S&P 500 taps 5k record, ASX futures to extend bull-flag breakout?

The S&P 500 posted its smallest daily range of the year, and second smallest since Dec 28th. That particular day marked an interim top. And whilst the S&P 500 tapped the magical 5k level, it was by just a smidgen.

We also saw a similarly small-ranged day on Jan 30th which was followed by a 1-day pullback, so I am left wondering if we'll see a retracement on Friday as traders may opt to lighten their load ahead of the weekend. But as mentioned in yesterday’s analysis, futures positioning and pricing suggests a break above 5,000 for the S&P 500 cash index. I mean, did it really come this far to not go further – retracement incoming or not?

Market Summary:

Fed member Barkin was the latest member to push back on imminent rate cuts, saying “I think it is smart for us to take our time”.
The yen was the weakest FX major on Thursday and the US dollar broke its 2-day pullback, allowing USD/JPY to reach a YTD high and hone in on my $150 target
The weaker yen along with Wall Street playing with record highs has keeping the 40 to 47-day AUD/JPY cycle in play, which currently estimates its next trough to land between the end of March / beginning of April
Gold continues to trade in a choppy range with the past two days effectively closing flat, with an upper wick on Wednesday and lower wick on Thursday.
However, gold played very well with two swing-trade ideas on Thursday, but rising into the weekly and monthly pivots before reversing lower and reaching the 2040 target.
Oil prices soared higher on headlines that Israel rejected the Gaza ceasefire proposal, fanning fears of a broadening conflict in the Middle East.
WTI rude oil rose nearly 3.5% during its best day of the year and stropped just shy of my $77 target – but it shows the potential to continue higher should concerns over a full Middle East conflict continue to rise
AUD/USD turned lower and closed back beneath 65c, to keep the downside target of 64c alive.

Events in focus (AEDT):

RBA governor Bullock speaks shortly to the Houser of Representatives. I doubt we’ll glean much more from her than already conveyed at this week’s meeting and press conference; inflation remain too high, a hawkish bias remains and it will take some time for CPI to return to their target. That said, any awkward questions can result in slip-ups, and they can move markets. And any hint of dovishness could send AUD/USD lower and the ASX higher.

09:30 – RBA governor Bullock speaks before the House of Representatives
14:00 – New Zealand inflation expectations
18:00 – German CPI
00:30 – Canadian employment report
02:30 – BOC Loan Officer Survey

ASX 200 at a glance:

The ASX 200 cash market rose for a second day, although its two-day range is roughly one half of the prior two-day bearish selloff
SPI 200 futures were effectively flat overnight, although gains on Wall Street allowed it to recoup earlier losses and close flat (and leave a potential bullish pinbar on the daily chart)
Today’s bias for the ASX is bullish and for it to have another crack the January high
A bull flag has formed on the 1-hour SPI 200 futures contract which projects a target near 7640 and the Feb 2^nd overnight VPOC (most trading volume of the session)
Resistance includes 7600, yesterday’s high around 7612 and the 7640 target
Bullish can seek dips towards 7588 (overnight VPOC)

View the full economic calendar

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

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