to see some further technical damage, for this could just turn out to be a mere pause before the uptrend resumes.
Source: TradingView and FOREX.com. Please note, this product is not available to US clients
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.