Not much has changed for the XJO from a technical perspective as we appear set to slowly rise until further developments are seen overseas. Technically, the XJO is in a downtrend and breaking several key support levels. However, the downtrend line is a way away, and the index will have to break several key resistance levels to reach it. To the upside, the first resistance is at 6,630, if that breaks, there is a further level at 6,680, followed by the downtrend line itself. The market held 6,500 as support last week; If 6,500 breaks convincingly, 6,400 would the next downside target. At this point, our market is likely to follow the fluctuations of US markets. However, we may also see some movement related to bank reporting at the end of the month.
Washington H Soul Pattinson & Co. Ltd (SOL) was up +7.2%, after a broker initiated coverage with a buy recommendation on the stock at a price target of $26. Clinuvel Pharmaceuticals Ltd (CUV) was up +4.2% after announcing the renewal of the CEO’s employment for 3 more years.
US markets fell overnight on light volume. The Dow closed 95.7 points lower (-0.36%) and the S&P 500 was down 13.23 points (-0.45%). European and Asian markets were mostly higher.
After the close of US markets, US authorities blacklisted another eight Chinese technology companies because of alleged human rights violations, which could complicate the upcoming trade negotiations. Technically, the S&P500 fell off to close below the support/resistance around 2,950-2,940 continuing its short-term downtrend. If the index continues to fall from here, it could be expected to head back to the support at the recent low of 2,850. If the index rises, there is the short-term downtrend line around 2,965 which will need to be breached before bullishness can be confirmed. The US market is likely to move with speculation around the upcoming trade negotiations.
XJO Implied Volatility fell 2.82% and closed at 15.807%. The US volatility was up 10.02% and closed at 17.86%.
Crude rose a little overnight.
Gold fell back to the $1,500 USD support level.
Iron ore is flat with Chinese markets closed for the National Day holiday.
The Aussie dollar fell back a little bit, back below the 67.5 US cent level.
There are plenty of concerns in the minds of US investors at the moment, with optimism around the upcoming trade negotiations starting to weaken. US and Chinese officials are meeting this week with the hope of coming to some sort of deal to resolve the ongoing trade war. The latest news has not been positive, with China stating that they are not willing to agree to a full-scale deal at the current negotiations, and most recently, the US blacklisting a further round of Chinese companies for alleged human rights violations. On top of these concerns, President Trump betrayed a long-time US ally in Syria overnight (the Syrian Kurds) at the behest of Turkey, a move that has outraged many US legislators, including many Republicans. Domestically we appear happy to rise in the absence of news, as we recover from a large sell-off last week. However, should the US markets continue to fall from here, I imagine we will soon follow.
Today’s trading In the U.S., the U.S. Treasury Federal Monthly Budget Statement is anticipated. In Japan, we get data on the Current Account balance in its Balance of Payments.