The
Christmas week seems to be ending without a festive mood. The S&P 500 broad
market index is slowly losing ground as it is declining by a modest 0.8% to
3825 points. However, the loss was felt more during the week as it touched 3763
points or 2.0% below last week’s close.
The U.S.
stock market tried to recover at the beginning of the week but failed after the
publication of the U.S. Gross Domestic Product (GDP) figures for the third
quarter of 2022. The 3.2% rise quarter-on-quarter surprised markets as only
2.9% was expected. Strong GDP figures reminded markets that the Federal Reserve
(Fed) could continue its monetary tightening without fearing it could harm the
economy.
The
downside target for the S&P 500 index at 3700-3800 was achieved, but the
index may continue to fall further. PCE Price Index data, that will be released
today, is of high priority for the Fed. So, any developments shown by this data
would likely define whether the stock market would continue to fall or pause
until next Wednesday at least.
The U.S.
Dollar, which is acting like an angry pit bull, demands that it be "let
off the leash" so it can strengthen by 4-5% and signal that the S&P
500 index would continue down towards 2200-2400 points. However, the Greenback
is holding its ground firmly this week, and there are some doubts whether it
could be “unleashed” during Christmas.
Oil prices
are stuck close to the resistance of $78-80 per barrel of Brent crude. The U.S.
Administration is signaling that it will be replenishing its strategic oil
reserves soon. Russia has still not responded to the EU price cap on Russia’s
seaborne oil. Vladimir Putin promised to sign an order that will act as his
response to this EU action at the beginning of next week, while Russia’s energy
minister Alexander Novak said this order would ban sales of oil and oil
products to countries that joined this price cap rule. These are positive
signals for oil prices, but fears over an upcoming recession and some relaxed
provisions of the price cap are not allowing oil prices to have any upside options.
Consolidation
of Brent crude prices at $78-80 per barrel is rather seen as a temporary
departure that would end a new selloff wave to the nearest support at $68-70
per barrel. The lowest targets are seen currently at $60-70 per barrel.
Gold prices
are charting an upside formation with targets at $2000-2100 per troy ounce by
the middle of 2023. Despite upside attempts of gold prices to rise above $1820,
this has not initiated an aggressive upside scenario with targets at $2050-2150
per ounce by the middle of February. So, prices are likely to roll back towards
$1700-1720 per ounce by the middle of January. Only then may the gold rally be
resumed.
The money
market continues to experience elevated volatility that prevents the use of
short-term signals. So, it is better to place orders that are attached to
longer perspectives. Short trades of AUDUSD were opened at 0.68000-0.68500, and
for EURUSD at 1.05000-1.05500. Downside targets for these trades are at 5000
points below opening prices. The same applies to stop-loss orders that are 5000
points above order prices.