Technically the XJO is in a shallow downtrend and breaking several key support levels. The downtrend line is still some away however – it comes in around 6,700. 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. 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.
US markets rose after Trump stated that the trade negotiations with the Chinese went ‘Very Well’. The Dow closed 150.66 points higher (0.57%) and the S&P 500 was up 18.73 points (0.64%). European markets and Asian markets were mostly higher as well.
US markets rose on optimism around a partial deal for a temporary tariff truce. President Trump tweeted that he would meet with Chinese Vice Premier Liu He on Friday, adding that ‘They want to make a deal, but do I?’. Technically, the S&P500 is in a short-term downtrend, but the index did rise to the trend line overnight. If the index rises from here, there is some resistance at 2,960 – if that breaks, the index could rise back to the all time highs around 3,020-3,040. 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.
XJO Implied Volatility fell 1.11% and closed at 15.257%. The US volatility was up 8.69% and closed at 17.6%.
Crude continued to rise overnight.
Gold fell back to the key $1,500 USD support/resistance level.
Iron ore rose with optimism around trade.
The Aussie dollar rose against the US.
The market will likely rise strongly today after a big push higher from US markets. The trade situation is not resolved however, and even if a deal is made overnight, it will likely be only a temporary ceasefire type of arrangement. The Chinese have indicated that they are willing to deal, but I don’t see what they have proposed as particularly good for the US – However, this doesn’t mean Trump won’t accept it, and this doesn’t mean markets won’t rise if it is signed. Once again, markets will fluctuate with Trade, but we may also see some movement related to the upcoming bank reporting and dividends at the end of the month.