1. Canadian Manufacturing Sales Fall
Sales at Canadian manufacturers 1.0% month-over-month, better than expected.
Sales at wholesalers fell 1.2% month-over-month, and this was in line with the expectations.
For the U.S., the shutdown continues. But, bunch of FOMC members are expected to speak in coming days, so let’s see if any sort of narrative change is happening. One would assume Federal Reserve to get somewhat dovish as not much data out there and shutdown continues for a while.
2. Key Level Getting Tested
The S&P 500 finding support at its 50-day moving average for now. This has been a key level for the index.
Over the past few years, there’s been a pattern around it: if S&P 500 is able to find support around it, you see buyers come – rally. If the index closes below its 50-day moving average, sellers jump in.
In case of selling, 3-4% below the moving average is possible. In case of support/ buying, you are looking at a move over five percent.
Also, don’t forget: earnings season has begun. Heavy weights on the index will impact the direction too. And, know what you own because your stock specific risk goes up.
3. Commodities Watch
Oil: it is becoming a hated trade, that means you must watch it. Some good opportunities can pop up.
Silver: trend remains strong. Watching the futures chain, some backwardation starting to kick in. Backwardation = future price is lower than current price. Essentially hinting that market is overheated.
Gold: Solid, expectations are high. Futures chain suggesting contango. FYI contango = future price is higher than current price.
4. Canada…
Not much has changed really, things look as bleak as before.
Housing continues to struggle. Consumer sentiment is in dumps. Business sentiment is garbage. Data is dire. Canadian dollar is falling. Bank of Canada likely will have to cut rates more.
I can’t stress this enough: this is very likely the worse of it. Canadian economy could potentially be finding some sort of bottom around here or in coming two quarters.
There is light at the end of tunnel.
5. Yields, Crypto & More
Yields: seeing U.S. 10Y yields getting close to 4.0%. This is a big level, will it break below? In April, we saw lows of 3.88%. So lets see! Don’t forget: U.S. yields have gravitational pull when it comes to global yields as well.
Crypto: Bitcoin remains choppy, and below its 50-day moving average.
Trump admin: to combat China, there will be some price floors set on industries. This is going to hurt the hot rare earth stocks, no?