Week 30: 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 updates 19th Jul 2020:

Overview: Covid-19 new daily cases remains on the rise particularly across the US, garnering some renewed concerns this week.

A look at the rolling 7-day new cases chart below finds US cases far surging that of other parts of the world at their earlier peaks. Meanwhile the Chinese market had also seen some cooling of the bullish sentiment both with the authorities’ guidance and disappointing retail sales data, although one may argue the latter had nevertheless been a better-than-prior reading.

All of which throws some doubts into the market. That said, perhaps of little doubt will be the fact that Q2 US earnings will only be having more sway in the coming week with a flurry of items to watch ranging tech companies like Microsoft and Intel to those in the energy sector such as Halliburton and Schlumberger – refer to the picture below.

Items to note

Covid-19 resurgence remains a prevalent issue across various parts of the world with the likes of US, Australia and Japan receiving increased scrutiny as a result of the rising numbers. These new Covid-19 hotspots will continue be the focus areas in the coming week with any further surges potentially drawing bigger risk-off reactions and cascading the effect to the markets.

US Q2 earnings season continue to roll in with approximately 17% of the companies, or 86 of which, reporting earnings on the S&P 500 index. A greater assortment of companies will be due to report their performance after the banks kickstarted the results release this week. As can be seen, the 8% of companies that had reported thus far had seen a 76% and 79% beat of the low bar for earnings and sales respectively, one to watch how things will fare in the coming week to influence prices.

Preliminary July Markit PMIs will be the highlight into the end of next week with both the US and Eurozone due to report their readings on Friday. According to consensus, both regions are due to see both manufacturing and services PMI improve. With services PMI, these are expected to swing back into expansion, one to weigh against the rising Covid-19 conditions in the US.

US data will be few and far between in the coming week. Besides the abovementioned PMIs, existing and new homes sales will be released for June. Initial jobless claims one to watch as well after a slowing trend had been evident here after the slide from the peak around March.

EU summit, while set to commence rather imminently this weekend, will be one to watch for market reaction at the start of the coming week. There had perhaps been reserved optimism going into the end of week particularly looking to that likelihood of the EU recovery fund deal that could give the EUR a boost. Buying EUR/USD had perhaps been rather fashionable of late with eyes on the 1.15 figure should a deal be agreed upon at the upcoming summit. One to watch.

China’s LPR will be the lone central bank rate update amongst relevant economies though we will also have Japan and Australia policy meeting minutes to parse through. No change expected here with the Chinese LPR, but instead it may be a continued watch for the authorities tone with the market for Chinese equities and the likes of the China A50 index.

The local Singapore market will see June CPI and industrial production data in the coming week. Do note that a string of circuit breaker inflicted Q2 earnings updates across many REITs on the local bourse will also be seen for the coming week such as Mapletree Logistics Trust and both CapitaLand and Mapletree Commercial Trusts.

 

Key companies to look out for on earnings releases:

Credits: Earnings Whispers

 

Gold trading plan:

 

Weekly Chart:

Gold have been going through corrective wave for past 2 weeks (pull backs) and where the downward pressure seems to be easing out. It would be good to monitor for another 2 days and be ready in case the next impulsive wave to come in. Lets move into daily and 4 hours chart to have a clearer picture.

Note: MACD, RSI are still trending up

In trading, please do not FOMO (Fear of missing out) – As seen recently (and many times in the past), before any large up move, market would generally test for support before going up. Hence, opportunities would come.

 

Daily chart:

In daily chart, the trend is looking to be ready for an uptrend but is still under consolidation. It would be important for Gold to break above 1,813.50 strongly for the new uptrend to emerge. Do take note of this level.

Similar to last week, MACD and RSI have slightly weaken (but still in positive momentum). – If it turns back up, it would be a powerful up move due to the positive momentum (in line with Wave 5 of 5 theory).

 

4 hours Chart: Bullish biased (subjected to 1,813.5 confirmation)

It seems that Wave 5.D corrective wave (mentioned last week) is over and we are currently at Wave 5.E.2 – however, we would need to see a strong confirmation above 1,813.5 for the wave to be valid.

I have added more position during the pull back seen last week and have moved my entry to break-even.

 

As no trading/investments are guarantee sure win, please do your own due diligence and always look at risk to reward and trade with guaranteed stop loss.

 

Regards,

Ernest Koh