US STOCKS: Late Equities Roundup: Risk-Off on Middle East Tension, Will US Join?
- Still off early Monday lows, stocks are retreating late Tuesday as Middle East tensions heat up. Following a series of social media posts around midday, wires said Pres Trump is considering joining Israel on striking Iran. Markets currently await a state Department press briefing.
- Currently, the DJIA trades down 320.42 points (-0.75%) at 42195.11, S&P E-Minis down 51.25 points (-0.84%) at 6038.5, Nasdaq down 185.9 points (-0.9%) at 19515.53.
- A mix of Health Care, Materials and Consumer Discretionary sectors underperformed in the first half, but it was a handful of Tech stocks led laggers: Enphase Energy -22.82%, First Solar -17.95% and AES -9.12% as the Senate looks to end wind & solar tax credits.
- Pharmaceuticals traded weaker as the WH considers cracking down on drug company advertising: Charles River Laboratories -4.56%, Bio-Techne -3.78%, IQVIA Holdings -3.15%, Thermo Fisher Scientific -2.93% and AbbVie -2.73%.
- The Energy sector outperformed as said geopol risk buoyed crude prices (WTI +2.804 at 74.57) in turn supported oil and gas stocks: Valero Energy +2.32%, APA Corp +2.17%, Diamondback Energy +2.15% and Chevron +1.92%.
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EURGBP TECHS: Bear Cycle Remains In Play
- RES 4: 0.8768 High Nov 20 ‘23
- RES 3: 0.8624/0.8738 High Apr 21/ High Apr 11 and the bull trigger
- RES 2: 0.8541/8557 High May 2 / High Apr 28
- RES 1: 0.8461 50-day EMA
- PRICE: 0.8399 @ 19:30 BST May 16
- SUP 1: 0.8394 Low May 16
- SUP 2: 0.8359 1.236 proj of the Apr 11 - 16 - 21 price swing
- SUP 3: 0.8316 Low Mar 28 and a key support
- SUP 4: 0.8277 1.618 proj of the Apr 11 - 16 - 21 price swing
A bearish theme is EURGBP remains in play - for now. The cross has recently cleared 0.8461, the 50-day EMA, signalling scope for a continuation lower near-term. Friday’s fresh cycle low strengthens the bearish theme. The 0.8400 handle has been pierced, a continuation lower would open 0.8359, a Fibonacci projection. Key near-term resistance to watch is 0.8541, the May 2 high. A break of this hurdle is required to signal a potential reversal.
GBPUSD TECHS: Trend Outlook Remains Bullish
- RES 4: 1.3550 High Feb 24 ‘22
- RES 3: 1.3510 1.236 proj of the Feb 28 - Apr 3 - 7 price swing
- RES 2: 1.3402/3444 High May 6 / High Apr 28 / 29 and the bull trigger
- RES 1: 1.3360 High May 14
- PRICE: 1.3272 @ 19:24 BST May 16
- SUP 1: 1.3140 Low May 12
- SUP 2: 1.3110 50-day EMA
- SUP 3: 1.3041 Low Apr 14
- SUP 4: 1.2968 Low Apr 11
GBPUSD is unchanged. Recent weakness appears corrective. Last Tuesday’s gains highlight a possible reversal pattern - a bullish engulfing candle. The pattern remains valid and if correct, signals the end of the corrective cycle and a resumption of the uptrend. Key support to watch is 1.3110, the 50-day EMA. A continuation higher would refocus attention on the key resistance and a bull trigger, at 1.3444, the Apr 28 / 29 high.
EURUSD TECHS: Support Remains Intact
- RES 4: 1.1625 1.500 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 3: 1.1608 High Nov 9 2021
- RES 2: 1.1440/1573 High Apr 23 / 21 and the bull trigger
- RES 1: 1.1266/1381 High May 14 / High May 2 - 6
- PRICE: 1.1144 @ 19:09 BST May 16
- SUP 1: 1.1094/65 50-day EMA and a pivot level / Low May 12
- SUP 2: 1.1026 38.2% retracement of the Feb 3 - Apr 21 bull cycle
- SUP 3: 1.0943 Low Apr 10
- SUP 4: 1.0857 50.0% retracement of the Feb 3 - Apr 21 bull cycle
EURUSD continues to trade above last week’s low. Recent weakness appears corrective and key trend signals highlight an uptrend. Note that a key support at the 50-day EMA, at 1.1094, remains intact. A clean break of this average would undermine the uptrend. A key resistance to watch is 1.1381, the May 2 - 6 high. Clearance of this level would signal the end of the correction and highlight a bullish break.
