The USA100 Breaks Through Resistance Levels Achieving New Highs

  • Technology stock investors ignore signals of a restrictive monetary policy in 2024 and continue buying tech stocks.
  • The USA100 climbs to its all-time highs after rising 1.56% on Thursday. Applied Materials (+4.54%), Qualcomm (+4.22%) and Apple (+3.25%) are amongst the best performers.
  • US Unemployment Claims decline to their lowest level since February 2023. Weekly US Employment Claims decline from 203,000 to 187,000.
  • UK Retail Sales decline 3.2% largely due to bad weather. The decline in Retail Sales is the largest witnessed since January 2022.

USA100 Reaches All Time Highs As Tech Earnings Approach

All US Indices rose on Thursday but the USA100 witnessed the strongest increase and rose to a new all-time high. Investors again ignored the negative factors from the past week such as supply disruptions, higher inflation, and less rate cuts. Instead, investors continue to believe in a soft landing and rate cuts throughout the year. Lastly, investors are also using this week to expose themselves to the stock market ahead of next week’s earnings data.

Next week will be the first week where the market will see major quarterly earnings reports for technology-based companies. Judging by the upbeat price action of the past 48 hours, investors seem to believe earnings will be higher than expectations. Next week’s earnings reports are listed below:

Netflix – 23rd January – After Market Closes – Earnings Expectations $2.24 Per Share. (-1.51% over the past 5 days).

Tesla – 24th January – After Market Closes – Earnings Expectations $0.74 Per Share. (-8.04% over the past 5 days).

Intel – 25th January – After Market Closes – Earnings Expectations $0.45 Per Share. (-1.54% over the past 5 days).

T-Mobile – 25th January – After Market Closes – Earnings Expectations $1.96 Per Share. (+1.17% over the past 5 days).

The USA100 was able to increase in value regardless of the more expensive Dollar and higher bond yields which shows investor momentum. Most global indices are also trading higher this morning including the Nikkei225, DAX and the French CAC. This can also be used as an indication of global risk sentiment and risk appetite. However, investors should note that the performance of the USA100 will largely depend on the performance of next week’s earnings data.

This afternoon’s Prelim UoM Consumer Sentiment will also influence the price of the USA100. In addition to this, the Existing Home Sales and Prelim Inflation expectations will also create volatility but to a lesser extent. Ideally, investors will want to see higher consumer sentiment but lower inflation expectations. Lastly, technical analysis indicates potential bullish price movement. The USA100 is trading above the 75-bar EMA and above the neutral on the RSI (2-Hour Chart). Additionally, the price is trading above the day’s VWAP, and order flow shows higher buy orders compared to sell orders.

GBPUSD – UK Retail Sales Decline At Fastest Pace Since January 2022!

The GBPUSD is witnessing considerable price action in favor of the US Dollar. The Dollar rose 0.24% against the Pound in the 90 minutes after the UK’s Retail Sales release. In addition to this, the currency pair also formed a bearish price gap after the announcement which signals lack of demand after the data was made available.

The economic release, which shows that UK Retail Sales declined 3.2% largely due to bad weather, also triggered bearish movement. The decline is the largest witnessed since January 2022. At the moment, the Pound is decreasing in value against all currencies and the US Dollar Index is trading 0.14% higher. Investors are favoring the Dollar due to the strength of the US economy, US economic data and stability.

The main concern for investors is that the Bank of England will need to abandon its restrictive policy or will not be able to bring inflation down without causing a recession. The price of the GBPUSD is still forming higher highs and higher lows. However, the price has now fallen from a “buy” signal to a “sell”. If the price declines below 1.26628, the Fibonacci will also signal a sell opportunity.

Michalis Efthymiou

Market Analyst

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