As markets digest new pricing in many symbols, my pivot and range math for next week indicate sideways range plays may go on for days. So, set your scalper’s chart grids and get ready for some Iron Condor possibilities! However, some trending may occur above/below my weekly-based options perspective or symbol list.
What a very strange week. Last Wednesday the Transports led to the upside while the Dow lagged. You’ll recall the Dow lagged because IBM got clobbered on their earnings report. Also, the BKX along with Goldman Sachs flattened out. Goldman is still moving to the downside. Why is this important? IBM is the 9th weighted stock in the Dow while Goldman Sachs is number two.
The euro/U.S. dollar/U.S. dollar currency pair lost 0.34% during the last five days. The single currency is trading at 1.2288 as investors await the ECB to keep rates and quantitive easing unchanged on Thursday, April 26 at 8:30 am. Trade war fears and actual war concerns waned this week after putting downward pressure on the U.S. dollar.
The United States led a coordinated effort, along with Britain and France, to strike specific targets in Syria on Friday night. This was the culmination of what began as a horrific chemical attack carried out by forces aligned with the Syrian government on a town held by Syrian rebels last weekend.
Markets rallied to key resistance levels and have to make an important decision this week. After two weeks of testing the bottom and coming to the middle of the range, will they fade here or go to the top of the range? It’s a mixed market with the Transports gapping up to start the week, but oil seems to have found a near-term high but violated the high it made earlier in the year.
The U.S. dollar lost against most majors even if it appreciated against safe-haven currencies on Friday. The Syrian conflict concerns faded at the end of the week and boosted the USD versus the JPY and the CHF. The release of the meeting notes from the March Federal Open Market Committee proved to be a positive for the American currency as the Fed was more hawkish than expected. Next up for the markets will be the release of retail sales data in the United States and the Bank of Canada (BoC) rate statements.
Regarding this week’s forecast, I noted that the British pound, the euro and crude looked bullish, and they behaved so. The projected range in crude offered a good reversal trade level into Wed. Also, my list of breakout symbols (Canadian dollar, crude oil, the pound and the S&P 500) produced pricing outside the prior week’s ranges. As a monthly chart follow-up, VIX futures are forming an inverted hammer, while Ten-year T-Notes formed a reversal long signal last month.
Markets haven’t been behaving well with Thursday/Friday being the latest example. I’m not even sure it was the weak jobs number which came in at 103,000 despite expectations of 182,000. Supposedly the Ides of March always augur in bad weather which leads to a "less than" haul. We’ll see soon enough in 30 days whether the weather caused an outlier.
There are a number of key events this week but inflation and the path in which the Fed is tightening remains at the forefront. This has literally taken the stability and liquidity out of the market which in turn has made other situations, i.e. the trade war, have a greater and more immediate impact on market conditions. CPI, a leading inflation indicator, is due Wednesday morning at 7:30 a.m. Central.
The U.S. dollar is mixed against major pairs after the U.S. non-farm payrolls (NFP) headline jobs number failed to meet expectations. The United States added 103,000 jobs short of the 193,000 jobs forecast. Wage growth came in as anticipated at 0.3% to keep the pressure on the U.S. Federal Reserve to raise interest rates.