SPX, USD, EUR/USD, Nasdaq 100 Price Analysis
- US equities are holding up rather well considering this morning’s release of initial jobless claims out of the US, printing at 6.6 million.
- Tomorrow brings another employment release out of the United States with Non-Farm Payrolls. It’s already known that this number will probably be bad – but how bad will it be?
- There’s a bit of hope in US equities after last month’s aggressive sell-off, buffered by the plethora of government actions designed to address the near-certain slowdown that’s going to emanate from social distancing measures. This webinar looked at a number of macro markets including Gold, the US Dollar, the S&P 500, Nasdaq 100 and more.
Stocks Stable Despite Another Terrible Release of Initial Jobless Claims
This morning brought another nasty release of initial jobless claims out of the United States. While disappointment was expected last week, to some unknown degree, this morning’s release was rather shocking as there were 6.6 million initial jobless claims, far outstripping the 3.3 million that was expected. And while this did begin to show fairly soon in US equity futures, that theme of fear didn’t hold for long and buyers jumped on the bid after the US equity open, driving the S&P 500 back above the 2500 marker, albeit temporarily.
Tomorrow brings another huge release in Non-Farm Payrolls, and this will be the first such report that we’re seeing that includes data from the recent shutdowns that have taken place across the US. It’s expected to be bad, with the loss of 100,000 jobs to US payrolls last month. But – even that might be undershooting it as it really seems as though this is a best guess given the tumultuous data that’s already begun to show. The unemployment rate is expected to rise to 3.8% but, similarly, this seems to be a shot-in-the-dark given the entrance of a new very threatening theme since the last such release in early-March.
In US equities – there’s some element of hope, especially given the lack of a violent sell-off on the heels of this morning’s release of initial jobless claims. That hope would likely be driven by the idea that the massive amount of government action already taken, combined with what could be expected should economic deterioration continue to happen – and there could be a brewing bull case after last month’s 20%-plus sell-offs in US stocks.
As looked at in recent webinars, there’s been a bit of difference in the way this bearish theme has priced in amongst the Dow, S&P and Nasdaq 100. With the sell-off being shallower on the Nasdaq 100, combined with a stronger response from support over the past couple of weeks – and this may be a more attractive venue for long US equity scenarios should strength continue to come back into stocks. Using the 2016-2020 major move as a meter, the Nasdaq 100 found support around the 50% marker of that major move. The S&P 500 found support around the 76.4% marker of the same measured move – highlighting the more aggressive sell-off in the S&P versus the Nasdaq 100.
Nasdaq 100 Weekly Price Chart
Chart prepared by James Stanley; Nasdaq 100 on Tradingview
In order to make an apples-to-apples comparison, the below chart of the S&P 500 has similar annotations; but note the more aggressive bearish move that’s recently priced-in.
S&P 500 Weekly Price Chart
Chart prepared by James Stanley; SPX500 on Tradingview
On a shorter-term basis, the Nasdaq 100 is holding support around the 23.6% retracement of the February-March sell-off.
Nasdaq 100 Four-Hour Price Chart
Chart prepared by James Stanley; Nasdaq 100 on Tradingview
For traders that are looking to take a bearish stance in US equities – the Dow Jones may be more attractive for such a push. Furthering the comparison from above, the recent bearish theme in equities appeared to price-in more aggressively here, likely owed to the major hit seen in the index’s constituent of Boeing (BA). I had looked into this setup on Tuesday and in today’s webinar with a bit more depth. \
Current support in the Dow appears to be showing around a confluent zone of Fibonacci levels, plotted from the approximate 20,726 up to 20,900.
Dow Jones Four-Hour Price Chart
Chart prepared by James Stanley; Dow Jones on Tradingview
US Dollar on the Move, DXY Back Above 100
It was a tumultuous month of March in the US Dollar. The currency initially came into the month with weakness, pushing down to a fresh yearly low. That soon changed, and aggressively, as price action then shot-higher for the next ten days to the tune of 8.8%. Price action spent much of last week pulling back; but since this week’s open buyers have returned with gusto to nudge the USD back-above that 100-marker.
US Dollar Four-Hour Price Chart
Chart prepared by James Stanley; USD on Tradingview
EUR/USD Sinks – Two-Year-Lows Lurking
On the long side of the US Dollar, EUR/USD can remain of interest. As USD-strength has come back into the equation this week, EUR/USD has unfolded and crossed back-below the 1.1000 psychological level. As looked at in the webinar, a progression of lower-lows and lower-highs can open the door to bearish approaches, looking for price action to move towards a re-test of the two-year-lows that were set just a few weeks ago.
| Change in | Longs | Shorts | OI |
| Daily | 3% | -18% | -3% |
| Weekly | 13% | -21% | 2% |
EUR/USD Four-Hour Price Chart
Chart prepared by James Stanley; EUR/USD on Tradingview
GBP/USD Resistance Test
On the short-side of the US Dollar, GBP/USD may hold some appeal. As EUR/USD has been pushing lower this week, GBP/USD has been rather resilient, building in a decent amount of resistance around the 50% marker of the December-March sell-off. That level is confluent with the 1.2500 psychological level, and there’s now been a few different inflections at this zone since it came back into play last Friday.
| Change in | Longs | Shorts | OI |
| Daily | -1% | 1% | 0% |
| Weekly | 12% | 5% | 10% |
For those looking at short-USD scenarios, breakout strategies may be of use or, alternatively, focusing on recent swing-lows to play reversion to resistance themes. For those looking at USD-strength, a hold of this resistance can open the door for short-side swing strategies.
GBP/USD Four-Hour Price Chart
Chart prepared by James Stanley; GBP/USD on Tradingview
--- Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
