At the end of 2019 the US stock market was worth $ 37,7 trillion, at a time when the FED had a balance of $ 4,1 trillion. Today the FED has a balance of $ 7 trillion and part of the “new” capital has ended up indirectly on the market. It is because of this that despite the strong contraction of the world's largest economy, the uncertainty as to the speed of normalization of life for a good part of the citizens of the globe and the unknowns about the profitability of companies in a world that has changed substantially in just two months. , Wall Street is very close to new highs, with Nasdaq for example closing Friday at just 5% of unknown territory.
Nor does the likelihood of a reignition of the trade war seem to scare the bulls yet, not even Trump's rhetoric or the US Commerce Department's decision to add 33 more Chinese companies to the black list, for human rights violations and for reasons of National security. A new episode of this saga after a few weeks ago the same department placed significant restrictions on US companies in the sale of material to giant Huawei.
In addition to this, the news that Beijing may pass a new national security law to be implemented in Hong Kong this week has been poorly received by the market, not least because Trump has already said that the US will react against that law, while on the Chinese side the The response was not long in coming, with a clear warning that the most populous country in the world will protect its sovereignty, security and interests, threatening to retaliate against any US measure.
But while the words come and go, Wall Street has appreciated more than 3% in the last five days, while the US dollar ended the week gaining 0,3% against a basket of other major currencies, which pushed the Euro to a slide of -0.5%, without affecting Yen, which remained unchanged. The strength in the Japanese currency may have come from those who sought refuge on the eve of a long weekend, an indication that was also present in the price of Gold, which increased 0.4% to $ 1,735. In any case and despite the upward trend, it is noted that sentiment is becoming a little less clear, with some growing noise about the reasonableness of market assessments and the dissociation between Wall Street and the Economy.
Today's chart is from the S & P500, the time-frame is 4 hours.
Bounded by a side channel (blue lines), it will be important to be aware of the upper line test that may be coming soon.