Green shoots appear as discussions begin over when to reopen the country
green shoots: A term used to describe signs of economic recovery or positive data during an economic downturn. The term green shoots refers to plant growth and recovery, and was used during the collapse of economies to describe signs of similar growth.
As every country, state, city, and town stays in their own coronavirus realities, green buds They are emerging as discussions begin about when to bring hope to life again. This week's economic data for March and April was, for the most part, more dismal than economists had expected, including 5,245,000 preliminary filings of US jobless claims. That brings the total for the past four weeks to nearly 22,000,000, but with Germany discussing reopening schools and the United States debating the prospects of "re-opening" some states on May 1, traders are hoping for the best. Watch this week's technology earnings, and most importantly their direction. Also, keep an eye on oil, as Russia and Saudi Arabia have indicated they are open to additional cuts.
The S&P 500, DJIA, FTSE and DAX all closed +/-3% last week, returning to reality after the previous week's +10% moves. However, the tech heavy Nasdaq closed nearly +7% in anticipation of earnings. A few tech giants reported earnings this week, including IBM, TXN, TSLA, AMZN, INTC, T and VZ. Other notable brands include HAL, LMT, AA, and AXP. It would be more important to focus on the guidance that each company reports, rather than the actual profits themselves. Traders will be watching to see how much economic impact the coronavirus is expected to have on each company.
CFD on WTI fell another 21% to fresh lows this week and closed at 18.27, its lowest level since the fall of 2001. The expected drop in demand exceeds agreement on the possibility of additional supply cuts going forward. (On Friday, crude contracts roll into the next month. Depending on which oil index you're trading, your prices may vary. But the percentages should be the same.)
Currencies and metals have been quiet most of the week, relatively, with most pairs closing 1% on Monday.
There are no major central bank meetings planned this week, although most central banks are operating "as needed" with liquidity measures when markets are tight. This week is light on economic data as well, before the end of the month/beginning of the month data arrives over the next two weeks. Here are some of the economic highlights for this week:
- New Zealand: Inflation rate quarterly (Q1)
- China: First loan interest rate (Q)
- Germany: PPI MoM (MAR)
- Australia: Reserve Bank of Australia minutes
- UK: Changing the number of claimants
- Germany: ZEW Economic Sentiment (APR)
- Canada: Retail Sales (Feb)
- US: Existing Home Sales (March)
- UK: Inflation rate, PPI, CPI, RPI (March)
- Canada: Inflation Rate (March)
- Canada: New Home Price Index (March)
- Crude stocks
- Global Manufacturing and Services PMI (April)
- Germany: GfK Consumer Confidence (May)
- UK: Retail Sales (March)
- US: Initial jobless claims (week ending April 18)
- US: New Home Sales (March)
- Japan: Inflation Rate (March)
- Germany: Ifo Business Climate (APR)
- US: Durable Goods Orders (March)
- US: University of Michigan Consumer Prospects (APR) Final
Weekly chart: 3 months WTI Crude Oil
Photo access to 18.40. There are few words to describe how poorly oil traded in 2020. If I tried to draw a technically reliable AB = CD pattern that would put the price in July at -6.00. We know that can't happen, at some point, the market will start pricing physical equipment used in oil drilling. The candle from January to March is very bearish. However, although only a month has passed since the current candle, it is currently forming an inverted candle, which will be bullish. An inverted hammer indicates a halt in the price decline. But I wanted to make this point because it shows support at the 2001 lows and the 1998 highs in the 16.20/70 area. Buyers may be aggressive if the price is trading below 17.00.
This week will likely trade outside the headlines. Watch for guidance from companies reporting this week. In addition, watch for more comments, hopefully green shoots from countries and states regarding the coronavirus. Also, keep an eye on the WTI to keep the $16 handle. We may see additional comments from OPEC on supply cuts to boost the market.