Stocks Need More Corporate Steam

U.S. stock market fell despite inspiring first quarter corporate reporting from Coca-Cola and Harley-Davidson. Stock indices are under strong pressure without any particular reason that is clear for investors’ majority.

European stocks fell too. The U.S. Dollar that should be strengthening as a safe haven instrument was sold off on Monday losing around 0.5%, which is a lot for a single day, especially Monday.

The reason for such decline could be geopolitics, but it is not clear since gold prices are also under pressure. It could a market noise or a short-term drop that will be immediately bought out as it was many times before this year.

To get a clear answer we should wait for the S&P 500 broad market index to return to last week’s highs at 4175 points to reconfirm markets strength, or reasons for the decline would emerge.

There is no important macroeconomic data on Tuesday except labor statistics in the United Kingdom. However, the British Pound has depleted its upside reserves and is more looking for correction.

Investors will continue to monitor earning reports in the United States that will be presented by Johnson&Johnson, Procter&Gamble and streaming giant Netflix. These companies are likely to continue outstanding first quarter reporting season for American companies, and may help stock market to recover. The landmark of 4175 point is of high importance for the S&P 500 index. This level should not be left alone for a long period as the target at 4500 points may turn overdue. If the index will fail to return to this landmark that would dring it down to the support level at 4040 and 3930 points.

The volatility in the oil market is rather tamed with Brent crude prices holding at $67 per barrel. If crude reserve in the U.S. due to be published on Wednesday would be down for another week Brent crude prices may jump to $68.1 per barrel, where sell positions with targets at $64.90 and $63.90 per barrel would be justified.

Gold prices hit $1790 per ounce at the beginning of the week. Prices could go further but rising yields on U.S. Treasuries limited such efforts. So, gold prices have lost its steam being close to the resistance level at $1800 per ounce. If the yields of 10- year Treasuries would not step back from 1.59% gold prices may plunge below $1750 per ounce.

The overall picture in the FX market looks overwhelmingly clear as the EURUSD reached its first resistance level at 1.20500, where short-term sell positions might be interesting to open. If the pair rises to the next resistance at 1.21500 even a mid-term sell positions would be interesting to consider.

The GBPUSD is already in the sell zone with the least resistance level located at 1.39900 and the closest support level at 1.38600. So, is it about time to open sell orders.

The USDJPY is close to its first support level at 107.60. It this supports would be crashed the pair may plunge to 103.60. However, if the Greenback shows its strength the pair may recover to 109.00. The last scenario is seen as less likely.