Summary:
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US indices trading higher ahead of Wall St. open
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Markets looking to recoup losses before Thanksgiving bank holiday
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Positive noises on trade help the bounce; Durable goods data misses
US stock markets are called to open higher ahead of the final session before tomorrow’s Thanksgiving holiday, with the US100 gaining the most ground. Yesterday saw the selling in tech stocks intensify with Apple falling into bear market territory as the wider Nasdaq index (US100 on xStation) dropped to its lowest level since April. However, the low of the day at 6450 came around the European close and on the plus side at least this held into the US closing bell. There was a strong attempted rally of this low but it ran into some resistance around 6625 and with the market rising back near this level in recent trade it could well be worth keeping a close eye on going forward.
The US100 has gained over 1% so far today with the market back near Tuesday’s high of 6625. If price gets above there then a further recovery towards 6755 is possible while 6450 now can be seen as potentially important support. A break below 6450 could see another swoon lower with no clear swing support levels for several hundred points below. Source: xStation
On the fundamental front the move higher has likely been aided by what could be seen as a positive developments on the trade front after reports that Peter Navarro is to be excluded from the Trump-XI summit. The reason this is seen as good news for a de-escalaltion is that Navarro is seen as one of the most hawkish members of the White House on the trade front and, his not being present may be seen to increase the chances of a breakthrough.
In terms of economic releases there’s been several second tier numbers out in the past hour which have on the whole been negative. Initial jobless claims rose to 224k vs 215k expected, with the prior reading also revised higher to now stand at 221k from 216k previously. Even after these gains the labour market still appears to remain tight and therefore the other release at 1:30 will have likely attracted more attention with the latest consumer spending numbers disappointing. For the month of October durable goods orders decreased by 4.4% M/M, double the -2.2% expected. The core reading also came in on the soft side at 0.1% vs 0.4% expected.
The longer term picture for durable goods orders remains on of softening with this metric pull back in recent months. The core reading (ex-transport) is weaker than the headline. Source: XTB Macrobond
The US500 (S&P500) has been down 5 of the past 7 sessions as price has come back under pressure of late. Lows from yesterday at 2632 could be seen as support but a break below there would open up a retest of the October low at 2603 - It is worth pointing out that since 1950 the S&P500 has never dropped below the October low in a midterm year! Thanksgiving week has also provided positive seasonality for this market with the past 6 years seeing gains every time. Price would need to get back up above 2737 for this run to continue but before then may find resistance around the 2695 region.
The US500 is trading higher ahead of the cash session with 2632 and 2603 seen as potentially key supports. Price is back down near the lower limit of the Bollinger band after two days of heavy declines so far this week. Source: xStation
