be aware to always trade according to the right signals, this is just an opinion 🙂
US:
After the Corona Crash we went up for quite a long time now. Currently it looks like a turning point and that the market realizes that the corporate earnings and forecasts together with the macroeconomic news and outlook are in a very bad shape. That's the reason why I expect another crash and a retest to the last lows and even lower prices. The US in general was in a way better shape than other economies and so far have the only convincing idea on how to stimulate the markets again. Therefore the US will come out of the Corona crisis way better than other economies.
EU:
For the EU I expect the same drop for the very same reasons. Since many of the economies in the Euro zone are in bad shape despite great economic growth in other parts of the world I expect that we will have a second Euro crisis arising coming from Italy and spreading fast over to Spain, Portugal, France and of course Greece. Many countries are facing a double dip recession at the moment. This means that Europe will lag the world's economy by far and that there may even be a third crash arising due to the unsolved debt issues in many Eurozone countries. Due to Brexit and the new EU hoseholds the potential for new stimuli will be vastly decreased together with the willingness of the richer countries to support the others.
UK:
Major issues with the lockdown and timing led the UK from being a potential economic winner in the Corona mess to fall behind. Afterwards the UK will also face new Brexit negotiations which certainly won't help their economy. Neither will it be good for the EU.
Still the UK is somewhere between the US and Europe as it has the ability to act independently with fiscal and monetary policies without looking after other countries.
CURRENCIES:
USD:
The long term rise of the US Dollar comes to an end temporarily. Despite that I expect that the USD will be stronger than the EUR and will continue to gain value against the Euro. In another Corona Crash the US Dollar is likely to lose against the JPY as well as "save haven" currencies like SEK, CHF, SGD and GBP.
EUR:
The very recent advance in the EUR against the USD is likely to be short lived and will reverse soon. Over the month of May I expect the Euro to be quite a bit lower than at the beginning.
GBP:
The predicted downwards movement in the middle of the month occurred and ended in a longer sideways movement. For the beginning of May I expect another drop of the GBP against the EUR and the USD and later on from mid of May another recovery. The medium-term outlook will be heavily influenced by the Corona management as well as the Brexit negotiations. Once the insecurity for both is gone I expect an upwards rally for the GBP.
Commodities:
Oil:
After seeing historical low oil prices we had the expected upwards movement which seems to continue at the beginning of May. During the middle of May there will be expected volatility with another possibility of a big crash in oil prices before the futures expire especially when they are back in Contango.
Gold:
After some upwards movement at the beginning of April we were mainly in a sideways movement for the rest of the month. For the beginning of May I expect rising gold prices however with further drops in stocks, I expect gold prices to go down as well before they rally up again at the end of May.
Silver:
After a longer sideways movement I expect silver to break out through the bottom and end lower in May than at the beginning. If the support levels below $15 are not holding we might drop straight back to $12 which would be a huge possibility.
Copper:
Due to the effects of halted production in China, all commodities that are heavily used in the production cycle like copper, Aluminum, Zinc, Nickel, etc. were hit hard. As we predicted for all of them with the exception of aluminum, they ended the month way higher. Currently we may see a nice retracement from the current levels and then another rally following after that.
Coffee:
At this point it looks like coffee will turn around and aim for higher prices. I expect that to happen roughly until the middle of May with a decline in prices again at the end of May.
Soy beans:
Coming from very low levels we recently saw slightly rising prices. I expect soy beans prices to continue to go up over the next several months beginning and middle of May up before we see some retracement and get another chance to enter the markets.
Lumber:
After a huge drop in prices due to the current situation, we reached some bottom in lumber prices. This means we are ready now for some retracement and higher prices in May, especially if the house building continues after lockdown restrictions in the US are removed.
Corn:
After a huge drop I see potential for higher corn prices throughout May. However I will become very cautious latest from the end of May as the spike is likely to be followed by a huge drop.
Zinc:
After some beaten up prices lately we had a recovery which seems to come to an end in a double top. Once we see a continuation of declining prices we might retest the last lows again in May and end the month way lower than the current level.
XLP/XLU:
Since most stocks might face a sharp decline over the next weeks and the situation on the vaccine front is quite nebulous in terms of who will be the pharmaceutical winner, I will have a close look at consumer staples and utilities in the coming weeks and months. Currently they both look like they will go down for the next time, however I think of turning points to be a good entry point. For those that don't want to screen the whole sectors for the best companies you can use the Sector ETFs in the S&P500 for these companies. This is a trade that goes throughout the month and might last for the whole summertime.
As always, make sure you do your own analysis. Happy and successful trading ☺
