Top Story

Stocks: S&P’s latest all-time highs could be brief

The US-China trade optimism is driving the markets and the S&P 500 has opened at a fresh record, while safe havens gold, yen and franc have all fallen. Tech stocks jumped after Trump said he would allow US corporations to resume business dealings with Huawei on certain products after it was blacklisted earlier due to national security concerns.

Global manufacturing PMIs disappoint

But July has started with a negative note for global manufacturing data, after purchasing managers reported deteriorating conditions in several key economic regions including China and the US. Initially, this was shrugged off by a market buoyed by the latest developments regarding the US-China trade spat, after Trump said trade talks are back on track. However, since the start of the US session, we have seen a bit of a pullback from the highs. If this latest trade optimism fades completely, the focus will turn very quickly to the ailing global economy. As such, the S&P’s latest breakout to a new all-time high could be brief, especially as some of the positivity regarding trade talks was already priced in.

OPEC+ cuts unlikely to keep prices support for too long

Also, I am not sure if crude prices will be able to rally significantly from here – in fact, I am expecting them to fall. Russia’s energy minister Alexander Novak said that all oil ministers have approved a 9-month OPEC+ extensions to curb production. This is arguably a better deal from the OPEC’s point of view than a 6-month extension some had expected, but with the same production quotas being retained, it has disappointed calls for deeper cuts. As such, the new deal will probably fail to address the rising non-OPEC supplies at a time the world economy is slowing, which could mean lower demand growth. Thus, the oil market is likely to be oversupplied again in due course, which means prices may struggle to push significantly higher from here. That in turn could weigh on energy stocks.

S&P 500 traders awaiting bearish price action first

However, the S&P will only turn negative from a technical point of view in the event it breaks below its most recent low at 2910. Until and unless that happens, the path of least resistance continues to remain on the upside. Indeed, if the bullish trend continues, we could see SPX 3K soon, with the 127.2% Fib extension at 3021/2 being the next bullish objective.

Source: Trading View and Please note this product may not be available to trade in all regions.

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 or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

The markets are moving. Stop missing out.