The optimism in the market is caused by statements in the media that the United States and China continue to work on the final stage of the trade agreement. Over the past two weeks, the parties have held many negotiations, agreeing on controversial issues: most of the trade duties may be gradually canceled. The second factor, which also has a positive effect on the US stock market, is the reporting season of large US companies, most of which showed better profits than analysts expected. The third argument in favor of further growth in quotations will be further easing of the Fed’s monetary policy: credit resources are becoming cheaper, and excess liquidity can be used to purchase shares of American companies. Macroeconomic statistics also support the market. Yesterday’s Initial Jobless Claims reached 211K against the forecast of 215K. The broad-spectrum index continues to trade at historic highs. The closest support level is 3061.3.
Today, statistics on the consumer sentiment index, as well as data on the number of US active rigs from Baker Hughes will be published.
Support and resistance
Stochastic is at the level of 71 points and does not give signals for opening trading positions.
Resistance levels: 3115.0, 3141.5.
Support levels: 3061.0, 3028.0.
Long positions may be opened from the current level with the target 3141.5 and stop loss 3061.0.
Turning to Oil
On Wednesday, the weekly data on US crude oil inventories were released. Despite expectations, the indicator increased by 7.929M barrels, triggering a decline in quotations by almost two dollars. According to statistics, such discrepancies with expected results are outplayed by the market for several more days, which is happening at the moment.
In the main world spread arbitrage between Brent and WTI, the formation of a large position is obvious, since the spread has not changed for several months and ranges from 5.5 to 6 dollars. It is worth recalling that back in September this spread reached 10 dollars, and such an expansion on the eve of annual expiration is likely.
Support and resistance
The classic situation is also observed on the asset price chart, confirming the assumption of long-term gaining positions. A lateral trend is formed within the framework of the broadening formation pattern familiar to the asset. Currently, the price, being at the upper border of the pattern, forms a local head and shoulders reversal pattern, which again confirms the fears that the asset will continue to decline.
Resistance levels: 63.00, 63.90.
Support levels: 61.80, 60.50.