The most important news for the markets during the past week was the increase, once again, in interest rates. Some analysts estimated that this increase would be postponed for the second half of the year, however, the Fed not only announced this increase but predicted a possible fourth increase in interest rates before the end of the year. The news led the markets to close down on Wednesday, then evidence some recovery towards the end of the week. The technology sector in particular continued to fall until reaching areas of previous supports near the 50 moving average.
Few economic announcements are foreseen, highlighting the sales of new houses on Friday and crude inventories on Wednesday. Both reports will have a direct impact on several actions of our portfolio, so we will be very attentive to these two events.
Developing what was indicated in the introduction, the Nasdaq last week showed a setback to its 50 moving average for the second time in a few days, showing a kind of inverted V, a fact that has not happened for some time. In fact, shares like NVDA, NFLX, FB, GOOG and AMZN did not manage to go back to their highs of the previous week, reason why we are observing a fatigue on the part of the bulls.
However, this week markets are opening up followed by optimism and positive closures in European and Asian markets. That positive Nasdaq opening today, it looks like a rebound after the drop mentioned above, so we will be very attentive. The development of this upward rebound will give us a lot of information about the real direction of the market, since it can be a temporary rebound to continue the fall, which would intensify the same and give value to the fatigue of the bulls. On the other hand, if the rebound is consolidated, we can mark the range of the 50 moving average as a solid support of this stock index.
Crude futures start the week in neutral territory, however, our focus remains on the inventory report for Wednesday.
The basic metals sector fell following the announcement of the Fed, however, recovered slightly before the end of the week. We remain optimistic about an imminent recovery in the iron and steel sector. The opening of this week with important shares of the sector in + 2% is a very good sign.