The SP500 rebounded yesterday showing a bullish technical strong signal. It looks likely that the US markets will continue further into all-time highs. Reporting continues to beat expectations which is a strong short-term factor. Most sectors closed in the Green see strong gains in all major US indices.
What the US markets do next will depend on the rest of the reporting season, and how Biden’s $2 trillion infrastructure bill plays out. Biden aims to approve a package in the coming months that revamp U.S. roads, bridges, airports, broadband, housing, utilities, and invests in job training along with care for elderly and disabled Americans. Republicans have signaled they could support a scaled-back bill based around transportation, broadband, and water systems.
The typical seasonal pattern for the markets is a rise into May and then ‘Sell in May and Go Away’. This means more times than not May is a bearish month. A correction in May is also common to see, especially if we see a strong up into the pullback.
Locally some of our banks report early May and most Miners and Energy stocks will have quarterly production reporting this month. Expectations are strong for our domestic reporting, with continued recovery expected here as well.
The XJO is expected to open higher this morning following strong overnight leads in the U.S. Yesterday’s reversal was a sign that the market was willing to hold around these levels despite major media spooking a rise in Covid cases. In reality, it seems the market likely just needed a pull back, and also potentially to flush out some of the timid long positions.
We are expected to open near 7025, which will keep us above the 7000 resistance. Provided the U.S market has indeed stabilised, our market should go on to test our post pandemic highs of roughly 7100, with our all-time highs of roughly 7200 in the cross hairs.
US shares pushed strongly higher overnight, with the flagship S&P 500 more than reversing its selling from the prior session. It was a brilliant return to form for US shares, which occurred despite a strong build-up in US oil inventories, which led to another big sell-down in oil.
Company earnings reporting continued to be strong, with just about every major company exceeding their earnings expectations; despite this, Netflix fell substantially as their subscriber numbers fell short of the consensus. Basic Materials stocks fare the best, while Oil & Gas stocks also fared well despite the selling in oil. Just about every major sectoral division closed higher except for Utilities.