SGT Chart Book

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The stock-market rally was hit last week when government data showed that prices rose more than expected last month and suggested that the Fed’s fight against inflation may not end as easily as some investors expected.

 

All three major U.S. stock indexes fell Friday after PPI came in hotter than expected, confirming the signal sent Tuesday when consumer prices (CPI) rose beyond expectations.

 

Market participants are now rethinking the timing and extent of the interest rate cuts that the central bank has penciled in for this year. Each index ended the week lower, the first weekly decline for any of them since early January. Both the Dow and the S& P 500 had hit record highs earlier in the week.

 

This week’s two inflation readouts together tells the market that the Fed’s preferred gauge is likely to show price pressures firmed in January, ending a streak of much better inflation readings.

 

Almost 80% of companies in the S& P 500 have reported quarterly results, with 75% posting earnings above estimates, according to data compiled by FactSet.

 

Housing data also disappointed. Housing starts in January fell 14.8% from December to a seasonally adjusted annual rate of 1.33 million homes, announced Friday. It was the largest decline on a percentage basis since April 2020.

 

Overseas equity markets

  • Germany’s DAX climbed 0.4% Friday to a record.
  • The Stoxx Europe 600 ended up 0.6% at a 52-week high.
  • Japan’s Nikkei 225 index climbed 0.9% to its highest close since the start of 1990.

Bitcoin rallies above $52,000.

USA500

Rattled by inflation data, was on course for 15th up week before sell off. Market continues to speak about the lack of breadth, with most concentrated in over 15 years, The top 5 stocks account for 25% of market capitalization of USA500. People talk about MAG7, just as a reminder these are: Apple, Alphabet (Google), Amazon, Meta, Microsoft, Nvidia and Tesla.

US 10 YEAR RATES

Reach high last week of 4.33% highest level since December 1st. We have left the longer-term uptrend line in, as often markets return to the break where there break down.

US$ INDEX

Mostly sideways trading within the last couple of years as illustrated in chart.

USDJPY

Testing back above the 150-level last week. Retesting base of the up channel. Are the BOJ watching?

XAUUSD

Recovery after a breakdown to the $1985 area earlier in the week. $2060 is still seen as first obstacle to higher prices.

USOIL

Markets need to keep an eye on this one. Not a lot was reported on the recent rally. Inflationary??? Prices have rallied 4th week in 5 and highest close since November 2023.

BTCUSD

An 8% rally in BTCUSD, with 4th straight week up. With over $1 trillion in market cap.

Happy trading,
SGT Trading Desk

trading@sgt.markets

Disclaimer: Trading Desk Observations are not trade recommendations. The purpose of these charts is to bring to your attention potential chart patterns you may wish to monitor.

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