Indices Trading Signals- Money Life Research

 Monthly change: SPX500 +5%

After reaching the new historical level of 3,960, the SPX500 index has started to decline. Stocks have fallen sharply, and the decline should not come as a surprise to anyone. Valuations in many equities have been at historically high levels.

The index's rally has been driven by the idea that low-interest rates could expand PE multiples. However, yield rates have risen sharply in recent weeks. These higher rates are making the stock market more expensive when compared to bond yields. If stocks need to reprice, it could result in a rather steep equity market sell-off, perhaps more than 20%.

It seems as if technology stocks prices have burned out over the past 12 months and maybe hit the hardest in a repricing environment triggered by rising yield rates. A market drawdown would undoubtedly be welcome after the euphoric run it has had over the last year. The rising-rate environment and overvalued stock market seem to have all come together, creating a perfect situation for this.

Indices signals

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Dow Jones Below 31,000

 The Dow Jones Industrial Average (DJIA) sank over 1% on Thursday as Federal Reserve Chair Jerome Powell failed to calm fears over bond market volatility in a speech at the Wall Street Journal Jobs Summit, causing Treasury yields to climb. The Fed Chair reassured markets that an accommodative path will be kept until significant job growth and inflation are seen. However, some expected Mr. Powell to confront the volatility seen in bonds more directly, however, the central bank chief stopped short of those expectations.

The 10-year Treasury rate rose above the 1.500% mark along with the shorter end of the yield curve, with the 5-year yield climbing nearly 8%. Lofty valuations in technology stocks led the Nasdaq Composite 2.11% lower, stopping just shy of making a 10% correction from recent highs. Elsewhere, the Russell 2000 lost 2.76% and the S&P 500 closed 1.34% lower.

The US Dollar received a bout of safe-haven bids amid the market turmoil causing risk-sensitive currencies like the Australian Dollar to selloff against the Greenback. President Joe Biden’s stimulus plan progressed through Congress. The revised stimulus plan may clear Congress by late next week. This version remains at $1.9 trillion but excludes a $15 minimum wage, a major resistance point from Republicans and some moderate Democrats.

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Monthly Overview on Oil

 Oil

Monthly change: XBRUSD +17.15%

Oil prices rose sharply in February. Saudi Arabia's deep output cuts, an improving demand outlook, and cold front, which shut wells and refineries in Texas, contributed to the price increase.

The growing popularity of commodities as a hedge against resurgent inflation have pushed oil higher this year. There have been a lot of bullish calls in recent weeks predicting that the rally will continue. The maintenance in the North Sea fields is set to reduce the oil supply.

The upcoming OPEC+ meeting is crucial. The market could remain positive in the face of a modest increase in OPEC+ production. If there is a large increase, then it could dampen the outlook in the short term.

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Comment on Gold by Money Life Research

 📕 Comment on Gold on 04/03/2021:

 ‼ ️After Tuesday's gain, yesterday world gold price turned down from 1740 to 1701 ($ 39) closed the daily candle with a strong bearish candle at 1709 penetrating the support zone.  1716. With the price decreasing gradually with the lower bottom lower than the previous one, in my opinion the 1701 support price zone will no longer be reliable, there is a high possibility that Gold will continue falling at the next support level 1685-  1689.

After creating a new bottom at 1701, the precious metal Gold is showing signs of recovery, but not so that we buy up with downside pressure from large time frames is still quite strong.  So in my opinion today we will wait for this precious metal to recover to around 1722-1728 to establish a sell position.  The target should hold back to 1701 and expect to reach the intraday support at 1689.

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