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Uni Mich beats; US stocks probing weekly highs

Summary:

  • Uni Mich: 98.8 vs 98.0 exp and 97.8 prior
  • Inflation expectations inline with previous at 2.7%
  • US500 near the weekly highs

The final economic data of note for the week has shown more good news for the US, with the revised University of Michigan consumer sentiment index beating expectations to come in at 98.8. Compared to the expected 98.0 the reading represents a decent beat, with the prior reading being 97.8.

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 UOM and CB consumer confidence both remain at elevated levels relatively speaking. Source: XTB Macrobond

Earlier this week we saw the other main consumer sentiment indicator also beat forecasts with the conference board equivalent extending its trend higher. Taken together these paint a pretty healthy picture of the economy and there is a clear and obvious uptrend that has been in place for the majority of this decade.  

It’s been a bit of a rollercoaster week for the US stock market with large declines seen on Tuesday, but as we head into the weekend the US500 looks set to end little changed. Taking a fib retracement from the recent highs at 2717 - seen last week - it is apparent that the market has recaptured majority of the declines. The 61.8% at 2676 appears to have proven a bridge too far for the bulls today with a short term double top seen at this level. Price has now retreated back to the 50% level around 2664. 

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 The US500 has recovered well in the latter stages of this week but resistance at 2676 has capped gains thus far. Source: xStation

 As it’s Friday it can be a good time to take a step back and look at the bigger picture, shown by a weekly chart for instance. Last week saw the market print a fairly ugly inverted hammer, but this time out the US500 could be set to print a hammer with a long wick below. This shows that price is currently being pulled and pushed around these levels without any real follow through as the bulls and bears wrestle for control of the tape. 

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 The US500 remains largely directionless in recent weeks with moves higher and lower both failing to gain traction. Source: xStation

In terms of geopolitics there was some pretty noteworthy news earlier with the leaders of North and South Korea holding a historic summit. North Korean leader Kim Jong Un and South Korea’s Moon Jae-In met at the line that separates the divided Koreas before Kim stepped over it and into the South - entering the territory for the very first time. Tensions surrounding North Korea and the US were having a clear impact on the markets last summer when the threat of a conflict seemed to be growing ever nearer. Whilst there has been no real tangible impact in risk sentiment of this latest development it is interesting to look at previous instances when the neighbours have met for a summit. The last two coming just before the .com bubble burst and the 08 crash. 

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 Previous Korean summits have coincided with significant market tops. Is today’s an ominous sign? Source: Sentimenttrader

 

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