Stocks Continue To Push Higher On Trade Optimism

Hi guys, good morning. Uh, it's Tuesday the 5th of November. Remember, remember the 5th of November. Hope everyone is, is doing well. We'll have a quick look over the, the charts, how we've come into position to where we're trading today, and we'll have a quick look over the, the headlines as well that are shaping up the rest of the session before having a look at the calendar as there are some points to be aware of this morning and into the afternoon as well. Just having a quick look over at markets, you can see stocks higher again. I've been off the desk for a couple of days. Thankfully I didn't go to Japan. Congratulations to South Africa on what was a wonderful performance. Um, obviously Saturday morning watching that was, uh, was a hard one to take, but fair play, great win. So I came off the desk around, uh, 4 or 5 o'clock Thursday evening afternoon, and since then stocks have recovered. We broke obviously above that trend channel, you can see, on Friday, uh, helped by, uh, I guess the Goldilocks situation of non-farm payrolls, uh, and pushed higher. And since then we've had a decent push on, and of course looking for targets now is going to be relatively difficult I'd be probably looking to get recent highs and see if there was any trends that come up, or fib extensions as well. I know people will be looking at— but higher on trade optimism. We'll come on to one of the, the stories from overnight, and it has been relatively quiet, I would say, on the, uh, the headline front, uh, to, to keep an eye on. So much of the same, I would say, uh, as before is how I would focus on on things. Stocks yesterday mostly in the green, uh, here just having a look at, uh, let me just bring that into picture there, uh, the, the S&P 500. Obviously the big guys there, uh, having a positive day. And we are just up for the day on the electronic market so far. Uh, elsewhere, let's have a quick look over what the pound is doing coming in. We can see, uh, it did push lower yesterday, but so did the euro as well, because they're both coming under a bit of pressure. A couple of headlines regarding the general election, but again, nothing substantial yet. We know we break up on— we break up— Parliament breaks up on Wednesday, and that's really where I would say it's going to start kicking on from. So the pound down, but nothing major, I would say, in terms of new developments to keep an eye on. One story from overnight that we'll, we'll go over and have a look on the chart now is the, the Aussie dollar. So you've got a couple reasons why we're higher this morning. I'm just going to put this onto the 15-minute, uh, chart here. You can see 3:30 UK time was when the, the RBA were delivering their, their rate decision, which they decided to keep rates on hold. The key points, uh, going for from this decision is, well, having they've already cut 3 times this year and they're now likely to hold to at least February. Uh, the RBA assessed the economy as little changed in recent months, and you can see since then the, the Aussie dollar has pushed higher. For one reason there, a bit of an unwind of some dovish bets which are priced in around 10%, and the other reason being that the trade war optimism has helped push the Aussie dollar higher, of course, with that correlation with Australia. and China. So the Aussie dollar, which again with euro and pound came a bit lower yesterday on what must have been some nice dollar strength, you can see has recovered slightly, uh, this morning to almost up to those highs. So good move in the Aussie on the unwind of David Schwartz keeping rates on hold, not looking to cut until next year, and trade optimism, uh, as well. Quick look over at gold. Let's have a quick look here. Which you can see drifted lower yesterday, uh, on, on that dollar strength. And of course, stocks pushing higher as well. 1505, a key level to, to the downside to keep an eye on, which was the low from Friday, and also just briefly touched that now as well. 1485, really key level that we hit, um, on, on the 30th, on Wednesday, and a decent push to the upside. So yeah, summary of RBA keeping rates on hold and business as usual, it seems, in, in sort of the wait-and-see approach now, which seems to be the, the main point across all central, uh, banks. Main headline that's keeping stocks elevated, uh, overnight: trade optimism, uh, continuing, uh, as the Trump administration officials are debating whether to remove some tariffs on China, uh, Chinese goods as concession to seal the partial deal that will pause the trade war as early as this month. So of course we had penciled in the November 17th, uh, meeting in Chile. That's obviously off the cards, so because of the political unrest there, um, the next place for this meeting to happen is still being decided. U.S. highlighted one of those places and Hawaii. But the optimism continuing, according to 5 people briefed on the discussions of the, uh, dropping of these tariffs. The White House is considering rolling back levies on $112 billion of Chinese imports, including clothing, appliances, and flat-screen monitors that were introduced at 15% back at the beginning of September on the 1st. And this move would meet a core demand from Beijing as negotiators from the world's two largest economies work out their terms of a ceasefire to be signed in the coming weeks by Trump and Xi Jinping. So positive on that. We also had from the, uh, the weekend as well Wilbur Ross optimistic on US-China trade talks. So a lot of the chatter over the weekend, and you know, I was keeping an eye on, on Twitter and a couple of the headlines, and it was mostly positive, at least being taken that way anyway. So for now, trade talks seem good. A trade deal is look— looking likely to have part of that signed by this month. Obviously we just started now, so there's, there's still time for things to change. I guess on the flip side, you've got people that are believing Trump is using up some leverage here and giving in, of course, as we come into the election now. Um, just a year away. Has he shot his load too soon, uh, on the leverage front? We'll have to wait and see there. But going into this morning, looking at the