Analytics

Expert Review: Oil, Gold and Stocks

Mid-term Analytics by Olymp Trade Experts


The past week raised a lot of anticipation in the stock markets due to the forum at Jackson Hole. The VIX “fear” index has been below the 18-point mark for quite a long time, which suggests that it’s time to close long positions in the stock market. However, at the end of the week, it became clear that things were not so bad at the moment. No bad news is good news, but what’s next?

 

Weekly Trends

  • Apple + 4.14%. This means that a buy with a $100 and X20 multiplier would earn $82.8.
  • Amazon  + 4.44%. This means that a buy with $100 and a multiplier of X20 would make $88.8.
  • Tesla  + 4.45%. This means that a buy with $100 and a multiplier X20 one could easily make $89.

 

Stock Markets

During the week, from 23.08 to 27.08, American stock indices were mainly growing. The S&P 500 index renewed its maximum, going beyond the level of 4500 points. The Nasdaq 100 index jumped past the 15400 marks. The Dow Jones index was mainly “flat,” slightly adding from 35273 points to 35478 points.

The main event of the week was, of course, the forum in Jackson Hole, which is held on an annual basis and attracts a lot of attention from market participants. This year it was a special event given the markets are waiting for the hints of further stimulus to be phased out.

Here are the main points in the speech of the head of the US Federal Reserve, Jerome Powell.

  • The labor market is growing
  • Inflation temporary
  • US economy does not need more policy support
  • Further progress is required to curtail incentives

The last point here is perhaps the most important. Everyone understands that the pumping of the markets with liquidity (in the form of the QE program) will not stop soon, and, therefore, the markets can calmly “exhale.” The reaction on the indices was bullish on Friday the 27th, the key indicators of the US markets grew. As a result, experts are confident that investors should not expect drawdowns in the stock market, but the volatility can be quite high. You need to be incredibly attentive closer to the September meeting of the FRS on September 22.


With a speculative approach to choosing securities, we recommend paying special attention to the shares of Amazon.com. The company’s revenue growth rates have been relatively high over the past few years. For example, for 2020-2021. revenues increased by more than 37%, and net income increased from $ 11.5 billion to $ 21.3 billion, i.e., almost two times.

The company’s price multiples are lower than in the industry. So, the company’s P/E is 58.38 (in the industry 59), the P/B is 14.76 with an average of 53.59, the P/S of the company is 3.83 (in the industry – 48.95). With such fundamental multiples showing better than in the industry, investors will be interested in buying shares, leading to an increase in capitalization.

Meanwhile, according to technical assessment, the company’s shares are in a “flat” zone with a support level of $3100 and the resistance level of $3500. Considering that the price of securities is now at $3350, it is worth thinking about buying this stock.

 

Commodity Markets

Strong enough influence Brent oil quotes were affected by Hurricane Ida, which reached the 4th category. As a result, the operation of the Louisiana oil port in the Gulf of Mexico was suspended. The result was a substantial rise in the price of Brent, which on 23.08 increased from $65 to almost $69.

On August 25, the price had already broken through the $70 mark. From a technical point of view, the growth target for Brent becomes $75. On the morning of Friday, September 3, the price bounced back from $74 and returned to $70.40; after that, it rose to $73.


Gold quotes exceeded $1,800 per troy ounce. Demand rose amid growing concerns over COVID-19. The nearest resistance level being $1835 – $1840.

 

Conclusions

Since Powell said nothing definitive about the transition to a restrictive monetary policy, Stock markets have calmed down a bit. As a result, we can expect continued growth on stock exchanges, at least until the committee’s next meeting on open markets in a month. At the same time, commodity prices went up. The reason being that both weather factors and fears of the resumption of lockdowns due to new strains of COVID. 

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