The U.S. stock market
survived as the S&P 500 broad market index refrained from going down to
3550-3650 points. In the second half of the week the index signalled buy
opportunities and rose to 4075 points.
It is interesting to
note that no positive drivers pushed the index up. On the contrary, the second
Q1 2022 estimate for GDP was even lower than the first one, it declined by 1.5%
vs 1.4% initially calculated. The Federal Open Market Committee’s (FOMC) minutes
signalled further Federal Reserve (Fed) interest rate rises to tame inflation
to the targeted 2%. This hike cycle could only be stopped in the case of a
sharp recession.
PMI readings in the
Eurozone, the U.K and the U.S. this week registered another significant
decline, especially in the services sector. Inflation is slowing down
reluctantly and may surprise us in the coming months if Brent crude prices
surge to $160-180 per barrel in June.
So, we may have a
stock market rebound this summer, but it will probably be of a high speculative
nature. The S&P 500 index entered an upside pattern with the target at
4200-4300 points. Good entry points for opening long positions are located at the
3960-3980 area. However, this would be a countertrend operation, bearing a high
risk.
Brent crude prices
broke through the resistance at$115 per barrel without a European ban on
Russia’s oil. This breakthrough triggered the extreme upside scenario of Brent
crude at $160-180 per barrel.
Gold prices are still
looking for the upside. But they failed to perform a significant rise from the $1840
per troy ounce support level despite a weakening U.S Dollar. So, an upside
spike to the targets at $1940 per ounce or $2000 is highly unlikely. Traders
should be prepared for a possible downside later in June.
The greenback
continues to lose strength. EURUSD continues to move towards the upside and has
met the primary target of 1.07000-1.08000. Now it is better to wait for a
correction or an aggressive climb above 1.08000. Only then may good entry
points appear.
GBPUSD has also met
its primary targets at 1.26000-1.27000. So, it is better to wait for the next
move of the pair to make justified decisions.