Buy S&P500 | 20 января 2017

Forecast for the week from January 16 to January 20:

XAU/USD:

I would recommend selling gold for two reasons. First of all, this week we might expect US currency quotes rising, which would have a negative impact on gold price. The US macroeconomic statistics published on previous Friday indicates release of positive data on producer price index. Inflation in US in 2016, apparently, will reach 2%. That will allow Fed to continue its interest rate increase policy. As neither ECB nor Bank of England or Bank of Japan are going to increase interest rates, dollar will be well-positioned on forex. Second of all, I expect increase in quotes of leading global stock indices against the background of positive corporate reporting for the 4 quarter of 2016. That means more pressure on gold as a safe financial asset. Trading recommendation: Sell 1197/1210 and take profit 1164.

Brent:

The situation for this week in not clear. On the one hand, strong December US inflation data may trigger new rise of US dollar considering expectations of monetary tightening by FOMC. Why do I expect CPI increase on Wednesday, January 18th? It is suggested by consumption expenditure and increase in producer price index up to 1.6% per annum. PPI in US hasn't reached such a high level since 2013. If dollar rises, gold quotes decline. On the other hand, Baker Hughes reported decrease in number of vertical drilling platforms in US by 11, total number now is 63. That suggests substential decrease of oil output, which will be welcomed by market participants. Market situation: flat 54,00 - 57,50.

S&P500:

This week is reach in corporate reporting. There will be reports from such giants of the market as IBM, Citigroup, American Express, Morgan Stanley. To my mind, release of positive data may be expected considering ISM Business Activity Index increase. I would expect increase in quotes and revising of historic high till Wednesday, later - profit-taking on long positions. December inflation report may trigger correction. The growth of consumer prices will cause the US Treasury bonds yield increase. Against this background, one might expect capital outflows out of stock market and capital inflows to debt market. Trading recommendation: Buy 2275/2260 and take profit 2293.