Chart of the Day US500 (S&P500)
US500 (S&P500) The Battle Goes On
Let’s take what we can get these days. No matter how small, the S&P500’s 0.5% gain at closing, after another day of choppy trading, is nothing to sniff at, given the recent performance or lack thereof. Nasdaq was up more, closing 2.3%, as technology sectors saw bids. US Treasuries stayed relatively unchanged, with 10-year yield down by 4bps to 1.15%. Overnight we have seen some follow through with S&P Index futures rising nearly 5% at there overnight peak
WTI rebounded 22.8%. The degree of uptick sounds impressive, but level-wise, it’s really just back to $25bbl. European bonds rallied due to the ECB’s 750bn purchase program that was announced earlier. The eurozone central bank is by no means the only busy one. The Fed extended its swap line facilities to 8 more central banks (on top of the 5 announced previously) across the world, including BOK and MAS in Asia. This is a bid to counter the tight USD liquidity issue globally. Elsewhere, the RBA joined the QE bandwagon, by announcing plans to target 3-year bond yields at 0.25% through purchase programs after cutting its cash rate to as much. The BOE’s in it too. New Governor Bailey presided over a decision to cut the rate to record-low 0.1% (from 0.25%) and to boost its QE to GBP 645bn – including for purchases of corporate bonds. Elsewhere, as a sign of how worried central banks in Asia are as well, BI and BSP cut interest rates too, by 25 and 50bps respectively.
Today we head into quadruple witching with over $1.2 trillion of options set to expire expect a wild ride. Note Goldman Sachs sales and trading desk highlight an interesting point, they see ‘$150bn of buying of equities into quarter end. There is a lot of debate on these models & their assumptions but as a consistent signal, it is the largest buy imbalance ever (nearly 2x the #2 instance), with #2 Dec’18, and #3 Dec’08’
From a technical & trading perspective the battle royale over the ten year monthly bullish trendline being fought over by both bulls and bears. A weekly closing of 2375 would be a bearish development, we would then focus on the monthly close as a confirmation next week, a monthly failure would likely see prices make a quick move to test the psychological 2000 level. However, if we can get a strong weekly rejection of the trendline then we could target a retest of the yearly pivot point in a short covering rally. This 2900/3000 will be another major battleground should we test these levels next week. For now focus is on the weekly close to act as the catalyst for further short covering or trend continuation and the potential for another gap lower into the Asian open Sunday
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Roz has been engaged in the financial markets since 2017, specializing in Foreign Exchange, Before joining to FOREX IN WORLD she start to learn forex trading related information.
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