The improving trader’s sentiment | 16 June 2023

#SP500:

For months, traders piled into a handful of megacap companies seen as safe bets in uncertain times, spurring a rally that has lifted the SP 500 nearly 11.9% year-to-date, concentrated in a small group of stocks. As the U.S. economy holds up despite higher interest rates, fears of an imminent downturn are fading. Some traders have started dipping their toes into economically sensitive market areas that have been out of favor this year including small caps, energy shares and industrial stocks - all of which have seen hefty rallies in June. This is a positive signal for the stock market. Given the recent debt ceiling agreement, the Treasury Department has the ability to issue new debt again and add to the $31.4 trillion in outstanding debt. Currently, and this is subject to change, the Treasury was only set to issue shorter maturity bills this week but is expected to increase issuance significantly in the coming weeks. This is a negative signal for the stock market.

Trading recommendation: range 4270 - 4377.

#HSI:

Foreign investors piling into Asian fixed income and stocks propelled emerging market portfolio inflows to $10.4 billion in May, offsetting Chinese bonds suffering a third straight month of outflows, the Institute of International Finance found. Over the past year, foreign investors have taken some $59 billion out of Chinese debt, though the country's equities have seen $33.7 billion of inflows in the same period. Investor appetite for China has been cooling against a backdrop of disappointing data, deteriorating Sino-U.S. relations and regulatory crack-downs from Beijing that unsettled markets.

Trading recommendation: sell 19620 and take profit 19300.

#WTI:

Hedge funds boosted bullish bets on WTI crude to a six-week high amid Saudi Arabia’s surprise move to deepen output cuts. Money managers raised bullish bets for a third straight week, according to exchange data released. The shift came as Saudi Arabia pledged to make an extra 1 million barrel reduction in daily output starting next month to “stabilize” the market, shorthand for halting a price slump. Saudi Energy Minister Prince Abdulaziz bin Salman’s warning that speculators better “watch out” already was hanging over the market.

Trading recommendation: buy 68.50 and take profit 72.15.