• The DJIA, rose 29 points, or 0.1% to about 26,392.
  • The S&P 500 closed roughly 1 point higher to close at 2,926.
  • The Nasdaq Composite Index bucked the trend and fell 11 points or 0.1% to 7,963.

Volatility was higher on Friday into month-end on Wall Street, but US stocks once again managed to defy the odds and scraped out higher closes with the majority of the benchmarks ending in the green. Mixed consumer data, trade war noise, strong spending but declining sentiment all failed to give a clear-cut direction to Wall Street.

The Dow Jones Industrial Average, DJIA, rose 29 points, or 0.1% to about 26,392, while the S&P 500 closed roughly 1 point higher to close at 2,926. The Nasdaq Composite Index bucked the trend and fell 11 points or 0.1% to 7,963.

As for the monthly results, the Dow lost about 1.7%, the S&P 500 shed 1.8% and the Nasdaq fell by 2.7%. Stocks remain very sensitive to trade war headlines while Chinese officials offered more hopeful rhetoric on the trade front. Stocks, however, retreated later in the session and pared back those gains in the afternoon. As for standout corporate performances, Dell Technologies Inc. rallied over 10% on better-than-expected earnings.

US data

Data from the July PCE report came in largely in line with expectations, with consumer spending growth rising slightly above consensus and our expectations at 0.6% m/m.

"Personal income rose less than expected by the market (but in line with our projection) at 0.1%, however this followed a modest upward revision for June. On net, the consumer remains resilient at the start of Q3, despite the trade noise. Turning to inflation, the PCE data matched our expectations at 0.2% m/m for both headline and core (1.4% and 1.6% y/y, respectively). Inflation remains subdued but we expect it to gradually inch up toward 2% by the end of the year,"

analysts at TD Securities (TDS) explained

The final release of University of Michigan's Sentiment indicator not only confirmed the decline to 92.1 from 98.4 in the advance release but actually unveiled a deeper fall to 89.8 in Aug — its lowest level since October 2016.

"This decline stands in contrast with the signal by the Conference Board's confidence measure, which barely dipped in August. Note that the UMich's survey is more affected by market and financial conditions (so the retreat may be reflecting the recent volatility in stocks), while the Conference. Board's tends to reflect more labor market conditions, which have remained solid,"

analysts at TDS explained.

DJIA levels

The DJIA managed to catch a bid through the recent resistance level formed in the August correction from the 25300s. A high of 26514 was made. Should the bulls get above 26500s and hold, then the 26900s will be in focus. On the downside, the 1915 to year-to-date Fibonacci retracement measures has the 23.6% marked at 21000 – below the Dec 2018 lows of 21712. The 21-monthly moving average is located at the May and Jun lows in the 24700s as a double-bottom target. The 23.6% Fibo' of the March 2009 swing lows to all-time highs is located in the 22,200s.

  • EUR/USD fell to 2-year lows as the Greenback strengthened across the board this Friday.
  • The level to beat for sellers is the 1.0961 support which can open the doors to 1.0870.

EUR/USD daily chart

On the daily time-frame, the common currency is trading in a bear trend below the main daily simple moving averages (DSMAs). This Friday, EUR/USD broke to its lowest level since May 2017.

EUR/USD 4-hour chart

The market is under bearish pressure below its main SMAs. EUR/USD found some support at 1.0961. If this support is broken, there is little in the way to 1.0870, according to the Technical Confluences Indicator.

EUR/USD 30-minute chart

EUR/USD is trading below the main SMAs, suggesting a bearish momentum in the near term. Immediate resistances are seen at 1.0996, 1.1019, 1.1030 and 1.1064 levels, according to the Technical Confluences Indicator.

Additional key levels

  • Despite a strong Dollar, Silver prices managed a 0.51% advance into the Wall Street close.
  • The first upside target is the 23.6% retracement level at $22.15.

Precious metals scored impressive gains in August, but silver, riding the coattails of gold's early advance, has been the most impressive. silver is up around 11% month to date, with its yearly gain at roughly 18%.

Despite the dollar's advance in recent sessions, toppling the 99 handle in the DXY on Friday as the euro finally fell flat on its face, silver prices still managed a 0.51% advance into the Wall Street close on a spot basis. Silver travelled from a low of $18.07 to a high of $18.47. The December contract ended at a more than two-year high of $18.342 an ounce.

By comparison, gold spices on a spot basis were down -0.27%, falling from a high of $1,533.15 to a low of $1,517.15 as the Dollar spiked and speculative positions squared up for month-end and the long US weekend. December gold settled at $1,529.40 an ounce, giving back some ground after hitting a more-than-six-year high earlier in the week.

Longer-term fundamental risks are to the upside for precious metals

However, considering the climate of negative interest rates, central banks racing to the bottom which is weighing on FX, nations accumulating gold amidst questions over the Dollar as being a stable reserve currency, trade war uncertainties and recessionary looking PMIs, its no wonder that gold has climbed about 17% higher so far this year and could be expected to remain elevated.

"Indeed, dovish central banks globally, along with inverted yield curves and a surging pile of negative-yielding debt, serve as a great fundamental backdrop to remain bullish," analysts at TD Securities argued:

"Meanwhile, the Presidents continued criticism of the Fed, politics in Europe, and the increasingly tense situation in Hong Kong ahead of this weekends outlawed rallies, provides additional scope for gold to continue moving higher despite the stretched positioning. While gold has taken a breather, platinum has stepped into the spotlight in the precious metals complex. While gold and silver have seen strong rallies in the past months, platinum is now playing catch up to the positive precious metal environment, with CTA buying helping to fuel the latest rally."

