Week 33: 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: The S&P 500 index is very closed to recent peak and by the looks of the MACD and RSI, it is likely to retest All time high in the upcoming week. The concern is if it will be sustainable especially for the next few months. From Investwhizz poll where ~280 have participated, we are seeing a 55% Bullish view in the market. Please do your own due diligence.

Meanwhile the local Straits Times Index remains down by more than 20% on a year-to-date basis, truly reflecting the varied drivers for the different markets. A short week is seen ahead for the local market with Monday being a holiday.

Items to note

  1. Event risks remains in abundance into the coming week. US-China tensions had been renewed with President Donald Trump’s latest decision to ban TikTok and WeChat while retaliation is not ruled out at this point of time after the series of move targeting China. Meanwhile, with the market having partially priced in the expectation for the next US fiscal stimulus, further downsides may be the case if we continue to find a impasse.
  2. US Q2 earnings season had seen 83% of the companies on the S&P 500 index having reported their Q2 performance with 82% beating on earnings and 65% for sales according to Refinitiv data. A splatter of releases remain in the coming week including Royal Caribbean Cruises and Applied Materials to watch ahead of the following week with retailers such as Walmart and Target in focus.
  3. US data to track in the coming week includes the likes of the July inflation, retail sales and preliminary August UoM sentiment. Expectations are for retail sales performance to slide from the strong June results. Jobs report is yet to be released at the point of writing, but retail sales performance will also be one to watch for the month whereby increased localised lockdowns had been noted.
  4. Australia had seen AUD/USD continue on the uptrend of late, eyeing a fresh 1.5-year high going into the fresh week.
  5. RBNZ is expected to hold official cash rate unchanged in the coming Wednesday at 0.25%. Domestic activity can be seen resuming for the NZ economy with elimination of Covid-19. No easing expected from the RBNZ in the near to medium term.
  6. China’s data barrage will be seen into Friday with July’s industrial production, retail sales and fixed asset investments. The consensus is currently pointing to relatively robust readings across the different gauges including retail sales to continue improving into July. Last month’s disappointment had weighed on the market, but economists are looking for the reading to head into positive year-on-year growth territory into H2. Low base effect may play a part to help as well.
  7. Tencent and JD.com will be two Chinese tech firms releasing their 2Q earnings results in the coming week with Tencent confirmed to be on Wednesday. Share price volatility had picked up for Tencent after getting involved in the US-China scuffle. Earnings and management views will be closely scrutinised in the coming week.

 

Credits: Earnings Whispers

 

Gold trading plan:

Weekly Chart:
As mentioned last week gold has finally did the flush down on Friday. At present, it is in the mode of recovery and we would need to monitor closely in case of another flush down to stop hunt the weak hands as mentioned last week.
MACD and RSI continue to be at the overbought region (short term upside with lots of flush down due to un-chartered area).
I have exited my mid term positions before the flush down and am currently left with smaller very short term position to ride the swings while I monitor for a good re-entry point.
Daily chart:
We can see that in the daily chart, the short term uptrend is broken and the support is around 1980 region. We would need to monitor how Monday’s candle play out before making the decision to go long or short on gold.
MACD and RSI are both looking like they are going to take a break where we may see a retracement happening if Monday’s candle is not supported. I would exercise more caution if I want to go long now.

 

4hours chart:

Chart is clear that Gold would be taking a short break (retracement) before going for the new high.  In the immediate 4hour chart, it may re-test 2,064 region (my short term position target) and if it fail to break up, we would be seeing a sharp wave C drop to 1980 range.

It is clear in the 4hour chart that the probability of gold having a retracement in the upcoming week is higher. Please DYODD.

 

 

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

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