charts again, uh, the way to, to take it is stocks are good, trade optimism, uh, the main driving force there, that helping the Aussie dollar after they've kept rates on hold and the unwind of those dovish bets. Gold uh, and T-notes just coming under pressure because of the safe haven flow. And if we just bring the yen in as well, you can see that confirmed here. So very much a morning for, uh, risk on in the market, which continued from yesterday morning as well. So how are we going to see an unwind of that? Well, if these trade talks, uh, take a turn for the worse, uh, I'd still think perhaps if there is no meeting scheduled in soon, that will start to be a worry. But at the moment, everything is, is deemed all fine and dandy, uh, going forward. Having a look at the, the calendar, is there anything here that could potentially move the, the equities lower? Because of course, we're in a bit of a Goldilocks scenario. Data at the back end of last week, not great, and this is going to keep the Fed somewhat accommodative going forward. So in the afternoon, US-wise, we've got Market Services PMI and Composite PMI, but both final readings, so not expecting too much in the way of movement there. And that's 2:45. 3 o'clock, this could have some movement— the ISM Non-Manufacturing PMI from October. So that would be the, the possibility for a slight bit of movement, 3 o'clock, for the US stock markets. And of course, any of the final earnings, which overall have been pretty good has to be said. So what is going to stop stocks, it seems, for now? And unless we were to have some really strong data or the trade talks to take a turn for the worse, it seems like the only way for now is up. Just while we're on the, the data calendar, I just realized I didn't have it, uh, changed there. So there's just the 2:45 and 3 o'clock. Just while we're on the, uh, the data calendar, might as well have a quick run through. You've got the, the The market services PMI, and we know this is the, the main one for, for the UK to focus on, that coming in expected at 49.3. Uh, just where would that put us? Pretty much unchanged from the last month, and we haven't had a reading above 50 since August, so that would provide a bit of a relief for the UK if we were to get above there. As has been the case with UK data, even though this is one of the more important ones, of of course Brexit is going to be the main driver, and at the moment the, uh, general election coming up will take more of a move on markets. But certainly short-term volatility, if we were to have a really strong number— and here you're talking more towards 51.5 or a multi-year low number below 48— I wouldn't be expecting to see too much Overnight, well, from yesterday, Johnson and Corbyn trade Brexit barbs as UK election heats up. Not enough really to take from here to, to provide a direction on the pound really. It was just a case of the dollar was a bit stronger yesterday and the euro and pound and the Aussie and the yen all came under a bit of pressure. And now we've just seen a bit of an unwind on, on that. So here we— this was more, you might have seen it in there on Twitter, on the Twittersphere yesterday, Johnson writing an open letter to Corbyn demanding to, to see what exactly is he doing for the general election, what is his agenda going forward. And then on the flip side, Corbyn attacking Johnson saying how he is hijacking Brexit to pursue, pursue an agenda of of cutting workers' rights and increasing the role of US companies in the NHS. Uh, the build-up obviously starting Wednesday for those 5 weeks, I mean, this is, it's going to start, I guess, to, to get more, more ugly as we go forward. To be expected, it's UK politics. Um, in terms of movement on the markets, I would say that is likely to, to happen as we go past Wednesday, and then we start looking at polls and any real key changes Is Farage going to stand or is he not? Of course, he said he's not going to after failing to make a seat in, I think it was 7 attempts or whatever. But they're going to run a candidate, candidate in all constituencies there. So well, we'll see what Brexit Party can do to the value of the pound if they were to make steps forward and take some of the, the shine away from the Conservative lead at the moment. Then of course the pound should well come down on the fears of a current Conservative majority turning into the minority, or even a flip round. There's more uncertainty there. But for now, I would say Brexit, you know, let's, let's wait and see what happens for tomorrow onwards. General elections, they break up and start really ramping up the, the rhetoric. Trade talks, all good. Going back to the calendar here, the building up of the day and how I would be, you know, looking at it is if I'm trading the pound, really from, from 9 o'clock, I'm just sort of unwinding any positions, waiting for this, this data to come out. European numbers you got out at 10 o'clock as well, so similar sort of thing. And just before that data release, just waiting to see how these numbers come out. The, the European producer price both the month-on-month and year-on-year figures from September. So limited reaction expected there. There was limited reaction from Christine Lagarde yesterday, pretty much a non-event as well. So really going into today, it's pretty quiet. A couple of data points of note to be aware of, but not, um, not much has changed, should we say, overnight. Having a look as well for the rest of the week, if we go over to Wednesday, obviously the UK Parliament dissolving Again, there's not really much driver this week. I wouldn't be looking to go chase markets really, um, in, in terms of, of single events. Thursday brings in the, the Bank of England rate decision. Yes, the, the quarterly inflation report will provide some opportunity perhaps, but they're not going to do anything, uh, while Brexit uncertainty and general election uncertainty are still still rife. And of course, uh, Carney is off on the 31st of January, as well as we may be with Brexit. Friday, you've got, uh, the RBA monetary policy statement overnight, Chinese data. But it's relatively quiet, uh, data front week, so this may help stocks just continue that gradual grind