Week 24: Market Update & Gold trading journal

Disclaimer: All information shared is solely for learning purpose and it does not constitute to a buy/sell call.

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Market update:

Overview: Reopening optimism had been the key theme seeing the strong rallies across Wall Street to Asia indices. That said, with the likes of the S&P 500 index having retraced three quarters of the March plunge and the local STI at 50% at the point of writing, it calls for the question as to whether this trend can continue and that will likely be the key question next week. Personally, I would not want to get too FOMO to it.

 

US-China tensions appears to have been thrown to the back of market participants’ minds following President Donald Trump’s announcement on the ending of preferential treatment for Hong Kong but stopped short of harsher restrictions. Further easing of tensions despite the tit-for-tat moves on the aviation side had also been noted this week. Although, US listings of Chinese companies remain a pain point here as President Donald Trump directed a task force to look into fraudulent practices of New York listed Chinese companies, and secondary listings into Hong Kong for Chinese companies may just be the trend here.

 

In Europe, the Netherlands and Belgium plan to open bars and restaurants; Switzerland will allow universities to open; Germany has approved small gatherings; the Spanish soccer league La Liga will resume; Portugal will re-open beaches; and Greece plans to relax rules on domestic travel. Elsewhere, New York City will begin reopening; India starts a phased lifting of its nationwide lockdown, allowing malls and restaurants to open. South Africa opens schools, and New Zealand could remove most of its remaining restrictions after virtually wiping out the COVID19.

 

The June Federal Open Market Committee (FOMC) meeting will conclude next week with expectations for continued low interest rates projections while the outlook may likewise remain abysmal.

High interests will be on what figures will be put to these economic forecasts after the Fed skipped the March projections owing to the uncertain outlook. Negative interest rate will likely be dismissed by the Fed again here as well.

 

US’ May inflation data will be released midweek, seeing expectations for the headline CPI print to head back to neutral on a month-on-month basis after two months in negative territory. Any surprises here will be taken in a positive light for consumer demand as reopening unfolds, though the likelihood is that sluggish inflation conditions will carry on for the coming months. Preliminary June UoM consumer sentiment also due into Friday, seeing consensus for an improvement to 76.0 from 72.3 in May, another potential suggestion of improving statistics here for the market.

 

OPEC+ may hold their ministerial meeting this weekend after earlier suggestions of a Thursday meeting did not come through. Expectations remain for the extension of the historical 9.7 million barrels per day cut though issues of lower compliance had marred the smooth passage of the extension thus far. Look to any indications of a weekend update that could be critical for commodities next week.

 

China data in focus next week will be May’s inflation readings though we will still have trade data, due Sunday, to get through first. CPI is expected to come in weaker at 2.6% YoY, with focus on the factory gate inflation or PPI that could continue to slump on a YoY basis. A -3.2% YoY consensus had been pencilled in, whereupon materialisation may serve as a reminder of the weak demand conditions, overpowering some of the rise in commodity prices in May.

The local Singapore market after having been stuck rangebound mostly between 2500-2600 for over 1-month had taken this week to break out and oscillate the 50% retracement level. Prices look to be approaching the 100-DMA of around 2790 levels. One to watch in the coming week as to whether the rally could continue and catch up to its US counterparts as reopening hopes sputters into end of week.

Source: External

 

Gold trading plan:

 

Weekly Chart:

Bearish:

  1. MACD & RSI both showing signs of exhaustion supported by chart pattern
  2. Fail to close above 78.6% Fibo, chart would be heading down in the immediate term to look for support

 

Daily chart:

Bearish:

  1. MACD & RSI are both bearish – view also supported by weekly chart
  2. Immediate support level 1,670 & 1,658
  3. Volatility of gold seems to be trending higher
  4. Possible structure of Elliott corrective wave C

 

4hours chart:

Bearish:

  1. View supported by Weekly and daily chart
  2. Currently broke off down trend support channel, will likely to attempt back testing to get back down channel, if back testing fails, it will go down to 1,650 – 1,670 range to look for support

 

Cheers,

Ernest Koh

InvestWhizz Founder
#covid19, #SG United, #standwithyouSG