By Russell Glaser – It looks like markets are gearing up for a move higher. Most risky assets jumped yesterday despite negative news. The S&P 500 is testing the big round number of 1100, the EUR/USD is approaching a key Fibonacci retracement level, and crude oil is pushing towards the $80 level. Today’s stress tests release is the key event. Wisdom says that it’s not how what the news says; it’s how the market reacts to the news.
Financial markets the past two weeks have been choppy, with risk going on and off again. Much of the movements have been tied to recent economic data releases. Yesterday’s economic data was mixed across the board, divided between the two continents. European industrial orders and British retail sales were stronger, along with U.S. housing data and strong earnings from U.S. corporations which helped to increase trader’s risk appetite. But higher U.S. weekly employment claims, and a warning from Ben Bernanke on the U.S. economy, countered this positive attitude.
But yesterday’s trading struck a chord: despite the negative outlook for the U.S., risky assets were trading higher. This shows a convergence and a red flag; when risky assets rise in spite of negative news, a shift is occurring in the markets.
Despite the uncertain outlook the Fed has regarding the U.S. economy, the S&P 500 was up 2.25% yesterday. The index made a close above the recent downward sloping trend line, indicating a potential reversal of the bearish trend to a bullish trend. Now the index has the big round number of 1100 in its sights.
Forex Market Analysis provided by Forex Yard.
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