Despite US Stock Exchanges not trading yesterday due to Labor Day celebration, it was business as usual for US Futures. Both S&P 500 and Dow 30 climbed higher, following the footsteps of Asian stocks and European bourses. The main driver was the declining likelihood of a military response from US on Syria, despite the heavy chest thumping by various US politicians earlier. Without the threat of war, it is not surprising to see stocks climbing higher, and US stocks are no exceptions.
Other than that we have no other major bullish drivers that was available. No economic news release from US given that it was a bank holiday, while European economic data wasn’t the most bullish either, with German PMI Manufacturing (Final) coming in lower than the flash estimate. But Euro-Zone’s PMI did even the score somewhat, with the final numbers coming in 0.1 point higher than the flash estimate, and hence did not jeopardize yesterday’s rally bullish much.
S&P 500 Hourly Chart
From a technical perspective, price has cleared the highs of last Thursday and Friday, but is still kept below the rising trendling and the 1,650 round figure. Even though Stochastic readings are pointing higher and crossing the Signal line, the trough is hanging as it has not hit Oversold region at all, suggesting that the bearish cycle move may not be fully over yet. That being said, there has been precedent for such troughs before, and hence we cannot dismiss the possibility of price moving back up higher. Hence, a more prudent approach may be to wait for either 1,650 to be broken or 1,646 to be breached.
Dow 30 Hourly Chart
Dow 30 which has been the more bearish of the 2 for the past 2-3 weeks does not appear to be as bearish here. Nonetheless, price is facing the same issues as S&P 500, and we are in a much narrower range (percentage wise) compared to S&P 500. Should price break 14,925, we may see bullish acceleration higher towards the higher rising trendline with the lower trendline providing interim resistance. Support in this case would be 14,900 and a break would open up 14,850 as the next level of support.
Fundamentally, with nothing bullish going for US stocks yesterday other than the lack of war, it may be hard for price to climb further with significant resistances overhead. However, Asian markets are currently still not letting up, with Nikkei 225 shooting another 2.64% higher with Hang Seng Index up by 0.60%. It seems that bullish momentum is still going strong even without any economic news fueling it, and perhaps that may help to push US stocks higher today as well especially if European stocks are higher too.
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