Summary:
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US manufacturing ISM: 60.2 pts vs 58.5 pts exp
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S&P 500 (US500 on xStation5) eyes another test of the 50% Fibo level
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Tesla (TSLA.US) jumps after production goal was met in the previous week
Throughout this week investors will be offered a vast array of macroeconomic readings and events from the US economy. The US manufacturing ISM index reading launched the data marathon today. The US stock indices trade lower following a downbeat session in Europe. Tesla (TSLA.US) is advancing on the back of reaching its production goal for the first time.
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US manufacturing ISM index moved higher in June diverging further from the PMI index. Source: Macrobond, XTB Research
The US manufacturing ISM index has been released today starting a week full of reports important for the USD. Economists surveyed by Bloomberg pointed for a minor drop from 58.7 pts in May to 58.5 pts in June. However, instead of decline we were offered an advance and it was quite a significant advance. Namely, the index reached the 60.2 pts level in June and stays just a notch below the multi-year high at 60.9 pts. This shows that the members of the manufacturing industry still see this sector expanding and that risks are limited. It is worth to note that this is another month when we see ISM and PMI indices show contracting values.
US500 pulls back towards key support level marked by 50% Fibo level. Source: xStation5
After a downbeat session in Europe major stock indices from Wall Street joined the downtrend following the opening. All three major US benchmarks are trading below their Friday’s closes at press time. Do notice that the US500 (S&P500) is pulling back towards the 50% Fibo level of the February’s slump. This level has been tested several times in the previous days and so far proved to be too strong for the sellers. However, in case no major positive news surface that could help US500 distance away from this obstacle we may see a break lower. In such a scenario investors should be cautious once the price moves close to the 200-session moving average (purple line on the chart) as it may prove to be relevant support level.
Tesla (TSLA.US) opened significantly higher after the weekend. However, after higher opening the price marched lower. The 200-session moving average may be the closest technical support level. Source: xStation5
Tesla (TSLA.US) is one of the stocks being in the spotlight at the beginning of the week. The company announced over weekend that in the previous week the company’s goal of producing 5000 Model S cars per week was finally achieved. Let us recall that failure to reach this goal was one of the reasons for the Tesla’s drop in valuation in the first half of 2018. As the goal was finally met we saw company’s shares launch today’s trading with a significant upside price gap. However, some analysts are concerned whether such euphoria is justified. All in all, the Tesla’s announcement means that the company managed to reach its goal in the previous week not that it reach the capability in achieve it week after week. Do notice that this would not have been achieved if the third assembly line in Tesla factory was not set up. Therefore we may have to wait until the full financial report for 2018 is published to see whether Musk’s company will show profit for the first time in its 15 year history or not.
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