Technically the XJO is in a shallow downtrend and breaking several key support levels. The downtrend line is still some distance away however. The market is holding 6,500 as support; If 6,500 breaks convincingly, 6,400 would be the next downside target, and if that breaks the market could head back to the 200-day moving average at 6,350. If our market can break to the upside, it will have to get through the 50 and 100 day moving averages around 6,600 before further bullishness can be confirmed. Just above those moving averages, there is further resistance at the key 6,630 level. Our market is likely to follow major moves in US markets, as well as potentially moving in relation to bank reporting a dividends towards the end of October.
Clinuvel Pharmaceuticals Ltd (CUV) was up +60.2%, following the news that the U.S. Food and Drug Administration has approved their Scenesse drug to treat patients with erythropoietic protoporphyria. Flight Centre Travel Group Ltd (FLT)is down -11.7%, after the Company provided a trading update, expecting 1H20 underlying profit to be below that of the same period a year earlier.
US markets rebounded somewhat overnight with an increase in optimism around trade. The Dow closed 181.97 points higher (0.70%) and the S&P 500 was up 26.34 points (0.91%). European markets were mostly higher, whilst Asian markets were mostly lower yesterday.
US markets rallied somewhat, but pulled back off their highs after Chinese officials indicated they would be open to a partial deal provided no more tariffs are imposed. However, the deal they indicated they’d be willing to agree to is basically them agreeing to buy more US products, but doesn’t actually address the sticking points of the trade negotiations. Acquiescing to such a deal by the Americans would not be a great look, as it would appear that their concerns could simply be bought off. Regardless, markets will rise on any news that appears to push things closer to a deal. Technically, the S&P500 is in a short-term downtrend. If the index continues to fall from here, it could be expected to head back to the support at the recent low of 2,860 – 2,850. If 2,850 breaks, the next level is around 2,820 – and if that goes, we could be in for some serious falls. If the index rises from here, there is the short-term downtrend line around 2,965 which will need to be breached before bullishness can be confirmed.
XJO Implied Volatility was up 3.44% and closed at 15.427%. The US volatility was up 13.79% and closed at 18.64%.
Crude rose a little overnight, but pared back gains.
Gold held above the key $1,500 USD support/resistance level.
Iron ore fell yesterday with yesterday’s negative sentiment around trade.
The Aussie dollar was fairly flat against the US.
Our market will likely follow US markets higher overnight, but it is worth noting that they pulled back significantly towards the close. A deal between the US and China may indeed be close, but it is certainly not the comprehensive trade deal that the US has been pushing for, and if anything – it would essentially be a ceasefire agreement. Regardless, markets would likely rise if such a deal were announced. Otherwise, with markets in a downtrend do not be surprised to see things continue to come off if no deal is reached. Our market will soon look towards bank reporting and dividends as it moves towards those key reports at the end of the month.
Today’s trading. In the U.S., monthly CPI data is to be released. In the U.K., data on Industrial Production and Manufacturing Production is anticipated. In Japan, we get data on Core Machine Orders.