The structure of the stock market during the US argument over the Government Shutdown, Obamcare and the debt Ceiling looked really very good so it is no real surprise that the S&P 500 closed at a new all-time high of 1745 on Friday up 0.68%. It has broken strongly through the previous all time high and market technicians are looking for a move to 1830ish. The Dow was 0.18% higher and the Nasdaq rose 1.32% as Google surge through $1000. This week we can get our teeth back into some fundamental drivers with earnings season and the data catch will be very important. But with the taper receding into 2014 and with bonds rallying back to 2.58% in the 10 year the metrics that support the market grow stronger.
Looking at the technicals on the S&P 500 you can see a very strong trend and as I have written recently there is possibly another 100 points in this through time as a Fibonacci projection and within the overall very strong bull trend.
Which helped European stocks rally hard and saw the SPI 200 contract on the Sydney Futures Exchange rose 22 points to close on Saturday morning at 5343 bid. It should be another good day on the ASX today. BHP and Rio did well in London which is a good lead. So the technicals for the SPI 200 looks strong as well as you can see below.
On FX markets the Aussie continues to head into the 97-98 cent zone we’ve been expecting for a while now and closed the week at 0.9668. Reuters is saying it has held it’s gains in early Sydney trade this morning. The comments by RBA Governor Stevens that he was “helpless” during the US debate while true undermine cred to a certain extent and his comments that while he’d like the Aussie lower but effectively can’t do much about it while also true will just embolden the bulls. 97.70 is the 200 day moving average and a very important level. Chinese GDP printing 7.8% on Friday is another boon for the Aussie.
The daily charts for the Aussie are starting to get a little extended so I don’t expect the 97-98 cent zone to be breached just yet and perhaps we may only see a foray and then fall back from just above 97 cents but nothing in the dailies yet says be bearish simply cautious. On the weeklies however you can see in the chart below the outlook remains fairly positive within the overall gradual down trend from the highs in 2011.
One thing I have done however as an example of ow I use the MACD indicator is circle the bounce of the low in 2009 and then the recent similar performance. Different instances of course because the 0.5960 low was a acutely weak period for the Aussie Dollar. Essentially when we get a low the MACD histogram – and the price – tend to revert to the average line and often cross over as the price heads higher.
So at the moment I am still expecting the Aussie to be fairly strong.
Elsewhere on forex markets the Euro (1.3685) looks headed for 1.39/40, while the Pound (1.6173) might get a lift from a Central Bank Board member talking about raising rates over the weekend. USDJPY (97.71) is trapped within an ever decreasing zone and is poised for a big break in the next week or two.
On commodity markets Nymex crude closed at $100.86 and is very close to a big break lower which would be good for global growth – and my petrol bill driving to Sydney every week – Gold is at $1312 bouncing around still but possibly forming a solid based for a rally in coming months. Copper is at $3.28 and on the Ags the volatility continued with wheat up 2.88% (not a typo) while corn and soy beans were quiet.
On the data front it is a slow front to what is going to be a going to be a busy week as we start to catch up with delayed US data. Today we have revised Japanese export and import data, PPI in Germany and Industrial production in Italy.
Employment data in the US is out on the 22nd.
It feels bullish and when it is a bullish market we know Jesse Livermore tells us to be bullish – so don’t fight it. But always keep stops close for your risk appetite and tolerance.
Have a great day and good hunting.