Climbing the wall of worry
30 March 2023
War, inflation, banking sector crisis – all this and still, the indices are climbing higher. Stock bears are probably pulling their hair out seeing this. Almost all of them were celebrating the collapse of the SVB and the problems with the Credit Suisse and Deutsche Bank, but the prices went up nonetheless. Well, it is a common thing in trading that some instruments are climbing the wall of worry; and you know the saying: buy when there’s blood in the streets.
The fact is that the market is currently in the full risk ON mode. S&P 500 managed to break the mid-term down-trendline that was connecting lower highs since the end of January. DAX broke the 15250 resistance and is now trading confidently above it. Dow Jones smashed the 32500 resistance and is fighting for a positive close of the monthly candle. That’s not what a down-trend looks like, is it?
This risk ON sentiment is certainly helping oil, who has been climbing higher in the second half of the month. WTI is currently fighting on a key resistance on the 72.5 USD/bbl, while Brent tested the long-term down-trendline yesterday. The price breaking the resistance can be a first signal to a new, long-term up-trend. With all this, we have to say that gold is holding up pretty strong. We are currently experiencing a flat, pennant-like correction. I guess the weaker dollar is helping here a bit.
Today’s calendar will bring the first reading of inflation in Germany. CPI m/m is expected to drop from 0.8% to 0.7%. Before the American session starts, we will also learn the final GDP number in the US. Here, the same reading as in the previous month is expected – 2.7%.