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Investors Continue To Bet On Equities, U.S. And Canada Data In Focus

By JFD TeamMarket OverviewDec 23, 2021 04:36AM ET
www.investing.com/analysis/investors-continue-to-bet-on-equities-us-and-canada-data-in-focus-200612516
Investors Continue To Bet On Equities, U.S. And Canada Data In Focus
By JFD Team   |  Dec 23, 2021 04:36AM ET
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Yesterday, it was another day when the equity indices across the globe were a sea of green. The best performing sectors were consumer cyclical, energy, and real estate in the US. The sectors that performed the least yesterday were the consumer defensive, utilities, and industrials. Thursday will be a relatively light day on the economic calendar.

Equities Continue to Recover Losses

Yesterday, it was another day when the equity indices across the globe were a sea of green. Among the top indices, only the Chinese did not have a positive day, as they closed fractionally in the red. The positivity came from some major economies, whose leaders decided not to impose stricter measures before, during, and after the festive days.

Also, we received the country’s GDP growth rate from the US, which came out higher than the initial forecast. In the beginning, the expectation was for the US QoQ GDP rate for Q3 to show up at +2.1%, but the actual reading was at +2.3%. Investors saw all that as a positive and pushed equities higher, with Dow Jones Industrial Average, the S&P 500 and NASDAQ gaining around a percent.

The best performing sectors were consumer cyclical, energy, and real estate in the US. Tesla (NASDAQ:TSLA) led the way by gaining a promising 7.50%. This came after Elon Musk’s comments that he was done with selling the company’s stock.

Investors took that opportunity to drive the stock back above the $1000 mark. In the energy sector, one of the best performers was Devon Energy (NYSE:DVN). In real estate, all companies managed to enjoy some modest gains, but the biggest gainer was CBRE Group (NYSE:CBRE).

The sectors that performed the least yesterday were the consumer defensive, utilities, and industrials. The worst performer among the consumer defensive companies was the Altria Group (NYSE:MO), showing a -1.86% result.

In the utility sector, AES Corp. (NYSE:AES) was the laggard, finishing the day with -0.59%. And among industrials, Emerson Electric (NYSE:EMR) was the biggest loser, ending the trading session with -1.27%.

S&P 500 – Technical View

After finding support near the 4530 hurdle at the beginning of this week, the S&P 500 index started advancing rapidly while trading above a short-term upside support line taken from the low of Dec. 20. As long as the price continues to trade above that trendline, we will stay positive, at least with the near-term outlook.

If the index still gets pushed higher and climbs above the 4702 barrier, marked by yesterday’s high, this will confirm a forthcoming higher high. The S&P 500 may then travel to the 4725 obstacle, a break of which could set the stage for a move towards the current all-time high, at 4752.

Alternatively, a break of the aforementioned upside line and a price drop below the 4653 hurdle, marked by the high of Dec. 21, could spook some buyers from the arena for a while. The index might fall to the 4631 obstacle, which if broken may clear the path to the 4582 level, marked by an intraday swing low of Dec. 21.

S&P 500 4-hour chart technical analysis.
S&P 500 4-hour chart technical analysis.

The US and Canadian Data Awaited

Thursday will be a relatively light day on the economic calendar. There are only a few pieces of data worth keeping an eye on. From the US, we will receive the initial and continuing jobless claims for the past week. Currently, there are no major surprises expected, as the initial ones are believed to decline only by 1K, going to 205K.

And the continuing ones are forecasted to go down from 1845K to 1820K. The US will also deliver its core durable goods orders on an MoM basis for November. The expectation is to go from +0.5% to +0.6%.

If so, that would be the third month in a row when the numbers manage to beat their previous reading. In addition to all that data, the US will provide us with the new home sales figure for November, which is believed to improve slightly from 745K to 770K.

US initial vs. continuing claims.
US initial vs. continuing claims.

The only other piece of data worth mentioning is the one from Canada. The country will provide us with its MoM GDP number for October. The expectation is for the reading to go higher substantially, from +0.1% to +0.8%.

Canada GDP MoM.
Canada GDP MoM.

USD/CAD – Technical Outlook

Overall, USD/CAD continues to trade above a short-term tentative upside support line drawn from the low of Nov. 10. However, at the same time, after finding resistance this week near the 1.2964 hurdle, the pair started correcting lower. Even if the rate continues moving to the downside, as long as it remains above that upside line, we will stay positive, at least for now.

A further lower correction might bring the pair closer to the 1.2764 hurdle, marked by the low of Dec. 16, or even to the aforementioned upside line. That line also coincides with the 200 EMA on our 4-hour chart, and if both of those lines continue to support USD/CAD from moving lower, a rebound could be possible.

If so, the pair may rise back to the 1.2829 hurdle, or it may end up testing the 1.266 level, marked by an intraday swing high of Dec. 22. Around there, the rate might test a short-term downside line, marked by the high of Dec. 20.

On the other hand, if the previously discussed upside line breaks and the rate falls below the 1.2705 zone, marked by the low of Dec. 13, that could clear the way to some lower levels. USD/CAD may drift to the 1.2678 obstacle, a break of which may lead the pair towards the 1.2606 territory. That territory marks the current lowest point of December.

USD/CAD 4-hour price chart.
USD/CAD 4-hour price chart.

As for the Rest of Today’s Events

The US will also deliver its new home sales figure for November. The current forecast is to rise from the previous 745k to 770k. If the actual number shows up somewhere near those figures, we believe that the indicator might not have a significant effect on the US dollar.

Investors Continue To Bet On Equities, U.S. And Canada Data In Focus
 

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Investors Continue To Bet On Equities, U.S. And Canada Data In Focus

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