higher, which we know they do love when things are all fine and dandy and we're just getting those 0.5% moves each day. It could be that we're in for, for that, unless trade talks turn worse or, or we have some really strong US data. But these points that we're looking from, from here, unless we're getting that from the ISM non-manufacturing, really, um, that's, uh, that's the only big opportunity to, to perhaps change the, the US dollar off of data. uh, release. Quick look over the charts as a whole from today, opportunity-wise, levels to be aware of. Certainly just looking at the pound here, we're testing the original low of yesterday afternoon before that breakthrough, so you would expect some resistance around here. Double bottom from the low of the day, keeping a watch on those previous lows from the last couple weeks if we were to have any negative headlines or a poor multi-year low, then these could well come into play, uh, to the upside. Uh, you can see it moved quite nicely yesterday when we have broken these support levels. I mean, look at that really lovely retest around midday, and the S1 offered good opportunity a couple of times, as did the S2 on the classics there. So some good opportunities yesterday, and those would be levels today that I'd be focusing on in terms of looking to go short there, uh, if we were to push higher. Just be wary of how we get there. Because of course we've just made now this trend, um, from the high that we had in the afternoon of the 1st on Friday, then the morning of the 4th, and literally to the tick just now. So we're really key and well-respected trend line. So a break of that could be a change of the trend, and actually these shorts now don't look as attractive. Well, there would still definitely be profit targets Looking over at the euro, similar move. I mean, it looks pretty much the same, uh, market in terms of where we just found resistance now, the original low from yesterday. So we're keeping a watch on that. Just above where we're trading as well, uh, you've got the previous low of yesterday morning. That would be another point to have marked up. Really, you could call this a, a 3-day triple top on the euro, just starting to top out perhaps there. It's been on a decent run for the whole month. It had has to be said of October. Decent push, um, and just couldn't quite get above 112 on the futures, confirming a break there. But for now, uh, we are below, um, levels to be aware of to, to the downside. That triple bottom, this is a very key range now, it has to be said, for the euro, with those lows and those highs going back to a few weeks. Let's drag that over. No harm medium term anyway, waiting for a bigger move to see what can happen. Having a look at the, the S&P, of course the all-important trend channel is going to be, uh, your, your guide here. While things are probably expecting just to grind higher on this lower volume, uh, it's a trend. Just being aware if we do come down for whatever reason, a key break, which we've had above here, is the all-important line in the sand. So below that, then it can start to push lower. Fine. You can see that's the initial, uh, hold of that. We broke lower, uh, offered a great opportunity to come in on the untested level the 13th of September. Failure on both of those days to close below, and we had pushed higher since then. I do actually believe if we on these days just circle this up close below that level, I do believe now we could be quite a lot lower. Just the way markets work and the psychology now of being above that trend channel which came in around 3050, you can see we got a nice 30 points higher above there. So for me, that's the, the key line in the sand. Looking at a 60-minute, be looking at any of these previous highs as well from, uh, the days this week to offer a level of support, uh, going forward. We have perhaps just created a bit of a pennant here, just starting to get squeezed in. But, you know, much of muchness at the moment, relatively quiet out there as well. Gold, you can see just before we put the pivots on here, having a nice area of support. Be keeping a watch on that as well, getting squeezed in from the, the upside, um, on that dollar strength that we had from yesterday. Key level around 1505, that's where I'll be focusing on to the downside of close. Of the hour, maybe below there, could open up the door back towards 1500 handle, S1— S2, sorry— and the previous high from the 31st. Really key level, just like the euro on, on those free days, just struggling to get back above 1516 as well. So a bit of a mini range to be aware of. Looking over at oil, decent move yesterday, uh, and of course on Friday as well. We're now back above some of those levels, uh, or almost, I should say. We did yesterday get back above the high that we had from the, the 27th. However, we have just closed below there in $57 handle. Keeping a watch here, it's a bit of a messy level, it has to be said, but the previous high from, from Friday, we broke through there yesterday, support there last night, had a little go, yes, a couple of times this morning, but $56.38 is holding well. So to the downside, that would be my level to keep a watch on. To the upside, just below 57 at 56.92 as well. Any questions, as usual, please, uh, do, uh, let me know. Overall, in a summary, RBA rates unchanged, unwind of dovish bets, so pushed higher with trade optimism boosting that. Stocks higher on that front. The pound, not really any new developments. The speaker is confirmed, but that's not really going to drive price right now with the parliament being dissolved Wednesday. That's when I would expect things to pick up. Just out the corner of my eye, I might as well bring in this chart to wrap things up. This is Bitcoin, um, here, which at 7 o'clock was trading at 9,382, uh, and then a few minutes later was trading at 8,357. So I've said this before and I'll say it again, I'll take those 0.5% ranges, uh, in the S&P, uh, over a 10.8% move downside to then go 11% to the upside. Crazy. Any questions, do, uh, let us know. Expecting a relatively quiet day, um, but, uh, headline risk of course is there with trade and Brexit. Hope you'll have a good trading day, and I'll catch you all in the chat.