Stock Futures Trade Flat While Investors Are Focused On US Retail Sales Data. Gold And Bitcoin Prices May Face More Sell Off

European and US futures are trading very close to the flat line, as investors continue to argue that the current rally has taken the price action too high and too fast. If you look at the major stock indices, such as the S&P500 index or the Nasdaq 100, you will see that these major stock indices have clocked seven weeks in positive territory out of eight weeks—which is something more than remarkable, but at the same time, it is more than enough to raise alarm bells that the current rally could begin to lose its mojo.

Having said this, there are many arguments that investors can make in favor of this rally, as well as plenty of room for the current rally to continue to push the stock indices further higher.

Their arguments are based on the resilience of the economic data, which doesn’t really show that any of the major economies are going to have a hard landing. Secondly, there is enough optimism among investors that the Fed will cut rates sooner than later, and not many are still buying the news that the Fed will cut rates only once this year. Lastly, there is hope for the US elections and the subsequent surge in the equity markets.

US Retail Sales Data 

Today, the focus will be on consumer health, and nothing is more important than US retail sales, which explain the actual health of the US economy. The m/m retail sales number is expected to improve from its previous reading of 0.0%. The forecast for today is 0.3%. If the actual number matches expectations, it would be positive news for the market, and the stock indices are more than likely to improve further. There is already heavy upward momentum in the tech sector, which is primarily driven by AI stocks and CAPEX expectations. And an improvement in retail sales data will only bring more positive news.

However, traders must remember that we are in a unique market environment where positive news can have negative consequences. If the data is positive, market participants may expect a gradual response from the Fed regarding a potential rate cut. Given the market's preference for dovish monetary policy, this could lead to a potential retracement in the major stock indices.

Bitcoin and Altcoins 

In the crypto world, things aren’t looking that great. The current momentum in the cryptocurrency world has lost its narrative, leaving traders deeply confused about the future direction. Yesterday, we witnessed a significant sell-off in prices, during which the price of bitcoin experienced pressure from sellers. And today is not that different—it seems like bears want to push a new support zone, which could be near the 60K price level. If the price drops near that level, the narrative doesn't improve, and bargain hunters don't intervene, we could potentially witness a significant downturn in the cryptocurrency market.

Overall, one can clearly see that we are in the third cycle of crypto price action: the first cycle is where the bitcoin price action begins to move upward, and we saw this when the bitcoin prices moved sharply higher. The second cycle is where altcoin prices rise while bitcoin prices remain relatively flat. The third cycle is when bitcoin prices begin to move lower and altcoins tank—this is where we are now.

In terms of fundamentals, traders and investors are more eagerly waiting for the US election, as that will mainly impact the mining industry. The mining players hope that Trump will come into power—many CEOs of major mining companies have already met Mr. Trump.

The below chart shows important price levels for the Bitcoin price.

Bitcoin chart by Zaye Capital Markets

Gold Price Action 

Just like Bitcoin, gold prices are also on the move, but to the downside. The main reason for this trend is primarily due to differences in risk appetite. Traders and investors primarily favor riskier assets, and they know that they can get more bang for their buck by taking risks. This has taken the shine away from gold prices, which is why the prices are moving to the downside. In terms of technicals, it is likely that the price action may actually test the support of 2,300 in the coming days, as it appears that the bulls are failing to defend. A break of the major support without any new buyers at that level may push the price further lower towards the next important price level of 2150. 

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.