Wall St set for bright start on stimulus and trade hopes

Summary:

  • US indices up 1+% before opening bell

  • White House considering more tax cuts

  • S&P500 back in 8/21 EMA zone 

 

US stocks are called to open firmly higher this afternoon, with the major benchmarks expected to start around 1% higher after a morning of steady gains for European bourses. Equities ended last week with a flourish on reports of a significant fiscal stimulus in Germany and comments yesterday that the US was also set to ease policy on this front have provided a further boost. 

 

Furthermore, some positive trade remarks on social media from Trump have also contributed to this improvement in risk sentiment with bond yields also gaining and precious metals selling off. It is perhaps worth noting that the FX markets aren’t confirming this risk-on move and the USDJPY in particular could be worthwhile keeping an eye on this afternoon.

There’s a sea of green across equity markets in America ahead of the US cash open with hopes of fresh fiscal stimulus boosting sentiment. Source: xStation 

 

The past couple of week have seen some pretty wild swings in US stocks, but a lot of it has been back and forth with no real clear direction on the whole. This is good for those looking to trade intraday but frustrating for trend followers as the market has been mean reverting. Following the large declines at the end of last month and the start of this, the trading range has narrowed as price has undergone a consolidation. Moves back into the zone between the 8 and 21 daily EMA have provided nice opportunities on the short side in recent trade and once more the market has returned to this region. 

 

With the 8 below the 21 the EMAs still indicate a downtrend although their gradient has levelled off and could be set to turn higher. Daily highs around 2928 could be seen as possible resistance but it’s not until price makes a clear break above 2944 that significant further gains would be possible and the trend turn higher. As for possible support the gap higher from Friday’s close of 2890 remains unfilled and this is the first level to look to below.

 

The US500 has pulled back into the 8/21 EMAs which continue to indicate a downtrend. A clean break above 2944 would invalidate this. Gap up from 2890 remains unfilled. Source: xStation          

 

 

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