SGT Chart Book 20.05.24

sgt_chartbook

Risk on: The Dow closed above 40,000 for the first time on Friday. The three major US equity markets achieved new all-time highs last week, with the headline being the Dow crossing 40,000 for the first time.

 

Microsoft’s role as a leader in the Dow reflects the increasing importance of tech stocks to the index and the market as a whole. Excitement around generative artificial intelligence technology has fuelled a furious rally in shares of several mega cap tech companies, leading the major indexes to record high after record high this year.

 

Shares of Microsoft have nearly doubled since the Dow’s 30000 mark and are up 12% this year. Microsoft’s stock is among the biggest beneficiaries of the AI frenzy and viewed by investors as part of the vanguard of widespread AI adoption.

 

For the week, the Dow was up 1.2%. The S&P 500 put in a weekly gain of 1.5%, while the Nasdaq Composite was up 2.1%.

 

Renewed hopes that the Federal Reserve will cut interest rates later this year have sparked a rally in stock prices in May. All 11 sectors of the S&P 500 are up for the month, pushing the broad index to a gain of 5.3%.

 

Market participants welcomed more signs this past week that the economy can cool gradually without any significant deterioration. A key measure of consumer- price inflation rose in April at its slowest pace since 2021, while April retail sales were unchanged from a month earlier.

 

A survey of fund managers found that 82% expect the Fed to cut interest rates in the second half of this year.

 

The economic releases have helped push US 10-year rates to their lowest levels in over a month.

 

The US Dollar index took a hit. Losing all the gain since the April CPI uptick.

 

Metals are loving the backdrop with gold closing above $2400 for the first time, Silver above $31 for first time in over 10 years, Copper a widely viewed indicator of economic growth, closed at its highest level ever.

 

BTC had a big up week moving above $67k.

USA30

April 19th saw the Dow hit 37,250 as Middle east tensions grew and inflation expectations continued to hamper interest rate cuts. Since then, as seen by the chart below, we have witnessed an aggressive rally to touch 40,000.

USA100

USA500

US10 YEAR RATES

Break below short term up trendline, after supportive economic data.

DXY

After a rough week for the dollar, we can see that the sell off is currently contained by trendline support.

EURUSD

Break out of the recent down channel.

XAUUSD

First ever close above $2400.

XAGUSD

Classic, break out, retest then explode higher. Highest close in over a decade. Silver is also outperforming gold.

USOIL

Oil tests short term resistance zone.

BTCUSD

Highest level in over one month. Testing $67/68k resistance. Above here trendline resistance then then ATH.

Join us next week, for more market insights.

 

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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