- Markets expect US Fed to hike rates 75 basis points
- Dollar slides
- Oil slips on recession concerns
On Tuesday, futures on the Dow, S&P, NASDAQ, and Russell 2000 moved higher, along with European stocks which recovered after opening in the red on recession fears.
The STOXX 600 Index opened 0.3% lower as the ongoing energy crisis in Europe reduced the outlook for economic growth. However, the index recovered as Energy sector and Utilities climbed after shares in Électricité de France (EPA:EDF) surged over 50%, following the news that the French government will pay 12 euros per share to nationalize the nuclear energy provider.
The S&P 500 lost 0.84% of its value yesterday after Apple (NASDAQ:AAPL) announced plans to slow hiring, another sign that high US inflation is slowing growth. The news ties in nicely with the technicals.
The stock found resistance below the neckline of a top for the second time since June 1. Considering how close the price is to resistance, I consider this an ideal short entry, with an implied target of $125, but the price has to break first the June 16 low's support.
The 10-2 year Treasury yield curve remains inverted.
It is pricing in a second consecutive 75 basis point interest rate hike at the July 26-27 FOMC meeting.
The dollar fell for the third straight day after extending far above its trendline.
A return to a trend line may offer a buying opportunity along the uptrend. Each rising trend line will provide another risk grade, with the closest being aggressive and the flattest one being conservative.
Gold was flat, which is surprising considering the greenback is falling, and the market narrative that investors are nervous. Perhaps, investors earmarked capital to bonds, and maybe technicals are weighing on the yellow metal.
On the monthly chart the price is the lowest since the March 2020 crash. It may be topping out, which could send gold crashing.
Bitcoin fell, paring about almost a third of yesterday's 8% advance, its biggest hike since June 19.
After completing a gigantic top, the cryptocurrency found resistance at the top of a short-term rising channel, a Return Move. According to the principles of technical analysis, Bitcoin should crash, which I have been forecasting since the start of this year.
Oil opened lower, ending a four-day advance which saw it hit $100 on tight supply concerns and a weakening dollar. Nevertheless, the black gold fizzled, perhaps on the technicals, reinforcing the recession story.
The price cannot climb above the triangular pattern, cementing its resistance. I expect oil to fall into the $60s.
Up Ahead
- On Wednesday, UK CPI figures are published
- US existing home sales are released on Wednesday
- Crude oil inventory data is published on Wednesday
Disclaimer: The author currently does not own any of the securities mentioned in this article.