The week on a high

Traders will be considering if the all-important top of the market is in with a price retracement in overnight markets. Is the Dow really up two points coming into the close after an intraday sell of 57 points?

Dow Jones
Source: Bloomberg

After solid gains of 570 points on the Dow 30 in five trading days, the current move could be looking a little stretched.

The S&P 500 is already hitting most analysts’ full year predictions, with the index finishing flat at 2346 last night. There would be a build-up of those willing to stand in front of this freight train bull market, with short positions trying to pick the top, without any evidence of real market weakness. These are brave souls in this new world order of reinflation.

With legendary investors Warren Buffett and Charlie Monger increasing their positions in American Airlines and Apple, a position that has reportedly already made a billion dollar profit, this bullish stage of the markets may just be getting underway.

Reports to watch for today include Medibank Private; commentary will surround the number of services provided. Santos are also reporting today and investors will be looking for commentary around the debt load and the effects of the rising oil price on cash flows. So far, about 50% of the ASX 200 companies have reported results, with 70% lifting dividends and 15% having lowered the dividend.

Our market has now been higher seven out of eight trading days and testing resistance at 5830. This may be the point of inflection for traders as the resistance of 6000 points is tantalisingly close. Continued upbeat reporting may just allow the market to retest levels in the near future.

WTI oil is testing the upper resistance levels of $54.00 in the consolidation phase, oil is up 35 cents in quiet trading and the Baker Hughes rig count currently at 741 will be updated tomorrow morning at 5am AEDT.

Overnight SPI futures are lower by one point, and a flat open is be expected. 

The AUD/USD cross again tested highs overnight at 0.7732 - just shy of the multi-month resistance of 0.7760.

With iron ore higher by 1.2% and the 62% iron ore futures showing $89.50/ton, all is well in the broader commodity complex.The BHP ADR shows $26.65 down from yesterday’s close of $26.94. A positive day is expected on the back of a broadly upbeat reporting week, with any price consolidations being looked at as a place to enter in the aspiring bullish run to 6000 points.

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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