As the stock market saying goes, "the trend is your friend". It indicates that trends in the market tend to persist according to the so-called momentum strategy. Therefore, let us take a look at the five strongest trends of the past week in the financial markets. We will try to understand the reasons behind these stock market movements in order to explore the possibility of their continuation.
Table of contents:
SYNTHETIX (SNXUSD)
Growing expectations for the acceptance of the first ETF for the bitcoin spot seem to be affecting the entire cryptocurrency market. Among them, synthetix has been growing the fastest recently - up 36% over the past week. The main goal of the synthetix cryptocurrency is to allow users to invest in various assets - currencies, commodities or stocks - by creating synthetic representations of them on the blockchain. Therefore, the cryptocurrency's users are often financial institutions that provide such services through it and whose increased inflows are expected with the implementation of the ETF. The increases led to a break through the one-year resistance at USD 3.38.
Source: Conotoxia MT5, SNXUSD, Daily
ARK Innovation ETF (ARKK)
There is increasing pressure for earlier interest rate cuts relative to earlier expectations. The low interest rate environment significantly favours growth-oriented companies due to easier access to cheap funds. This may have been the reason for the ARK Innovation ETF from the famous Cathie Wood rising by 9.5%. It should be mentioned that the fund's price is currently at a key 2-year support at USD 45.
Source: Conotoxia MT5, ARKK, Daily
Pallad (XDPUSD)
The price of palladium has risen by 9.4%, surpassing the US$1,000 level, after an almost continuous decline from the US$3,000 level over the past year. According to SFA Oxford, the metal is mainly used in the automotive industry (81.2% of demand), manufacturing (16.3%) and jewellery (2.5%). The metal has been struggling for some time with a lack of growth in demand despite a continued increase in the amount of recycled palladium sourced (up 4% year-on-year), which has led to an overall decline in demand of 2.1% year-on-year.
Therefore, is the current increase only a short-term rebound or will this trend continue?
Source: Conotoxia MT5, XPDUSD, Daily
Natgas (XNGUSD)
Another commodity that has seen the biggest downward trend in the past week is gas losing 9.4% in value. According to S&P Global data, we are currently at a point of equilibrium between gas production and consumption. The latest forecast from the US Energy Information Administration (EIA) predicts an average price of $3.25/MMBTU for this commodity next year. However, it should be noted that the heating season has not yet fully started and any shortfall will depend on the weather conditions this winter.
Source: S&P Global
Source: Conotoxia MT5, XNGUSD, Daily
S&P 500 (US500)
The past week proved exceptionally positive for the general stock market.The main S&P 500 index recorded an increase of 2.52%.Interestingly, it even outperformed the Nasdaq 100 technology index, which ended the week with a gain of 2%. This is now more than 19% year-to-date growth on the S&P 500 index. The momentum started with Tuesday's US CPI inflation data, which came in below expectations. It is now just 1.4% short of reaching historic highs on the index.
Source: Conotoxia MT5, US500, Daily
Grzegorz Dróżdż, CAI MPW, Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
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