US Stockmarkets fall ahead of key releases

The USD tended to remain relatively unchanged against its counterparts on Friday, yet interest may have started to shift toward US stock markets. We note the wide simultaneous drop of Dow Jones, S&P 500 and Nasdaq as US yields seem to have stabilised at rather high levels, with the 10-year yield being a particular example. Yet high US yields seem to leave gold’s price unimpressed, which continued to be on the rise on Friday. The market’s worries for a possible recession in the US economy, are still present and tend to weigh on US stock markets. It should be noted that Cleveland Fed President Mester stated on Friday that she sees the possibility of another rate hike by the bank, underscoring the hawkish tendencies of the Fed. We expect the market to focus on the US tech sector in the current week, as on Tuesday we get the earnings reports of Alphabet (#GOOG) and Microsoft (#MSFT), while on Wednesday we get EBAY (#EBAY), IBM(#IBM), APPLE (#AAPL), META (#FB) and on Thursday Amazon (#AMZN), among a number of other high-profile companies. 

Gold’s price tested the 1987 (R1) resistance line on Friday, yet failed to clearly break it and opened with a negative gap during today’s opening. Nevertheless, the precious metal’s price regained its momentum and rose during today’s Asian session and the RSI indicator despite dropping below the reading of 70 remained at relatively elevated levels. Given also that the upward trendline guiding the precious metal since the 6^th of October remains intact, we view the drop as mere technical correction and maintain our bullish outlook. Should the bulls maintain control as expected, we may see gold’s price breaking the 1987 (R1) resistance line and aim for the 2015 (R2) resistance level. For a bearish outlook we would require gold’s price to break the prementioned upward trendline, in a first signal that the upward movement has been interrupted, break also the 1955 (S1) support line and aim for the 1930 (S2) support level.

Nasdaq on the other hand, despite still being within the corridor set by the 14450 (S1) support line and the 15300 (R1) resistance line, has clear indications of a bearish movement. We note that the RSI indicator remains near the reading of 30 implying a bearish sentiment on behalf of the market. Yet we would feel more comfortable with a bearish outlook once the index breaks clearly also the 14450 (S1) support line and starts aiming for the 13920 (S2) support nest. Should a buying interest be expressed by the market, we may see the index breaking the 15300 (R1) resistance line and aim for higher grounds.      

Other highlights for the day:

On an easy Monday, we note the release of Eurozone’s preliminary consumer confidence for October. During tomorrow’s Asian session, we get the preliminary PMI figures for October of Australia and Japan. 

As for the rest of the week:

On Tuesday we get the preliminary PMI figures of France, Germany, the Eurozone, the UK and the US while we also note the release of Germany’s November GfK consumer confidence and the UK’s employment data for August. On Wednesday we note the release of Australia’s CPI rates for Q3 and Germany’s Ifo indicators for October and on the monetary front we get from Canada BoC’s interest rate decision. On Thursday we highlight the release from the US of the preliminary GDP rate for Q3, but also note September durable goods orders and the weekly initial jobless claims figure and on the monetary front, we highlight ECB’s interest rate decision and note from Turkey CBT’s interest rate decision. On Friday we note the release of Japan’s CPI rates for October and from the US the consumption rate for September, the core PCE price index for the same month and October’s final University of Michigan Consumer Sentiment. Furthermore, on a fundamental level, we highlight the risk of an escalation of the Israeli conflict which could create turmoil in the markets, supporting safe haven instruments and possibly oil prices as well.

XAU/USD 4 Hour Chart

Support: 1955 (S1), 1930 (S2), 1910 (S3)

Resistance: 1987 (R1), 2015 (R2), 2050 (R3)

Nasdaq 4 Hour Chart

Support: 14450 (S1), 13920 (S2), 13200 (S3)

Resistance: 15300 (R1), 15950 (R2), 16670 (R3)

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