The US SP500 briefly broke the key 3,400 level but reversed to close back above the trendline. The Tech sector was down as much as 5.5% before reversing and closing only 1.34% lower. Tech Communication services and Consumer Discretionary were the weaker sectors. Whilst Financials, Industrials and Materials closed in the green. At this stage, this move down in the US is just a classic pullback in a strong uptrend. With the FED still supporting the financial system, likely, we will not see the sell-off continue much further or at all when the US comes back on Tuesday.
On Sunday we saw a road map announced for Vic that was very unfavorable for many businesses, with not many changes until the third step, which will only kick in late October if cases are as low as 5 average per day over two weeks.
In the third step, we see the restricted reopening of many businesses- restaurants open with outdoor seating, Hair, and beauty reopen, Real estate can have outdoor auctions, Offices, and professional services that can reopen but must work from home where reasonably practicable.
Many people are labeling this a road map to now where, as the benchmark for each stage is very high. The last step requires no new cases for two weeks.
With negative leads from the U.S on Friday and their soft futures this morning we are set for another fall on open this morning. Its been rather volatile in our futures but at this stage we look to open near 5875, putting us below the key support at 5900.
If this eventuates, the market will have created a lower peak, and will be about to create a lower trough. This is the early warning signs of a change in trend, but we would need consecutive lower peaks and troughs to confirm it. Until this is presented, we still assume the broader uptrend and medium channel is still in play.
The falls were started by the U.S, which means the recovery will likely be too. Unfortunately, they are closed for Labour Day tonight. We will look to their futures once more for indication of whether this is just a flash in the pan, or the early signs of something more. On a positive note, the keen reversal from their lows on Friday shows the bulls won’t go down without a fight.
US shares fell for the second day in a row on Friday. The selling was significant at points, but a soon after the open recovered much of the losses. US shares will not trade tonight, with US markets closed for the labour day public holiday.
US unemployment data released on Friday was somewhat positive, with the unemployment rate dropping, but nonfarm payrolls came in worse than expected. Technology stocks and other shares that have recovered strongly from the March-April selling were the weakest performers on Friday, while basic materials and financials were the only sectors to close in the green.