Our view on ROKU was that the stock would be a buying candidate on a pullback to a support area. We pointed to the 322.80 – 333.00 area as a potential support range. Stock retraced back to this area two weeks ago and has attracted buyers ever since. The stock has now rallied over 10% from our support area. Yesterday the stock was among the biggest gainers and rallied 5.15%. By reading further you agree with our disclaimer at the end of this report and acknowledge that we do not provide investment advice.
Both the Nasdaq Composite (+0.74%) and the S&P 500 (+0.18%) indices closed at new all-time highs. Nasdaq was leading while the S&P 500 index managed to advance only very moderately. The Dow Jones Industrial Average (-0.25%) suffered minor losses. The technology (+1.01%), the communication services (+0.66%) and the real estate (+0.57%) sectors were attracting the most funds among the S&P 500 sectors. The materials (-1.23%) and the financial (-1.04%) sectors were the weakest sectors.
The RBA Monetary Policy Meeting Minutes were released early this morning European time. The main takeaway was that the central bank considers it to be too early to consider ceasing the bond-buying programme. The bank doesn’t believe the inflation to meet its target range before 2024. AUDUSD hasn’t reacted to the minutes as the bank had nothing new to say and because the markets are cautious before the Fed meeting that starts today. Today’s main risk events are the BOE Governor Bailey’s speech and the release of the US retail sales data.
Our view on ROKU (here) was that the stock would be a buying candidate on a pullback to a support area. We pointed to the 322.80 – 333.00 area as a potential support range. Stock retraced back to this area two weeks ago and has attracted buyers ever since. The stock has now rallied approximately 10% from our support area.
The stock has now successfully navigated its way above the 357.40 resistance. The next significant resistance area can be found at 388.50 – 397.70 (a recent swing high and the rising trend channel top). The nearest support area is at 338.20 – 343.10 (trend channel low and both 20-day and 50-day SMAs). Moving averages are pointing higher and the stock has reacted positively to a support area. Therefore, based on the technicals ROKU remains bullish above the support area and as long as the area is not violated the stock is likely to move to our resistance zone. A break below 322.80 would turn the stock short term bearish and indicate that a move to the 280 support level would be likely. Note that the CFD prices might vary slightly from the underlying stock prices.
The technology sector performed well yesterday and one of the main contributors was this stock: AAPL. This heavyweight really moves the markets when it starts to rally – like it did yesterday. The stock closed 2.46% higher taking the Nasdaq into new all-time highs. For the past four weeks stock has been bound by a resistance area at 127.80 – 128.30. Yesterday the stock rallied above this level on the back of the news that the company was planning a faster watch with body temperature and blood sugar sensors. The rally took the stock well above the resistance area and the heavy volume associated with the breakout tells the institutional investors take the news story seriously.
The next minor hurdle for the bulls is the downward sloping trendline resistance (currently at 133.40) while the next significant resistance is at 137.07 high. The previous resistance (at 127.80 – 128.30) is now the nearest support area and the one after that can be found at 124 (the rising trend channel low). The stock is currently bullish and would need to break the May 10th low at 122 to turn bearish. Note that the CFD prices might vary slightly from the underlying stock prices.
Macro Drivers for the USD
As the most followed, invested and traded markets for risky assets are priced in the USD it is helpful to understand what macroeconomic factors impact the other side of the equation, the USD. Whether we are trading EURUSD, XAUUSD or US equity CFDs the factors impacting the dollar, the nominator in the equation, have a significant role in the formation of all medium to long-term price action. The following table summarises the most important fundamentals.
|The FED||The Fed has on several occasions repeated its commitment to ultra-accommodative monetary policy. The rates are likely to stay near zero but now some Fed officials have said that the Fed should start considering potentially tapering their asset purchases.|
|Stimulus||The US lawmakers have authorised approximately five trillion dollars of economic stimulus and the Biden administration has indicated it will seek to deliver another two trillion dollars in infrastructure spending.|
|Yields||After trending higher since the beginning of August 2020, the Treasury yields have been moving lower or sideways. All in all, the yields and interest rates are extremely low on both nominal and real basis.|
|Payrolls||The latest miss in payrolls was the second in a row (+559K vs +645K expected). The unemployment rate decreased from 6.1% to 5.8% but the fact that it happened while the labour force participation rate decreased makes it less good news.|
|Inflation||The year on year headline CPI change was 5% but not all inflation gauges agree with such a high number. The trimmed-mean inflation CPI index published by the Cleveland branch of the Federal Reserve Bank, rose only 2.6% y/y (0.4% m/m).|
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Market News & Facts
- Goldman Sachs to offer options and futures on ETHUSD
- UK – Australia free trade deal to be announced today
- New Zealand house prices up 1.5% m/m in May (24.7% y/y)
- Lagarde says that it’s too early to discuss the end of PEPP purchases.
- Elon Musk: Tesla accepts bitcoin payments if clean energy used in mining
- Germany wholesale price index for May +1.7% m/m (+1.1% previous)
- UK April GDP m/m +2.3% (2.4% expected)
- The UK Prime Minister Boris Johnson: A one-month delay to re-opening
- Large Manufacturer conditions in Japan for Q2 -1.4% (+1.6% previous)
- US Senator Warren: crypto regulation is needed.
- PBOC Governor Yi Gang: China’s 2021 consumer inflation less than 2%
- US Republican senators saw some progress in infrastructure talks
- RBA may start to dismantle some of the QE structure soon
- China May CPI came in at 1.3% y/y (1.6% expected)
- China PPI was confirmed at 9.0% y/y (8.5% expected)
- China state media to Australia: Diversify your iron ore exports away from China
The Next Main Risk Events
- USD – Core Retail Sales & Retail Sales
- USD – PPI
- USD – Industrial Production
- GBP – CPI
- CAD – CPI
- USOIL – Crude oil inventories
- USD – FOMC Economic Projections
- USD – FOMC Statement
- USD – Federal Funds Rate
- USD – FOMC Press Conference
For more information and details see the TIOmarkets economic calendar here.
Chief Market Analyst
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DISCLAIMER TIOmarkets offers exclusively consultancy-free service. The views expressed in this blog are our opinions only and made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions. The analyzes and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. The content has not been prepared in accordance with any legal requirements for financial analyzes and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval. FX and CFDs are leveraged products. They are not suitable for every investor, as they carry a high risk of losing your capital. Please ensure you fully understand the risks involved. All the prices in this report are CFD prices based on price charts provided by TIOmarkets unless otherwise stated.
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