Markets are a little bit all over the place at the moment, struggling to maintain any real theme in the short term as things continue to whip sideways. But Value and Recovery stocks remain strong overall. The theme of Value should continue to be strong in this environment. If Tech finds support here and rises with the Value market, things could become very bullish again.
It is all about timing. We need to see the Nasdaq break the counter-trend, the SP500 break into all-time highs, and the XJO also breakthrough 6,830. If we see this there will likely be much more movement higher with the 1.9 trillion of stimulus in the US and bond yields falling off.
The market is starting to get what it wants, Bond yields are cooling off, Stimulus is coming and CPI overnight in the US missed expectations. The mini sell off in commodities didn’t last long with most Metals and Crude oil up overnight. Iron Ore also held after falling 10%.
The XJO is set to open higher this morning following positive moves from the U.S last night. We are set to open near 6750, which doesn’t clear the highs of yesterday but is a good start. During our session, our market will likely face the countertrend line that has been suppressing our rallies since the highs mid-February. There is a good chance we get through it, though less so today, with a slew of market positive news coming from the U.S overnight.
It is likely the XJO continues to trade like it has since the stellar run in November last year – sideward to higher. On the other hand, volatility remains in the market, and if it can be put to good use, we could see a strong move at least back to our post-pandemic highs of roughly 6950.
US shares pushed higher overnight, with bond yields again drifting lower, this time after a weaker than expected US inflation read, assuaging fears of run-away inflation. Markets were also helped higher by US president Biden announcing that he would sign the latest stimulus package into law on Friday.
Offsetting the optimism of the inflation read was a US oil inventory read that showed a large build-up in US oil inventories; despite this, oil prices held and Oil & Gas stocks were the strongest performers on the night. Basic Materials, Financials, and Telecoms also rose strongly, while Tech was the only sector to close lower on average.