As each country, state, city, and town remains in its own coronavirus reality, green shoots are emerging as discussions have begun as to when to bring life to each person’s hope. Economic data this week for March and April was, for the most part, more dismal the economists’ expected, including another 5,245,000 initial filings for US jobless claims. This brings the last 4 weeks’ total to nearly 22,000,000, However, with Germany discussing re-opening of schools and the United States discussing possibilities of “re-opening” some states as early as May 1st, traders are hoping for the best. This week watch tech earnings and, more importantly, their guidance. Also, keep an eye on oil, as Russia and Saudi Arabia have indicated they are open to additional cuts.
The S&P 500, DJIA, FTSE, and DAX all closed +/-3% last week, coming back to reality after the previous week’s +10% moves. However, the tech heavy NASDAQ closed nearly +7% in anticipation of company earnings. A few tech giants report earnings this week, including IBM (NYSE:IBM), TXN, TSLA, AMZN, INTC, T, and VZ. Other standouts include HAL, LMT, AA, and AXP. It will be more important to focus on the guidance each company reports, rather than the actual earnings themselves. Traders will be watching to see how much of an economic impact the coronavirus is expected to take to each company.
The CFD on WTI Crude Oil was down another 21% to new lows this week and closed at 18.27, its lowest level since the Fall of 2001. The expected fall in demand is outweighing the agreement of the possibility of additional supply cuts moving forward. (On Friday, crude contracts rolled to the next month. Depending on the which oil ticker you trade, your prices may differ. Having said that, the percentages should be the same. )
Currencies and metals were quiet for the most part on the week, relatively speaking, with most pairs closing within 1% of Monday’s open.
There are no major Central Bank meetings planned for this week, although most central banks are acting “as needed” with liquidity measures when markets get tight. This week is lite on economic data as well, before end of month/beginning of month data arrives over the next 2 weeks. Some economic highlights for this week are as follows:
Monday
- New Zealand: Inflation Rate QoQ (Q1)
- China: Loan Prime Rate 1Y
- Germany: PPI MoM (MAR)
Tuesday
- Australia: RBA Minutes
- UK: Claimant Count Change
- Germany: ZEW Economic Sentiment Index (APR)
- Canada: Retail Sales (FEB)
- US: Existing Home Sales (MAR)
Wednesday
- UK: Inflation Rate, PPI, CPI, Retail Price Index (MAR)
- Canada: Inflation Rate (MAR)
- Canada: New Housing Price Index (MAR)
- Crude Inventories
Thursday
- Global Manufacturing and Services PMIs (APR)
- Germany: GfK Consumer Confidence (MAY)
- UK: Retail Sales (MAR)
- US: Initial Jobless Claims (Week Ending April 18th)
- US: New Home Sales (MAR)
Friday
- Japan: Inflation Rate (MAR)
- Germany: Ifo Business Climate (APR)
- US: Durable Goods Orders (MAR)
- US: University of Michigan Consumer Expectations Final (APR)
Chart of the Week: 3 Month WTI Crude Oil
A picture is worth 18.40. There really are few words to describe how poorly oil has traded in 2020. I have attempted to draw an often-reliable AB = CD pattern, however that would put price in July down at -6.00. We know that can’t happen, as at some point, the market would start pricing in the physical equipment used in drilling the oil. The candlestick from January-March is extremely bearish. However, although it is only 1 month into the current candlestick, it is currently forming an inverted candle, which would be bullish. An inverted hammer shows a stall in price decline. But I wanted to show this point because it shows support at the lows of 2001 and the highs in 1998 in the 16.20/70 area. Buyers may be aggressive if price trades under 17.00. (A low in oil would be green shoots!)
This week most likely will be traded off headlines. Watch for guidance from companies reporting this week. In addition, watch for more comments, and hopefully green shoots, from countries and states regarding the coronavirus. Also, keep an eye on WTI to hold in the $16 handle. We may see additional comments additional comments from OPEC++ regarding supply cuts to boost the market.
And of course, be safe and always wash your hands!