Gold-silver ratio sees silver with lots of catch up work to do

The question is whether silver has more to catch-up by as it was underappreciated for most of 2019 while gold leapt through the key $1,400 level. The gold to silver ratio is now in the 82 levels, ending Friday around 83 having travelled down -0.73% from 84.07 the high – It was in the low 93s for every ounce of gold at the highest point in the year so far. Technically the ratio is still very high – The 23.5% retracement of 2010 to year-to-date rally, (from when the ratio was in the 30s) is all the way down in the 78s. A 50% mean reversion target of the same range is located in the 62s – Silver has plenty more to go on the upside in this environment.

Silver levels

Silver prices have dropped from the 49.80s at their highest point in April 2011. The first upside target is the 23.6% retracement level at 22.15. Thereafter, the 38.2% target is 27.40s – a 50% mean reversion is located in the 31.70s and a move beyond there will look to the 2012 highs through the 61.8% of 36 at 37.50. On the downside, tests all the way to 17.50s would not be out of the question (50% Fibo of 2016 highs to recent swing lows) but the 17.70s could offer a solid level of support on the way there.

As for gold

The 50% comes in at 1478 which was also a level of support on the 13 Aug volatility and downside spike. A 61.8% retracement at 1,460 guards the 19 July swing highs at 1,452.93. However, while holding in the 1,520-1,525 zone, (1518 was the low) bulls are still in the running for a test a break of 1,558 to open 1,590, the 127.2% Fibo target area. Thereafter, its blue skies to the 78.6% Fibo of the 2011 to YTD range located in the 1,730s ahead of the triple-top peaks of the 1,800s.

  • Gold is ending the week below the 1,530.00 level.
  • The level to beat for sellers is $1,510.00/oz and 1,490.00 support.

Gold daily chart

Gold is trading in a bull trend above its main daily simple moving averages. The yellow metal is off multi-year highs after peaking at 1,554.63 on Monday, ending the week on a weak tone.

Gold 4-hour chart

Gold is trading above 1,510.00 support and its main SMAs, suggesting bullish momentum in the medium term. However, bulls need to reclaim the 1,530.00 and 1,550.00 levels on the way up.

Gold 30-minute chart

Gold has found no acceptance above 1,530.00 and the main SMAs. If the sellers keep the pressure on, the market could reach 1,510.00 and 1,490.00 to the downside.

Additional key levels

  • The DXY broke highest levels since May 2017 and WTI extends to a 4% decline.
  • Russia's oil output cuts in August will be slightly below those agreed.

West Texas Intermediate oil prices have taken a knock, coincidently into month-end and as the US Dollar perks up nicely through the to test the 99 handle for the highest level printed at 99.02 since May 2017.

Output cuts not to be taken for granted

WTI spot prices are currently trading at $54.94 having travelled from a high of $56.70 to a low of $54.57. On strictly oil-related news, oil output cuts were thrown into question when Reuters reported that Russian Energy Minister Alexander Novak said Russia's oil output cuts in August will be slightly below those agreed to under the deal between OPEC and non-OPEC producers. When the only major supportive factor for oil is put into doubt, your going to see lower prices which came into fruition today – a 4% drop was marked up since yesterday's highs towards the 57 handle. As for futures, October West Texas Intermediate oil lost $1.61, or 2.8%, to settle at $55.10 a barrel on the New York Mercantile Exchange.

Prices firmly in whipsaw territory

However, analysts at TD Securities argued that the supply-side fundamentals remain positive for the energy market, with the latest DOE data pointing to tighter supply which had seen CTAs turn buyers across WTI, Brent, gasoline and heating oil. However, they also noted that buying remains on thin ice. "Momentum signals across the complex are pointing to weak buying, with prices all firmly in whipsaw territory which could see the algos return to sellers again next week as prices remain range-bound for the most part."

WTI levels

Bulls capitulated on Friday and the price action has left the 60 handle back in the rearview mirror. When trading below the 200-day moving average, the bears are back in control and the 52 handle and the 61.8% Fibo at 51.70 come into focus again.

Assessing the latest economic growth data from India, "India’s Q1 FY20 (April-June 2019) GDP growth has slipped to the lowest in 25 quarters," noted ANZ analysts. "This is the first time since March 2013 that growth has been sub-6% for two consecutive quarters."

Key quotes

"Compared to the previous quarter, domestic demand slowed sharply, led by private consumption. Net exports contributed positively to growth for the first time in nine quarters on lower imports, underlying weak demand."

"High frequency indicators continued to show sluggishness in July, suggesting the slowdown may have some steam left. Today’s weaker-than-expected growth print reaffirms our call for further 50bps of cuts by the Reserve Bank of India (RBI) in the rest of the year."

"Additionally, the structural nature of the slowdown could prompt the government to announce a fiscal push as a supplement to monetary easing, in order to lift sagging demand."

  • DXY (US Dollar Index) is breaking above the 2019 high as the market is trading at its highest since May 2017.
  • The next key resistance can be seen at the 99.27 level.

DXY daily chart

DXY (US Dollar Index) is trading in a bull trend above the main daily simple moving averages (DSMAs) as the market is trading at is highest since May 2017.

DXY 4-hour chart

DXY broke above 98.94 resistance, the previous 2019 high, opening the gates for a potential continuation up towards 99.27, previous key level. If the market holds above the 98.94 level, it would be seen as a bullish sign.

DXY 30-minute chart

DXY is trading above the main SMAs, suggesting bullish momentum in the short term. Immediate support is seen at the 98.94 and the 98.68 levels.

Additional key levels