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Week in Review: 15-19 July 2024

 

Financial Markets

Week-on-week, the main stock market indices were negative, with the S&P500 losing nearly 2% and the NASDAQ 100 down by 4%. The RUSSEL 2000 was up by almost 2%, but showed a topping tail due to some selloff during the latter part of the week.

The price of Gold is only slightly lower (-0.4%) and is still around 2400$ per ounce. The next support is at around 2300$, but if gold breaks this level, it could fall until approximately 2150$. Silver dropped a significant 5.1% for the week but is still holding above the 28$ level, which should be short term support for the metal.

The barrel of WTI fell 4.3% and is at a support level, around 78$ per barrel. It looks like WTI could continue in the range of 75 to 85$ over the next weeks.

Bitcoin recovered 9.4% and is around 66500$. Bitcoin seems to be on a downward trend with the next supports around 60000 and 53000$. However, this price formation could also signal a bull flag consolidation before the next price move to the upside.

The relative strength of the US dollar (DXY) is slightly up (+0.3%), and has been stable in the range of 103 to 107 since April 2024.

Financial conditions (NFCI) have loosened by 2.5% relative to the previous week, supporting the stock market and other risk assets in general.

US bond yields are slightly up this week, and now sit at 4.52% for the 2-year and 4.24% for the 10-year.


Comment Section

The main US stock market indices have been in a small correction and have been negative for the past days. The equal weight S&P is unchanged and the Russel 2000 was still positive for the week, probably indicating that some money has been flowing out of the big caps and into other more value-oriented stocks and assets.

The VIX (volatility index) has spiked a bit, as investors looked at a few negative days with some worry and started seeking puts for protection and speculation. This environment can be interesting for options sellers as premiums are higher.

On the monetary policy front, this week we had the speech by Jerome Powell, the FED chair, where he hinted at imminent rate cuts (likely in September), and shared his worries about the unsustainable national debt of the US. In the Euro Area, the year-over-year inflation rate came as expected, at 2.5%, and the ECB held rates at 4.25%. Retail sales in the UK remain in negative territory, showing weakness of the consumers and poor demand.

Take care, and good luck.


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