WEEKLY MARKET OUTLOOK
FOR THE WEEK OF FEB. 20, 2023
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Bull Case: Bulls technically have control above 4050 (prior swing) but will need to break above 4100-4113. Strong daily supply created on Thursday at 4141.25. Daily supply above this until 4218, then next strong supply at 4279.5. Two possible demand zones below at 4027.75 (4 hour) and 3945.25 (Daily) which lines up closely to Daily Trend Line.
Bear Case: Daily supply created on Thursday at 4141.25. Bears would need to keep price below this to continue setting lower highs and break below 4050 to start creating lower lows. Take note of possible demand zones below at 4027.75 and 3945.25.
SUPPORT AND RESISTANCE
Apple Inc. (AAPL) 30m
Tesla Motor Co. (TSLA) 30m
Invesco Trust (QQQ) 30m
Alphabet Inc. (GOOG) 30m
Amazon.com Inc. (AMZN) 30m
BITCOIN (BTC) 30m
EARNINGS RELEASE CALENDAR
FOR WEEK OF FEB 20
Feb 13 - Feb 19
The Fed’s Fight Against Inflation
The Labor Department’s Tuesday report showed that overall consumer prices had risen, though the year-over-year downward trend in inflation remained intact. This was less progress than economists had predicted, but the uptick in prices was not entirely unexpected. Factors such as large utility providers boosting electricity rates last month were largely to blame for the inflation increase. Despite this, there are still plenty of reasons to believe inflation will continue to cool in the coming months. The Federal Reserve may see this report as proof that it will take time to get inflation down to their desired 2% level, and might require more interest rate increases to do so.
More Rate Hikes On The Horizon
Goldman Sachs and Bank of America said they expect the U.S. Federal Reserve to raise interest rates three more times this year, lifting their estimates after data pointed to persistent inflation and a resilient labor market. Goldman Sachs economists and BofA Global Research both expect a 25bp hike in the Fed’s June meeting, pushing their expectations for the terminal rate up to a 5.25%-5.50% range. According to the CME Group, After the Fed’s meeting in June, the probability of a terminal rate of between 5.00%-5.25% is 34.4%, the probability of a terminal rate of between 5.25%-5.50% is 52.9%, and the probability of a terminal rate of between 5.50%-5.75% is 10%.
EV Mining In The Arctic
The Arctic region has the potential to become a hot spot for electric vehicle (EV) metals like copper, cobalt, nickel, and lithium. Currently, EVs account for less than 2% of vehicle sales globally, however, many governments are aggressively pushing to increase adoption of EVs and other forms of green technology. This shift in the automotive market has increased the demand for EV metals, leading to a surge in exploration and mining activities in the Arctic. Despite challenges including the harsh environment and difficult terrain, the potential benefits of mining EV metals in the Arctic are significant, and the region is likely to become an important spot for mining operations in the coming years.
Worldwide Crypto Adoption
This past week has been a big one in terms of adoption in the crypto community. Mastercard partnered with Binance to launch a prepaid crypto card in Brazil that will allow Brazil’s citizens to make purchases using crypto at the point of sale.The Bank of Japan also stated that it will start a pilot programme in April to test the use of a digital yen following more than two years of experiments that the Bank of Japan (BoJ) has been conducting to decide whether to issue a central bank digital currency (CBDC). This same week, the Bank of Russia came out with similar claims, stating that they are preparing to roll out the first consumer pilot for the nation’s CBDC on April 1, 2023.
Real Estate Affordability
The average rate on the 30-year fixed rate mortgage has risen from 6.12% to 6.32%. This increase is the single largest since mid October of 2022. As the Fed continues to be hawkish with interest rate hikes, the future of the housing market for the remainder of the year is unclear. Housing affordability in the U.S. has fallen significantly since the height of the Covid-19 pandemic. Many investors believe that there is more pain to come as housing is now the least affordable since the 1980’s.