The US Markets were closed overnight for Labour day, strong moves higher in Europe has helped the local futures market close higher overnight. The shock pullback in the US last week has a lot of people speculating that the US could continue lower when they reopen tonight, but technicals are not backing this up.
The SP500 held trend on Friday when it reversed so at this stage the probability is that it will hold trend through this week. Although this doesn’t mean the US will be up tonight, we could see things whip around here.
Locally the mood is fairly mixed as we saw the now labeled “Road Map to nowhere” released. This is indicating that Melbourne’s strict lockdowns are likely to continue for a while. The other states are managing a lot better so Melbourne’s situation is just softening sentiment rather than causing a major pullback. Don’t forget many companies are not being affected by lockdowns, in particular many of our miners with operations that are not in Victoria.
The other positive to take from this is that because the restrictions are so strict we are likely to get back some form of normality in Melbourne by Christmas which gives us a timeline to work in. Unfortunately, the damage is going to be done to smaller businesses and we can only hope that the state of the federal government will release some form of further Aid to help them get through.
With the U.S closed overnight our market instead looks to their strong futures for leads on our open this morning. We are expected to open around 5975 and if their futures remain flat to positive during our session today, we are likely to hold these gains.
Yesterday our keen reversal from our lows showed a bounce off key support keeping us trading in the channel. It also means we likely failed to create a lower trough, potentially remedying the symptoms of an early change in trend. The 100 MA also likely helped keep us buoyed by acting as support yesterday. The next target for our market is 6000.
The media’s attention is increasingly shifting to the upcoming election with Trump and Biden each having the other in their cross hairs. Expect the rhetoric on key policies to become hyped and extraordinary as they try to one up their opponent and appeal to the voters.
Melbourne the other day was posted to remain in lockdown for far longer than expected with the biggest hit to small business in perhaps the history of Australia. The lockdowns now have the goal of eradication, something experts are apparently split over.
US shares were closed for the Labor Day public holiday overnight. Futures for the S&P did close their session higher, indicating that US markets will open up higher tonight. This was despite threats from Trump overnight that he would sharply scale-back economic relations with China.
Technically, the US futures are suggesting that the S&P 500 will hold the previous resistance at 3,400 as support, which also holds the index above the uptrend line that has formed since the lows of March. We will have to wait and see if this is the case tonight. A hold of 3,400 suggests that the index will rise further, with resistance at 3,600 a potential target. A break below 3,400 could see the index head back towards the next support at 3,320.