Markets continue to trend upward as expected. But momentum is slow as we await confirmation of further fiscal stimulus. Gold and silver tend to move higher on stimulus news, which is already starting to play out as we speak.
With US daily cases and deaths still high and with markets overheated, we will need Stimulus and Vaccine news as a catalyst to keep markets rising. This week we are still seeing that rhetoric in the market.
Iron Ore port prices were up, but Dalian futures are showing signs of topping out at around 900 Yuan for the moment. The miners in their ADR’s offshore continue to take a breather last night. If Iron Ore continues to hold these levels our big 3- BHP, RIO and FMG are very cheap at current levels. Iron Ore can take seasonal moves so we could see the price of Iron Ore come crashing back down early next year.
The XJO is expected to open right near our post fall high of roughly 6720. This follows the U.S pushing once more into all-time highs overnight. Their futures sit flat this morning, and depending on how they move during our session today, will likely dictate if we stall at 6720, or push through to create a new post fall high.
If we pullback from here, for any significant falls to occur we would need the uptrend line to break. From there the next target is 6500, and if broken will look like a confirmation of a double top reversal pattern.
If we push through from here, the next key target is 6850 – a previous all time high we tested a few times last year before eventually pushing through.
Technically we are trading in ascending triangle, with very little room to the point left. Typically, we would expect a strong break in the direction of the underlying trend, but as we sit at the top of the range it becomes harder to predict.
US shares rose overnight, with the S&P 500 index closing at a fresh all-time high above the key 3,700 index point level. Talk again centred around stimulus, with Republican Senate Leader Mitch McConnell overnight indicating that he would be willing to make some concessions to get a deal passed.
Tonight we will see the US FDA rule on the use of the Pfizer + BioNTech vaccine, which could cause some movements in global shares; indeed, we saw UK authorities give the vaccine emergence use authorisation overnight as well. US labour data was mixed overnight, while crude oil inventories came in weaker than expected. Oil and Gas and Telecoms stocks were the strongest performers overnight, while Utilities and Financials were the only sectors to close (slightly) lower.