The US indices seem unstoppable in their quest to mark the disjunction between the real economy and equities.
The North American DowJones30 index has continued its bullish path and yesterday reached a new all-time high at 30165.
The good economic data that is being published recently, in many cases well above the market expectation, is supporting the stock indices.
Today, important North American data such as GDP, durable goods, and new home sales are published. If the latest figure success is confirmed, it could serve as confirmation for the upward momentum of the indices.
In the case of the DowJones30 index, two factors explain its better performance compared to other indices:
- on the one hand, the announcement of the progress of vaccines for the epidemic and,
- on the other, Biden's victory in the elections.
The massive vaccination projected in the world's developed countries would lead to a return to normality in consumption. Since this index has a greater composition of growth values and services, it is the one that benefits the most from this situation.
The Democratic victory, although still with many points to resolve, anticipates more significant fiscal stimulus measures than with a Republican governor and this also helps the sectors most affected by the crisis, such as those that make up this index.
The market is on the eve of Thanksgiving Day, and market participation and therefore liquidity will be reduced in the remainder of the week. That is why volatility could increase these days, and it is also likely that long stock positions will be closed as profit-taking before the long weekend.
The Gold Market
The currency market is very calm, with no notable movement than the previous day, only to highlight the abrupt downward trend that GOLD has had in recent days.
At first, it was caused by the rise in the Dollar that occurred after the publication of an exemplary manufacturing PMI figure in the United States.
Later, it has continued the downward movement, breaking the 1850-60 support until the 1800 area, which is critical support where the 200-day SMA passes.
In principle, nothing has changed from a fundamental perspective, that is, real interest rates at historic lows, a Dollar with a tendency to weaken, and the Fed's promise to maintain this expansionary monetary policy for an extended period. All of these are fundamental factors that support the precious metal.
It is also true that this asset's volatility is high and that excess long positioning helps to produce corrections of this type. From a technical perspective, $1800 is relevant support. Its break to the downside would pave the way to more losses until the $1730-60 zone where the previous price concentration zone is located.
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