Today it has been rumoured that Syria have agreed to a proposal by Russia to put any chemical weapons under International control, but in fairness the risk of a strike by Western forces has diminished. Over the past couple of sessions, data out of China has been relatively bullish, most notably export data released over the weekend.
The equity markets have responded with a strong move up in the S&P yesterday after a couple of sessions of consolidation, thus far this morning futures are pointing to another move higher. With this I thought it would be worth highlighting a couple of technical levels. The market has highlighted earlier stuttered at the 1650-1655 region, but a break higher has opened up the possibility of further upside, with the next level of resistance being the 1684. It is worth noting that although the return of risk appetite is noticeable, particularly in some of the emerging markets, volumes do however remain low. Another point to consider, is that when the market was trading above 1700 prior to the recent pullback, many of the major blue chip names had already shown signs of topping out, and this is a negative development.
Despite a weaker than expected non farm payroll number at the end of last week, precious metals continue to consolidate off recent highs. As highlighted a couple of weeks ago for Gold, $1350 should act as a reasonable support, which although may hold a first test, I believe could be quite vulnerable especially if thoughts of tapering begin to resurface.
For a trade right now, I like the idea of selling the S&P, I think the 1684 will prove to be tough to overcome, and the volumes of the recent run higher should not warrant any concern for the bears.
Philip Ball | Sales and Trading