US Market Technicals Ahead (4 Jan – 8 Jan 2021)
Markets will face their first major challenge of 2021 as the rapid spread of a new, more contagious coronavirus strain means that economic gains could still be a way off. The December jobs report on upcoming Friday could show that the pace of hiring is slowing down amid renewed pandemic-related restrictions on businesses. Meanwhile, energy traders will be turning their attention to Monday’s OPEC+ meeting where another output boost is on the agenda.
Here is what you need to know to start your week.
S&P 500 (US Market)
The benchmark index (
SPX) rallied with a modest gain of +1.43% (53 points) during the final week of 2020, closing at an all time high of 3,756. At the current junction, SPX price action remains within the tight 3% trend channel range highlighted; and there will be expectation of a minor correction in the upcoming week in technical perspective, with SPX trading near the upper bound resistance of its trend channel. Additionally, a short term price-volume bearish divergence is also been observed.
The immediate support to watch for any signs of weakness is at 3,660 level, a break of the lower trendline support.
Top 3 things to watch this week:
1. Vaccine rollout
With U.S. case numbers surging and vaccinations proceeding more slowly than projected Senator Mitt Romney on Friday urged the U.S. government to enlist veterinarians and combat medics to give out coronavirus vaccinations.
While the U.S. has approved two vaccines, rollout is going more slowly than the government hoped. About 2.8 million Americans received a COVID-19 vaccine by Dec. 31, falling far short of a 20 million target.
The U.S. is averaging 186,000 cases a day, down from a peak in mid-December of over 218,000 new infections each day. Health officials have warned that cases will likely spike again after holiday gatherings.
2. December jobs report
The first major U.S. data point of 2021 will be Friday's nonfarm payrolls numbers, which could show a loss of momentum in the labor market.
November data already indicated the employment market was losing steam, with 245,000 new jobs added, the fewest in six months. For December, expectations are for an even smaller 100,000 gain.
3. OPEC+ to debate supply vs. demand
The Organization of the Petroleum Exporting Countries and its allies, including Russia are to hold a virtual meeting on Monday.
Oil prices ended December with gains in a positive end to a year that saw U.S. futures turn negative for the first time ever in April.
In December OPEC+ held back from plans to boost output by 2 million barrels per day after implementing a record 7.7 million bpd supply cut earlier in the year to shore up prices. Instead, it increased output by 500,000 bpd and agreed that additional monthly adjustments would not exceed that amount.
Russia has indicated that it will support another 500,000 bpd production increase from February, despite concerns from others in the group that it is still too early.
Here is what you need to know to start your week.
S&P 500 (US Market)
The benchmark index (
SPX) rallied with a modest gain of +1.43% (53 points) during the final week of 2020, closing at an all time high of 3,756. At the current junction, SPX price action remains within the tight 3% trend channel range highlighted; and there will be expectation of a minor correction in the upcoming week in technical perspective, with SPX trading near the upper bound resistance of its trend channel. Additionally, a short term price-volume bearish divergence is also been observed. The immediate support to watch for any signs of weakness is at 3,660 level, a break of the lower trendline support.
Top 3 things to watch this week:
1. Vaccine rollout
With U.S. case numbers surging and vaccinations proceeding more slowly than projected Senator Mitt Romney on Friday urged the U.S. government to enlist veterinarians and combat medics to give out coronavirus vaccinations.
While the U.S. has approved two vaccines, rollout is going more slowly than the government hoped. About 2.8 million Americans received a COVID-19 vaccine by Dec. 31, falling far short of a 20 million target.
The U.S. is averaging 186,000 cases a day, down from a peak in mid-December of over 218,000 new infections each day. Health officials have warned that cases will likely spike again after holiday gatherings.
2. December jobs report
The first major U.S. data point of 2021 will be Friday's nonfarm payrolls numbers, which could show a loss of momentum in the labor market.
November data already indicated the employment market was losing steam, with 245,000 new jobs added, the fewest in six months. For December, expectations are for an even smaller 100,000 gain.
3. OPEC+ to debate supply vs. demand
The Organization of the Petroleum Exporting Countries and its allies, including Russia are to hold a virtual meeting on Monday.
Oil prices ended December with gains in a positive end to a year that saw U.S. futures turn negative for the first time ever in April.
In December OPEC+ held back from plans to boost output by 2 million barrels per day after implementing a record 7.7 million bpd supply cut earlier in the year to shore up prices. Instead, it increased output by 500,000 bpd and agreed that additional monthly adjustments would not exceed that amount.
Russia has indicated that it will support another 500,000 bpd production increase from February, despite concerns from others in the group that it is still too early.
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