Traders that jumped in on the Friday buying surge are hoping the bear market relief rally can follow through as we slide toward the end of the 2nd quarter. There is, of course, the possibility of an end-of-quarter window dressing, but with down-trend and overhead resistance levels above, the bulls will have their work cut out for them. This morning we face the Durable Goods and Existing Home Sales economic reports that analyses expect to both show declines. Plan for some price volatility as the data is released, and prepare for just about anything with the threat of recession on the horizon.
Asia markets rallied overnight after the strong Friday surge in the U.S. as the Hong Kong tech sector rose 2.35%. European markets are also bullish this morning; however, they seem much more tentative ahead of potential market-moving data. U.S. futures recovered from early losses to point toward a bullish open, hoping that the economic data won’t derail the relief rally. So, plan carefully and keep a close eye on the overhead resistance that the bears may work to defend.
Economic Calendar
Earnings Calendar
Winding down the 2nd quarter, we have a light day to begin the week. Notable reports include NKE, CIDM, DLNG, & JEF.
News & Technicals’
Interest payments totaling $100 million were due on May 27 and were subject to a grace period that expired on Sunday night as Russia faces a historic default. Sweeping sanctions imposed by Western powers in response to Russia’s invasion of Ukraine and countermeasures from Moscow have effectively ostracized the country from the global financial system. Bolstering the defense of the Baltic region is seen as one of the most critical decisions for NATO leaders to take at the group’s June 29-30 summit. The 30-member military alliance is poised to reflect on how the group can respond to Europe’s new security reality in the wake of Russia’s onslaught in Ukraine. “We need to move to deterrence by denial. We need a credible military construct on the Eastern flank that will deter Putin,” a spokesperson at Estonia’s foreign ministry told CNBC. Three Arrows Capital, a crypto-focused hedge fund, has to meet a deadline on Monday to repay more than $670 million in loans to Voyager Digital or face default. Voyager said it “intends to pursue recovery from 3AC” and is talking to its advisors “regarding legal remedies available.” Three Arrows Capital, or 3AC, is facing a liquidity crisis after the collapse of terraUSD and luna, margin calls on its loans, and a massive slump in the crypto market. U.K. tax officials recently fined wise CEO and co-founder Kristo Kaarmann £365,651 for defaulting on his taxes. The Financial Conduct Authority has now opened an investigation into the matter. The probe could have significant ramifications for Wise and its chief executive. Vast container ships and chunky freight planes — essential in today’s global economy — can now be brought to a halt by a new generation of code warriors. “The reality is that an airplane or vessel, like any digital system, can be hacked,” David Emm, a principal security researcher at Kaspersky, told CNBC. In December, German firm Hellmann Worldwide Logistics said a phishing attack had impacted its operations. Treasury Yields begin the week Higher with the 10-year pricing at 3.16% and the 30-year trading at 3.30% early Monday price action.
The Friday surge upward raised hopes that a bear market relief rally can find some follow-through bullish energy. Futures began trading in the red but reversed higher as Asian bulls went to work following the Friday U.S. rally. However, this morning traders will turn their attention to the Durable Goods report, and Pending Home Sales figures that consensus suggests could show declines. At the same time, the T2122 indicator though it moved substantially higher on Friday, still has some upside potential if the bulls can remain inspired. With significant overhead resistance just above and the worries of a possible recession with the Wednesday GDP report, it would not be a surprise if the bears remain active defending the downtrends, so the bulls will have their work cut out for them! Plan carefully, respect overhead resistance and expect price action to remain challenging in the days ahead.
Trade Wisley,
Doug
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