Wall Street indices took the relatively rare step of ignoring its tendency to rally ahead of the Thanksgiving holiday, and price action suggests there could be deeper pullback. Which may not bode so well for ASX 200 bulls who may be sleeping behind their wheel around a record high.
By :Matt Simpson, Market Analyst
Wall Street indices took the unusual step of falling the day ahead of Thanksgiving, thanks to a combination of weak earnings and strong inflation data. Thanksgiving ‘eve’ usually sees the S&P 500 post positive average and median returns in the lead up to the long weekend each year, while also posting the stronger returns of the three days either side of Thanksgiving itself. But not this year.
Nasdaq 100 futures led the declines during its worst session in eight and S&P 500 futures formed a two-day reversal (dark cloud cover) beneath its all-time high (ATH). The Dow Jones also posted a small bearish engulfing day at its record high. Which pleased me greatly as just yesterday I was questioning if bulls really wanted to be long the S&P 500 at its record highs, given price action clues on the Dow and S&P 500.
Super core PCE had a trick up its sleeve in October, rising at its fastest pace in eight months by 0.4% m/m. The second consecutive increase on the month also places it above its long-term average of 0.33%. Personal consumption increased at its fastest month in nine by 0.6%, also marking a faster pace for a second month. And both serve as a reminder that we could be facing a second round of inflation, fresh on the heels of yet another batch of higher consumer sentiment. Both the US Conference Board and University of Michigan showed consumer sentiment rising either side of the US election, and prospects for further inflation remain elevated with US economic data heading into Trump’s second term.
Events in focus (AEDT):
- 08:45 – NZ business confidence
- 11:30 – AU capital expenditure
- 19:55 – AU RBA governor Bullock speaks
- 20:00 – DE state CPI, EU money supply, loans
- 21:00 – EU European Sentiment Indicator
- 00:00 – EU CPI
- 00:30 – CA average weekly earnings
Click the website link below to get our exclusive Guide to index trading in Q4 2024.
https://www.forex.com/en-us/market-outlooks-2024/Q4-indices-outlook/
ASX 200 futures (SPI 200) technical analysis:
The local share market has clearly struggled to challenge, let along conquer, the 8500 level. A bearish divergence has formed on the daily RSI, and given the weak lead from Wall Street I suspect the minor overnight rally could be a trap for bulls to enter so close to its record high.
A bearish divergence has also formed on the 1-hour chart. Prices are rising within a bullish channel, which to my eyes appears corrective in nature. This leaves the potential for a ‘last hurrah’ higher within the channel before an anticipated break beneath it, and move down to the weekly pivot point (8389). Note a weekly VPOC at 8348 and weekly S1 just beneath 8300 which could also provide bearish target should sentiment sour.
View the full economic calendar
– Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.