The XJO fell back towards a short-term uptrend line yesterday after breaking through a resistance level the day before. Should the uptrend line hold, we would expect to see the XJO continue higher towards the all-time high level at 6,875, which is the next key resistance level. If we break below the short-term uptrend line, the next level of support is around the 100-day moving average at 6,650, after that the next target to the downside would be around the longer-term uptrend line at 6,550. Our market has been kept strong by strength in US markets and the hope of further interest rate cuts domestically.
US markets fell with most other markets overnight, after a report that a ‘phase one’ trade deal may not be reached this year. The Dow closed 112.93 points lower (-0.40%) and the S&P 500 was down 11.72 points (-0.38%). Asian and European markets were lower as well.
The trade war has been cycling between positive news and negative news for most of this year, with the latest news being a report from Reuters that a pact may be delayed but that progress is being made, which had a negative effect on sentiment. Technically, the S&P 500 tested potential support at 3,100 index points and managed to close a fair way above that level, despite trading below it during the session. 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 6.51% and closed at 11.222. The US volatility was up 2.50% and closed at 12.78%.
Crude bounced back strongly after falling for a few days – it is currently moving in a very volatile fashion.
Gold was fairly flat overnight.
Iron ore was mixed.
The Aussie dollar dropped against the US.
On top of a negative report around the US-China trade situation, there was further damaging public testimony against Trump in the impeachment proceedings. Despite this, US markets held up fairly well overnight, falling far less substantially than Australian markets yesterday. Our falls have been led recently by the banks, who have had some fairly poor earnings results this year in addition to conducting capital raisings.