Market concerns seem to be distracted, but the SP500 remains below key levels

Wall Street's positivism is on the back of the declining dollar and the extremely high economic expectations of the US economy. The SP500 rises for the fifth consecutive day after the crash in the past two weeks, but still remains below key levels that we expect to temporarily exert on the index. It seems that other markets in the world are also covered by positive moods, with Europe and Asia also showing a steady pace of growth after the correction. But what continues to bother investors is that yield on 10-year US bonds is approaching 3% and JPY and gold keep rising. On one side, high bond yields make investors allocate their assets from dividend shares to fixed yield bonds, as returns there are greater. On the other hand, the rise in gold and JPY seems strange as stocks rise. According to some market participants this is entirely due to the weak dollar, but if we look at the last five days in detail, the USD change in the negative direction is minimal compared to the growth of gold and JPY. Dollar Index declined from -1.73%, while JPY rose 2.70% and gold rose 2.42%. The simple bill shows that somebody buys yen and gold while the markets are picking up and the growth is not entirely dictated by the USD decline.

Technically speaking, the SP500 is at key levels of resistance formed by horizontal, 50SMA and 50% Fibonacci Correction Correction Correction. During the session today, the price several times tried to break it, but failed. If the index fails to overcome by the end of the week, the probability of a subsequent Sell Off will increase as the weakness will repel buyers.

Source: Bloomberg Pro Terminal

Jr Trader Petar Milanov

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