Is the Wall St. versus the Main St. fight starting again? It certainly looks like it based on yesterday’s trading activity Gamestop (GME) shares. The rally in was helped by the main indices rallying strongly. See our Bullish & Bearish Markets video here. GME rallied from $49.50 to $91.70 during the last 90 minutes of trading yesterday and to $168.13 in the after-hours trading. It seems that the shares of AMC Entertainment Holdings (AMC) are being dragged higher with it. AMC shares were up by 18.05% at the market close yesterday and added some more after the close. After three weeks of sliding prices, we are seeing the Reddit bulls back at it. Judging by Powell’s testimony yesterday the lack of liquidity in the economy will not be a problem and could increase even institutional money flows into stocks that otherwise would not get risk capital allocated to them. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

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Fed Chair Powell’s testimony suggested that there will be no shortage of ammunition for stock market bulls, Reddit and other bulls alike. He promised to maintain the current rate of bond-buying and to keep the rates low. The cost of borrowing is likely to stay low for years to come as may, Powell said, take more than three years before the Fed’s inflation goals are met. Reuters notes that this was “a further signal the US central bank plans to look beyond any post-pandemic spike in prices and leave interest rates unchanged for a long time to come”.

Crude oil inventories were confirmed at a higher than expected level but the price of oil increased in yesterday’s trading. Analyst consensus predicted a reduction of 6.5 million barrels but the official number was much higher. Instead of reduction, there was an increase of 1.3 million barrels. This news combined with the price reaction supports our bullish view on this market. Today’s main risk event is the US Preliminary GDP release (4.2% expected). For more details on macroeconomic releases see our economic calendar.

We alerted our traders two days ago to the loss of momentum in gold. We wrote: “Today’s high print was put in at 1815.96 after which there has been some loss of momentum. A break below 1806 would indicate the red team taking charge and possibly driving the price lower towards the channel low”. Again, our estimation was correct and the price of gold came down after a couple of failed rallies. Now the key support level in gold is at 1873 and the nearest resistance at 1816. If gold creates a higher low above 1873 it makes another attempt on the 1816 level likely but it is also possible that the pair continues lower in the downtrend trend it is in. The most likely price range for the next week or so is defined by 1816 resistance and 1760 support.

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Silver (XAGUSD) has been much stronger than gold for quite some time now. The reason is that metal has a role in industrial production and therefore benefits from the ongoing commodity boom. Easy money (or funny money like it is also called) from several QE programs creates together with positive reports from the vaccination front drive up the prices. The price of silver is trending higher with the nearest key support and resistance levels at 26.21, 27.24 and 28.32. The 38.2 retracement level 26.95 and the 20-day SMA at 27.32 create a support zone while the next support zone below it can be found at 26.00 – 26.43 (50% retracement level and 50-day SMA). Open a VIP Black account with us. There are no per trade execution or monthly fees on our VIP Black accounts.

Recent macroeconomic data releases

UK Flash Manufacturing PMI 54.9, 53.1 expected
Canadian Core Retail Sales -4.1%, -2.4% expected
Canadian Retail Sales -3.4%, -2.5% expected
US Manufacturing PMI 58.5, 58.4 expected
German ifo Business Climate 92.4, 90.5 expected
New Zealand Retail Sales -2.7%, -0.5% expected
UK Claimant Count Change -20.0K, 13.8K expected
US CB Consumer Confidence 91.3, 90.2 expected
RBNZ Official Cash Rate 0.25%, 0.25% expected
Crude Oil Inventories 1.3M, -6.5M expected

Important macroeconomic data releases today
New Zealand Final ANZ Business Confidence 7.0, 11.8 previous
Australian Private Capital Expenditure q/q 3.0%, 1.1% expected
US Prelim GDP 4.2% expected

You may access the times and dates in the economic calendar here.

Trade Safe,

Janne Muta
Chief Market Analyst
TIOmarkets

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