INDICES MARKET OUTLOOK – 26 JULY 2021

The Corona Virus Delta variant has brought fear to the equity markets for the last two weeks but that seems to be fading away once again as we saw the “Buy The Dip” mentality kick in last week with the equity market closing at new all time highs. NASDAQ and the Dow Jones closed +2.88% and +0.99% respectively.

There will be lots for traders to look out for this week on the micro and macro level as we have earnings being released as well as the Fed’s Interest Rate Decision and the US GDP. Investors will be keeping their eyes peeled for earnings reports as major technology companies such as Facebook, Amazon, Apple, Google and Microsoft are releasing their Q2 reports this week. Earnings optimism means margin for error is thin and the technology pandemic winners may see their revenue growth start slowing down due to the resumption of normal activity and the economy reopening. But on the other hand, should Q2 earnings beat their estimations, this could be the fundamental catalyst to send US equities prices even higher.

Q2 EARNINGS CALENDAR

Traders will also be listening in on the Fed’s Interest Rate Decision and the GDP on Wednesday and Thursday respectively. The Interest Rate is expected to stay unchanged but investors will be looking to gauge the pace of Fed tapering and potential adjustments to the pace of asset purchases.

FUNDAMENTALS FOR THE WEEK AHEAD

Since we have seen “Buy The Dip” mentality applied last week, NASDAQ has been on a continued bull run closing last week out at almost +3%. Volume might be weak leading up to Wednesday as investors will not expose themselves to too much risk before the Interest Rate Decision and as everyone waits for the Earnings reports. Since we are at all time highs, we could see some profit taking occur which would come in the form of a technical pullback. Should this happen, we can expect pullbacks into and around the $14 750 region before continued upside targeting $15 250. Should we see earnings beat their estimates, this will most likely result in upside on NASDAQ.

NASDAQ 4 HOUR TIMEFRAME

At the time of writing, the Dow Jones has once again managed to pierce that $35 000 psychological level but just doesn’t seem to have the buying pressure to break it and leave it behind. This will be the third time the Dow tests this level since May. Should we see market wide profit taking occur, this could also result in a technical pullback on the Dow potentially eyeing that $34 500 level once more before managing to break that psychological level of $35 000 to the upside with $35 500 being the next target.

DOW JONES 4 HOUR TIMEFRAME

As always traders, exercise healthy risk management and we hope you have a fantastic trading week ahead. For more updates like the one above, subscribe to our blog for instant updates to your mail or join our Telegram Trading Floor via our website at http://www.aspirefx.co.za.

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