The London session was a quiet affair due to the bank holiday volume which crossed from the Antipodeans through Europe. So, when the US opened, we had a good spurt of energy injected into the markets, and anyone long the US dollar benefited. This didn’t affect the precious metals though, so I am now looking to buy the dip on their relative strength.
Market Wrap
The prices of all precious metals rose today as the continuing conflict between Russia and Ukraine impacts the wider economies and investors look for safer assets. The Bank of Russia Governor Elvira Nabiullina detailed how international sanctions on her country's economy, are not affecting the country's reserves of gold, implying they're willing to accept gold for exports or are able to use gold in fungible exchanges with other countries. One such commodity that will be impacted should it stop being exported from Russia is oil, and the price of energy increased over 1% today, as traders closely monitored how sanctions against Russia are impacting the global crude supply.
Along the supply worry’s theme, Libya's National Oil Corporation warned that operations at El Feel oilfield and Zuteina oil port had to be temporarily halted due to protestors. The UK is also feeling a supply pinch as protestors of a different kind continue to disrupt a key depot. As a chartist, there is a high probability now that the price of Brent touches $120 per barrel in an AB=CD corrective pattern. Though it is hard to be über bullish until we start taking out the $135 high.
It is earnings season and the Bank of America Corporation (BoA) announced that its total revenue in the first quarter of the year saw an annual rise of 1.75% to reach $23.2 billion. Its net income declined by 12.35% in comparison to the same trimester the year before to land at $7.1 billion. This also translated to the bank's diluted earnings per share (EPS) falling by 6.98% year-on-year to $0.80 per share. The share price opened lower at the US open but is looking likely to take out Thursday/Friday highs and possibly on the upbeat tone to the banks CEOs call for gains to be made on higher interest rates from the bank's depositors.
The XLF ETF tracks the financial markets and has also gapped and possibly trapped anyone looking to short the ETF based on the headlines from the earnings season so far. There is a lot of resistance to get through but for anyone looking to buy into the dip, this could be it.
The drop in the BoA share price along with the news from the NAHB housing market index helped drop the Dow Jones Industrial Average. A lower close today would set up a 3 bar pattern which is a swing high, but the descending channel is expected to break to the upside once it finds support.
33700 is a previous weekly high imbalance zone, so this is my preferred level to trade-off.
US builder confidence for newly-built single-family homes decreased slightly in April in comparison to the previous month, according to a report published today by the National Association of Home Builders. This is the 4th consecutive decline after December’s peak.
The US dollar index has broken higher having found support at the highs from last Thursday. This follows a bullish outside day, often seen as a bullish reversal or continuation pattern, and is setting the greenback up for a move towards the $102 level, which from previous analysis is a fib extension.
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