Market Analysis

S&P 500: Rising on the back of Cyber Monday but haunted by the dark cloud of the G20 summit

The S&P500 remains bullish since the beginning of the week, on expectations of strong gains for retailers as shoppers went stalking for deals on Cyber Monday. According to analysts, online sales are expected to set a new record of USD 7.8 billion, up nearly 18% from last year.

The upcoming G20 summit, scheduled to take place on November 30 in Buenos Aires, Argentina is also highly anticipated by the financial world considering Trump’s renewed tariff threats against China. There are concerns that an intensification in trade tensions could further injure growth in two of the world’s largest economies and inflict more damage on financial markets, which have recently experienced volatility in part over the tit-for-tat tariff impositions by the two countries.

White House Economic Advisor Kudlow said that Trump is open to a deal with China, although tariff hikes could be expected if no constructive outcomes occur as a result of the discussions held during the G20 Summit. The increasing of tariffs to 25% is not a “certainty” but defines the raise as “scheduled” while reinforcing that the US in far better shape to endure tariffs hikes than the Chinese.

Top S&P 500 Gainers and Losers yesterday:

Pacific Gas and Electric Company (7.36%), Advanced Micro Devices Inc. (4.83%), Vertex Pharmaceuticals Inc. (4.81%) among the top S&P 500 gainers for the session.

Aptiv PLC (-4.50%), United Technologies Corp. (-4.14%), Huntington Ingalls Industries Inc. (-4.13%) were among the worst S&P 500 performers of the session.

The preliminary Markit US Manufacturing PMI fell to 55.4 in November, compared to 55.7 registered in the previous month and missing analysts’ forecast of 55.7. Output growth slowed to a three-month low while new orders rose the most in six months while the pace of job creation hit an 11-month high.

Since the beginning of 2018 until last Tuesday close, the US index turned positive with a gain of almost 0.35% but since the start of November dropped 1.0%. Nonetheless, the week began on the right foot with a rise of almost 2.0% and on the daily basis closed in the green with almost 0.9% gain. Furthermore, the S&P 500 is in a distribution phase since mid-November.

On the last Tuesday session, the US index rallied with a narrow range and closed near the high of the day, in addition, managed to close above Monday high, which suggests a strong bullish momentum.

The stochastic is showing an oversold market and is beginning to display a strong bullish momentum although is still below the 50 midline.

The S&P 500 began November on a positive note with a rally up to 2,818.00 and even tried to break a daily resistance although without any success. This failure woke up the bears that pushed the price back down toward 2,625.75 where they seem to have lost the grip to the bulls. Now US index is testing a daily resistance zone that ranges from 2,682.75 up to 2,697.75. If the bulls manage to break above the daily resistance we might see a run up to the 61.8 Fibonacci retracement at 2,744.56 but on the other hand, if they fail to do so the bears could take control and push the price back down to 2,625.75. Yesterday, the S&P500 succeed in close above the 10-day moving average, which should act as a dynamic support while both daily moving averages, the 50 and 200 should provide dynamic resistance.

Usa500 is a CFD written over S&P 500 futures.

Watch out this Week:

Wednesday, November 28 at 13:30 GMT (08:30 ET): The US Bureau of Economic Analysis is scheduled to release the preliminary gross domestic product (GDP) annualized for the third quarter, which is expected to come in unchanged at 3.5%, the same as the previous period. The GDP Annualized is a gross measure of market activity because it indicates the pace at which a country’s economy is growing or decreasing. Normally, a high reading or a better than expected number is seen as positive for the USD, while a low reading is negative.

At the same time the Bureau of Economic Analysis, Department of Commerce is scheduled to release the preliminary Core Personal Consumption Expenditures quarter-on-quarter in the third quarter, which is expected to come in unchanged at 1.6%, the same as the previous period. This economic indicator is considered an important gauge of inflation. Generally, a high reading is positive for the USD, while a low reading is negative.

Wednesday November 28 at 17:00 GMT (12:00 ET): he Federal Reserve (Fed) Governor Jerome H. Powell is scheduled to speak. As head of the Fed, which controls short-term interest rates, he has more influence over the US dollar value than any other person does. Traders closely watch his speeches as they are often used to drop hints regarding future monetary policy.

Thursday, November 29 at 13:30 GMT (08:30 ET): The US Bureau of Economic Analysis is scheduled to release the Core Personal Consumption Expenditure – Price Index year-on-year in October, which is expected to come in unchanged at 2.0%, the same as the previous period. The “Core” excludes seasonally volatile products such as food and energy in order to capture an accurate calculation of the expenditure. It is a significant indicator of inflation. A high reading is positive for the USD, while a low reading is negative.

Thursday, November 29 at 19:00 GMT (14:00 ET): The Federal Open Market Committee (FOMC) is scheduled to release its meeting Minutes, which are released by the Board of Governors of the Federal Reserve (Fed) and are a clear guide to the future US interest rate policy.


Usa500 Dec ’18 Daily Candlestick Chart

Usa500 Dec ’18 Daily Candlestick Chart 


Written by Hugo O’Neill, External Analyst


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