Fear sells, and equities take full advantage of this – Market Analysis – June 22

Fear sells, and equities take full advantage of this – Market Analysis – June 22

Despite a break-out in number of infections, equities remain in the green

Despite the worrying increase in infection cases in the United States and the outbreaks in other countries such as Germany, investors continue to bet on the positive effect on the economy of the reopening of economic activity.

The interest in investing has more weight than the fear of a return to lockdown due to a continuous upturn in cases in the world. The governments of economies as powerful as the United States and England have prioritized the economy over health prevention, and this is being reflected in the markets, especially in commodities.

Commodities

After falling to its central support zone at $1.58, NaturalGas has started to rebound from oversold levels on the RSI indicator and needs to break above the $1.80, 100 day-SMA zone to start a new uptrend.


The same is true for COPPER, which has been rising for five days in a row and which has an intermediate objective in the 2.70 zone above which it would not encounter any obstacle from a technical perspective until the price concentration zone around 2.80, trading levels in the moments before the crisis.


US stock indices

Stock markets have also behaved more optimistically today after important falls in the moments before the opening, losses that have been

erased during the day until returning to green numbers. The levels that have to be left behind and that are currently behaving as resistances are 3090 in the case of USA500 and 9990 in the case of TECH100.


This week, there are no relevant economic figures beyond some of the real estate sector in the United States, the PMIS, and the German IFO.

Still, in any case, the market is biased to the upside, and only a relevant positive deviation from what is expected in these figures would have a reinforcing effect on bullish investor sentiment. If the data are not positive, they would not be taken into account.


The only risk still latent would be a massive worsening in the epidemic that will lead to a new locked down, but neither politicians nor investors consider it likely.

The enormous amount of liquidity that central banks have injected into the system and the aggressive fiscal policy measures implemented have flooded the market with cash.

As an example, US banks are reporting the highest amount of liquidity in deposits in their history, and late or sooner, those funds will have to be allocated in the investment assets.

The Gold

As we have already pointed out in previous comments, GOLD is the protagonist in this scenario. Although inflation expectations remain low, the massive increase in the monetary base increases interest in the precious metal as a store of value.

Leading GOLD analysts expect that soon it will exceed all-time highs at $1920, so far it needs to close daily above the top of the band in which it has moved in recent weeks, $1745-1750 to heading toward an intermediate goal at $1,810.

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