Weekend Analysis

Investors were half expecting a challenging week with the markets in a crisis that began with the collapse of the SVB Financial (SIVB) and Signature Bank (SBNY). The crisis was further magnified with the problems at Credit Suisse (CS) where the 2022 annual report identified "material weaknesses" in internal controls over financial reporting leading to a large drop in its share price and the significant customer outflows that followed. Credit Suisse became the first major global bank to get emergency funding since the 2008 financial crisis as it required a $54 billion lifeline from the Swiss central bank to shore up its  liquidity. 

As the investors lost confidence in US regional banks and Credit Suisse in Europe, on Sunday the Federal Reserve announced additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. Further attempts to allay the fear of Bank contagion were made on Tuesday as US President Joe Biden and other global policymakers vowed the crisis would be contained. 

It seems the Banks had started to look out for one another as financial institutions, including JP Morgan Chase & Co (JPM)and Morgan Stanley (MS), confirmed they would deposit up to $30 billion into First Republic Bank's coffers to stabilise the lender. However, Investor sentiment was soon dampened as in the latest twist in the US regional bank saga came as the European Central Bank pressed forward with a 50-basis-point rate hike despite recent turmoil in financial markets. 

For econ data the US CPI report showed consumer prices cooled in February, largely in line with market expectations, with headline and core measures notching welcome annual declines. Manufacturing activity in New York contracted further in March amid a steep decline in new orders and shipments while the outlook for business conditions worsened. US retail sales fell 0.4% last month after 3.2% growth in January. Economists had expected a contraction of 0.3%. 

Data showed the number of Americans filing new claims for unemployment benefits fell more than expected last week, pointing to continued labor market strength, which could persuade the Fed to keep raising rates further.

US Inflation data showed signs of economic weakness and cooling inflation. And the Oil prices dropped over 12% in the week to reach its lowest level in over a year. Investors rushed back into safe haven investments of Gold and Government Bonds, both rallying in the week on the back of Banking crisis and long memories of the 2008 crash. 

Despite ending the week on a sour note by closing lower on Friday, both the S&P and the Nasdaq ended the week in Green with the latter posting its best weekly growth since mid JAN23. DoW however, just sneaked in a Red week, though it remains above its WVI Supp and has posted an indecision doji for the week.  Nasdaq has pushed thru to close above its WVI/50MA Res but remains in the Bear territory. 

The volatility index weekly average spiked for another week posting its largest weekly growth this year. It peaked its head above the RN30 during the week to return back to the mid 20's, however, having BO of the wMA Res last week, the index remains closed above these with the wMA's now acting as support.  Shortselling saw a drop for the week as did stocks above their DVI which has now dropped to 2022 levels. 

In the UK the FTSE has free fallen from the dizzy heights of its all time high over RN8k, even managing its worst daily performance during the week since MAR20. The index has BD its DVI and has a clear run to reach it RN7K/WVI Supp. 

The Cable posted a strong Green week but on closer look the move was largely made on Monday after which it rode its d50MA for comfort. 

In the Crypto space Bitcoin is on track to post its largest weekly growth in over 2 years where as Ethereum is to do likewise in over a year. The former has also BO of its wMA Res in the process. 

In the Sector ETF's, we had a bullish bias with 7 of the Sectors posting a Green and not surprisingly given the Nasdaq jump this week that the sector march was led by Technology (XLK) and Communications (XLC). Both of these Sectors are now well established in the leading quadrant. Surprisingly the Bear march was led by Energy (XLE) and not Finance (XLF) which did put in a strong chase.

Discretionary (XLY) has been posting alternate Bull/Bear weeks and is nicely maintaining its momentum  towards the Leading quadrant. 

For next week, we have few central Bank rate decision starting with the USD on Wednesday and the CHF & GBP on Thursday. 

For Econ data the UK, Japan and Canada will publish its CPI. In addition we have large EU economies Germany and France publishing Manufacturing and Services PMI alongside UK and US. 

Have a great week.

Anil

Let's go trade!