In our last few videos, we were looking at the pessimistic attitude of investors toward a midterm Democratic sweep regarding the future of AI data centres and the effect on tech stocks.
Well, we were right, but it took a day or two for investors to figure that out. Let’s take a look.
In today’s Market Outlook, let’s take a look at Forex trading on NZDUSD, WTI Crude Oil, Gold, XAUUSD, Silver, XAGUSD, USDCHF, the S&P500, the NASDAQ, and the Dow Jones Industrial Average.
Let’s recap:
Tech stocks fell on the day of the election, as we all knew that a Democratic Congress would seriously scrutinise the effect of AI data centres on communities.
But the day after, we saw a resurgence based on a lower price of oil, the possible end of the Iran war, and the concept of political stability.
As we have mentioned many times, these ideas also indicate against the Fed raising interest rates, and the Dow Jones Industrial Average always benefits more from this.
But after a bad earnings report from Qualcomm, a major semiconductor player, combined with AI data centre pessimism, the markets collapsed.
So, why the recovery over the last 4 days?
Firstly, the price of oil fell again. Anything that alleviates inflation will help any stock index.
Then, there was a good old-fashioned “buy the dip” attitude as investors took advantage of the bargains.
There was dip buying also in semiconductor companies like AMD, Broadcom, and Philadelphia, which surged 7%.
And, finally, investors realised that tightening regulations on AI data centres would not kill the demand for AI.
But, looking at this bearish trend channel on the NASDAQ and the fact that price is at the upper trend line, we need to be careful and look for a big break up or another fall.
As we have seen over the ages, when investors dump stocks, USD gets stronger.
When investors buy stocks en masse, USD gets weaker.
We will be watching USDCHF to see if we get a reversal at this upper trend line.
On many USD pairs, we see the same situation with a big move and the stochastic oscillator looking extreme, as in the case of NZDUSD.
Watch this trend line and resistance. And check other pairs.
Speaking of USD pairs, keep an eye on gold, where we see an ascending triangle with clear help from the stochastic oscillator.
And silver, where we see a rising wedge, which is a bearish pattern.
And, yes, the price of crude oil is indeed falling as price finally broke this massive double-top neckline yesterday.
But, as we know, with the Iran war and the current US administration, anything can happen.
And keep an eye on all NZD pairs after we saw sudden strength after Saturday’s elections.
Watch for a reversal, and we will look at this next time.
That’s all for now.
CFDs and FX are leveraged products, and your capital may be at risk.
