Week 25: 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: Volatility had returned to the markets this week following the good run for risky assets on the back of the reopening optimism. After the likes of the Dow and the S&P 500 index chalked up losses of over 5.0% on Thursday, June 11, US futures can be seen inching higher in the habitual behavior post such declines. Seeing the S&P 500 index typically having gained in the week after a 5% drop, one does wonder if the same may be the case here. That said, COVID19 is seeing a potential wave 2 in China and we would need to be cautious.

US’ May industrial production and retail sales will be due Tuesday next week, expecting improvements across readings in the update. After two consecutive months of substantial declines, gradual reopening of the US economy, retail sales is expected to head back into expansion territory on a month-on-month (MoM) basis. Industrial production is likewise expected to have improved, albeit at a slow pace, going into May. Any surprise here may restore some market confidence as investors scrutinize the high frequency data.

Fed chair Jerome Powell is scheduled to testify before the US Congress across June 16 and 17 on the central bank’s semi-annual monetary policy report. Following the Federal Open Market Committee (FOMC) meeting this week, concerned had renewed with regards to growth seeing the -6.5% GDP projection for 2020. The appearances in the coming week will similarly be scrutinized on his views.

US’ May industrial production and retail sales will be due Tuesday next week, expecting improvements across readings in the update. After two consecutive months of substantial declines, gradual reopening of the US economy, retail sales is expected to head back into expansion territory on a month-on-month (MoM) basis. Industrial production is likewise expected to have improved, albeit at a slow pace, going into May. Any surprise here may restore some market confidence as investors scrutinize the high frequency data.

China’s May industrial production and retail sales will similarly be released at the start of the week, expected to continue telling the story of recovery for this Covid-19 front runner. Industrial production is expected to accelerate to 5.0%, trending in line with both the NBS and Caixin PMIs released earlier in the month. Retail sales meanwhile could show a smaller YoY decline with services sector continue to recover. Do note that given this a Monday reading, it may help to provide support for Asia markets should Wall Street exhibit the usual post -5.0% gain this Friday.

Bank of Japan meets in the coming week and updates monetary policy on Tuesday. No change to policy settings is expected with the central bank on a wait-and-see mode following the suit of credit easing measures introduced and more fiscal support on the way to the Japanese economy. USD/JPY expected to be risk sentiment driven in the short-term. In-depth analysis of BoJ MPM can be found in platform.

Bank of England is similarly expected to see rates on hold at 0.10% though expectations are for asset purchase target to potentially be lifted substantially in the June meeting. Brexit worries remain while weak economic conditions keeps the bearish GBP bias going in the medium term, although, short-term US dollar fluctuations remain the key driver here.

The IEA and OPEC will be publishing their monthly oil reports on Tuesday and Wednesday respectively. EIA will also be releasing their monthly Drilling Productivity Report on Monday with shale-output estimates for July.

Singapore’s May non-oil domestic exports (NODX) will be one to watch for the domestic market in the coming week. Positive readings had been seen through April on the back of pharmaceutical exports. The local STI, however, will still largely have external conditions to drive prices.

Source: External

 

 

Gold trading plan:

 

Weekly Chart:

Neutral to Bearish if fail to break above the trend:

  1. After last week’s exhaustion of MACD & RSI, Gold recovered its ground and is currently showing signs of uncertainty (i.e. could be recovery or could tip down in the coming week).
  2. Chart closed just right below 78.6% Fibo – would need to monitor how the market moves on Monday

 

Daily chart:

Neutral to Bearish:

  1. While some recovery are there last week, MACD & RSI are both still bearish looking.
  2. Breakout of trend did not happen last week where attempt to break out would happen on Monday. Do look out in case of rejection of break out, Gold would be continuing on the downward channel. Immediate support level 1,658
  3. Volatility of gold continued to be trending higher

 

 

4hours chart:

Bearish:

  1. View supported by Weekly and daily chart
  2. Gold managed to back test back to the down channel and is currently at the top of down channel. As seen in daily chart, it may test break out on Monday and iIn case of rejection, it would likely to be trending back down to 1,658 range.

Cheers,

Ernest Koh

InvestWhizz Founder
#covid19, #SG United, #standwithyouSG