Weekly Summary: Stock market runs on Positive Tunes

The end of the week was full of surprises. But the major one was Facebook’s (Meta) Q4 2021 corporate report as shares of the social media giant plunged 26% just after the publication. This was the biggest one-day drop in the history of the world’s largest social network. The market cap of Facebook dropped by $237 billion in a single day, a disastrous slide that scared investors to death--- U.S. tech sector stocks followed Mark Zuckerberg brainchild and dragged the Nasdaq 100 and S&P 500 broad market indexes down by 4.2% and 2.4% respectively.

Futures on major U.S. stock indices recovered on Friday morning after the publication of much better-than-expected Amazon and Snap Q4 earnings reports, but they then returned to their Thursday dips just before the opening of the U.S. market. And we may expect another negative day during Friday’s trading session.

The first Non-Farm Payrolls report for the year published this Friday had a  consensus of 150,000 new jobs and unemployment of 3.9%. But ADP presented an alternative scenario on Wednesday with a sharp decline in Non-Farm Payrolls by 301,000, the largest since May 2020. The real official picture was suddenly much more optimistic as January Non-Farm Payrolls was at 467,000, which is a much higher number than anybody expected. While this is the case, unemployment went slightly up to reach 4.0% which keeps it within the appropriate low level..

Would it be enough for investors to lower their expectations towards the Federal Reserve’s (Fed) monetary tightening angle? It is hard to justify an answer. Technically, the S&P 500 index remains on the positive upside. The nearest support level is at 4510 points. The index may find solid ground at this level to resume the rally and main target at 4650-4700 points. At least at this level there are more upside signals to hold buy positions.

Brent crude prices claimed its upside “$100” scenario as they jumped almost to $93 per barrel. The technical picture suggests Brent crude prices may hit $94.00-95.00 next week. A more   aggressive approach points out that Brent crude must close this week above $94.60 per barrel. In this case prices may reach $97.00-100.00 next week.

However, crude prices are seen to be extremely high for current global economic situation and the global demand for crude. But it is too risky to play against current speculations in the market. It is better to wait or carefully join the speculative rally.

Gold prices continue to swing around the $1800 per troy ounce landmark. The nearest support level is still at $1750 per ounce. But for the next two months gold prices are likely to remain on the upside track within the $1800-1840 trading range. Thus, no solid trades could be opened at the moment.

The EURUSD pair changed its track to the sharp upside after the European Central Bank (ECB) signaled to a more hawkish monetary policy following in the Fed’s footsteps. The Euro rose above 1.14700 to the U.S. Dollar almost hitting the target for entire month of February at 1.15500. So, any buy trades are already overdue, while it is too early to open sell positions given the upward trend in EURUSD.

GBPUSD has changed its pattern to the upside and has already met it targets above 1.36000. The move was supported by the Bank of England (BoE) that raised its interest rates from 0.25 to 0.5%. The BoE raised its interest rates for the second time in two months. Nevertheless, the Pound seems to be overbought from a technical perspective. So, any buy trades are not looking as attractive, while sell position are likely to be avoided as the Cable continues to move in the upward direction.