The XJO broke a short-term uptrend line yesterday and fell back to support around 6,630-6,650, which is also where the 100-day moving average sits; there is also a potential longer-term uptrend line coming in at this level, which will be confirmed if we rise today. Should the XJO break below the supports at this level, the next target to the downside would be some support at 6,500. Should the uptrend line hold, we would expect to see the XJO rise towards 6,750, and if that breaks, to continue higher towards the all-time high level at 6,875.
Costa Group Holdings Ltd (CGC) was down -4.5%, after City Bank downgraded the price target on the stock to A$2.8 from A$2.9 with a recommendation of Neutral citing, “We expect another challenging year in mushrooms, blueberries and citrus to hold the stock back.” Monadelphous Group Ltd (MND) was up +3.0%, after the Company was awarded contract to provide fixed plant maintenance services to Rio Tinto, worth more than A$100m over a five year period.
US markets fell a little again overnight as optimism around trade was hampered by US legislation that would back Hong Kong protesters, which Trump is yet to sign into law. The Dow closed 54.8 points lower (-0.20%) and the S&P 500 was down 4.92 points (-0.16%). Asian and European markets were lower again as well.
Investors are worried that if Trump signs the Hong Kong rights bill it will hamstring efforts to reach a trade deal and this held markets back overnight. There was also a large unexpected rise in US Jobless claims, as well as weaker than expected home sales. Technically, the S&P 500 again tested and dipped below potential support at 3,100 index points before bouncing to close above that level. To the upside, there are no further levels of resistance for the S&P500, so it is hard to say where it might stall. If the S&P 500 breaks through 3,100, there are additional potential levels of support at 3,050, and 3,020. If those levels break, 3000 is the next key level, if that goes we could start to see the index downtrend.
XJO Implied Volatility was up 3.48% and closed at 11.627%. The US volatility was up 2.06% and closed at 13.13%.
Crude rose strongly again after falling strongly earlier in the week – it is currently moving in a very volatile fashion.
Gold dipped a little overnight as bond yields rose.
Iron ore ticked higher overnight.
The Aussie dollar dropped against the US again.
Today’s trading: In Japan, data on CPI and PMI to be published.
Our market looks set to rise fairly strongly today, after potentially overreacting to the downside over the past two days, with our falls significantly outpacing those seen around the world. Tension remains between the US and Chinese, with the Chinese state run news agencies threatening that China will retaliate should Trump sign the Hong Kong rights bill, which was passed by the Senate and Congress. It seems that the window may be closing for a trade deal this year, with further tariffs set to be introduced by Trump on a 15th December deadline.
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