Originally published by Rivkin Securities
US equity markets were quiet on Friday, with the S&P 500 closing 2.74 points lower (-0.11%) at 2549.33. The Dow Jones Industrial Average was flat (-0.01%), while the Nasdaq Composite gained 4.82 points (+0.07%) to finish the week at 6590.18. It has been a strong period for US equities of late, with the S&P 500 up 3.57% over the past month, taking the gains for the past year to 18.37%. If we look at the chart below, it is clear the trend remains up, as prices continue to push to new all-time highs. Nevertheless, momentum indicators, specifically the RSI, are well within the overbought region above 70, registering a reading on Friday of 75.12. While prices can stay overbought for a period of time, it does hint towards increased risks of a pullback in the near-term.
It has been a very different story for the local market, with the S&P/ASX 200 confined to a trading range over the past 4-5 months. As marked on the chart, support is located at 5640, while the upper boundary of the range is capped by resistance at 5800. It is rare to see the ASX 200 within such a defined range for such a lengthy period. And as is often the case with technical patterns, as soon as they become extremely obvious to all, chances are they are closing to ending. As such, we would not be surprised to see a break from the range soon. The strong close on Friday (+1.04%) indicates that buyers remain committed just below current levels. A close above 5800 would lead to quick retest of the early may highs just below the 6000 level.
Commodity prices as a whole were lower on Friday, with the CRB Index closing down 1.08%. WTI crude oil prices dropped 2.9% to close out the week at US$49.29, while spot gold prices were slightly firmer, gaining 0.7% to close at US$1276.15. Gold prices have been weaker over the past month, pulling back around US$60 an ounce to be at 1-month lows.
In terms of major data releases this week, US FOMC Meeting Minutes are out on Wednesday, followed by a busy Friday, where first US CPI data is due, with the market expecting an increase in the annual rate from 1.9% to 2.3%. Then comes US advanced retail sales, before finally University of Michigan Confidence Survey.