PMI numbers raise hopes
While everyone is busy with geopolitical tensions, we should not forget about great economic data. Yesterday when the US market was closed due to Presidential day, European PMI numbers, especially in the service sectors raised hopes to encourage the idea that the economy is strong enough and can support itself, without central banks' support.
This positive sentiment continued today as well, with improving US data. According to the published data, Manufacturing and service PMI's respectively at 57.5 and 56.7, both could beat the expectations and improve the Composite PMI number also to 56.7 in February, from 51.2 in January. Also, the February CB Consumer Confidence even if it was decreased from 111.1 in January, to 110.5 in February, still was a bit better than 110.0 expectations.
Overall, published data confirm that the economy moves in its path and if we can solve the geopolitical tensions, there will be the opportunity in the market to see higher levels. Anyway, consumer confidence in February was lower than in January and it means that we do still have a fear that these tensions may slow down the economic recovery. This concern by itself can reduce the chance of a 50bp rate hike in March and even put the 25bp rate hike under question. If so, bulls can get encouraged, and returns from this level will bring a great buy opportunity.
From the technical point of view and as we can see in the bellow Daily chart of SP500, Candles are forming under 100 and 50 DMA. This overall downtrend with RSI at 37 tells us that bears have enough power to slowly continue the way, while the asset still getting strongly supported at 4,300 US dollars. The first resistance at the moment sits at 4,460, and as long as it is trading under this level, bears will have more chance than bulls.
