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The S&P 500 and Nasdaq 100 Indices closed at new all-time highs yesterday. The S&P 500 gained 0.58% to finish at 7,818.93, while the Nasdaq 100 Index advanced to approximately 31,224. Technology shares remain prominent in the rally, but the S&P 500’s breakout is an encouraging sign that strength is extending beyond the largest tech stocks. These are closing breakouts, rather than merely intraday moves above resistance. However, it is worth noting that the Dow Jones Industrial Average remains relatively weak within a deep bearish retracement, so markets are very mixed by sector.
US Treasury yields have pulled back from their long-term highs. The 10-year yield fell towards 5.27% yesterday from approximately 5.31%, while the 2-year yield eased towards 4.80%. A solid three-year Treasury auction helped demand for bonds. Today’s $39 billion auction of 10-year notes will provide another test of investors’ willingness to buy at these elevated yields. Trend traders will still be long of these yield futures, which have performed very well as a trend trade, with affordable micro future available on the CME.
WTI Crude Oil’s key support level at $87.68 has held, after being tested from above. Crude oil rebounded weakly from its recent low rather than completing a sustained breakdown below this important support area. Spot WTI is trading around $89.50, with benchmark futures quoted above $90 during the Asian session. The bounce preserves the immediate support structure, but I would not yet call it a convincing bullish reversal; the nearby $92.00 resistance level is the next technical test facing bulls. Some analysts argue that a storm approaching US Gulf oil-producing regions and renewed Saudi-Houthi hostilities are supporting prices.
In the Forex market, the Euro has recovered, weakening the US Dollar. EUR/USD rose sharply yesterday as French bond-market pressure eased following proposed spending cuts from a leading presidential contender. The pair is trading near 1.1225 this morning, above Monday’s low around 1.1160. The longer-term bearish trend remains intact, but this is a meaningful retracement rather than a continuation of the breakdown below 1.1200.
The Dollar remains firm overall, while the Yen is weakening again. The Dollar Index has risen over recent hours to around 101.77 after slipping 0.27% yesterday. USD/JPY has risen towards 158.50 during today’s Asian session, keeping Yen weakness—and the possibility of a response from Japanese officials—in focus.
Today’s FOMC minutes are the main scheduled event. The minutes from September’s rate hiking meeting are due at 18:00 GMT. Markets currently assign only about a 22% probability to an October hike, although expectations of tightening later in the year remain substantial. Traders should remember that the minutes predate last week’s softer inflation and employment data, so hawkish language will not necessarily represent the Fed’s current assessment.reuters+1
Bitcoin and Ethereum retreated yesterday, after spending many days looking likely to make a potentially strong and bullish technical breakout. Bitcoin still needs to establish itself above $87,293 and Ethereum above $2,800 before either can be described as making a fresh confirmed breakout. However, the bullish consolidations have not been invalidated and will remain in play for Bitcoin above $82,000 and for Ethereum above $2,544.