US retail sales lead to strong rallies

16 November, 2016

So far the US markets have continued to be a massive market driver in the recent weeks, as the recent political events and the volatility surrounding the race for the presidency caused markets to create large opportunities for traders. With all the passing euphoria now over the Donald Trump victory the markets are looking forward and at the possibility of Trump fulfilling promises to ‘make America great again’ and the expectations thus far are that he will spend up to 1 trillion USD in order to boost infrastructure spending and help bolster the economy. For the economy this will have a very large effect and the flow is expected to see an increase in inflation rates and the possibility of further rate rises to match the inflation rate. This was bolstered with retail sales m/m coming in at 0.8% (0.6% exp) which represents the economy being stronger than expected, and with the US economy consumption orientated it’s likely to have large flow on effects for the economy. It will now be quite interesting to see the reaction of the FED and how it anticipates inflation rising in the near term and if they look to still increase interest rates before December is out. There is still hope amongst a few economists that this may come true and the dollar bulls are likely to be ready.

The flow on effects are likely to be felt for some time in the US market and none more so than the S&P 500 which continues to be a catalyst for the growth that is expected. So far the S&P 500 has rallied strongly on the back of trumps win and today touched a key resistance level at 2183. For me this level for some time has remained strong, but the current prognoses is that it could break and markets will be looking to test this level over the coming days. Anything above this would be psychological levels at 2200 and 2250 for resistance.

Once again oil continues to find itself under pressure. The idea of the economy increasing in the USA has so far been positive for oil markets, and there are even reports of OPEC leaders flying between the various oil producing states in an effort to discuss the flagging prices. However, what can’t go unnoticed is the current surpluses that we are seeing in the long run, and if they are going to continue to hamper the prospect of oil prices continuing to go higher.

So far Oil has moved higher on the charts, but it’s unlikely to remain that way if the surplus build up does come true and well above expectations. [Anchor]  Resistance at 46.19 was slowly missed and the market is looking slightly down as a result. Expectations though around the surplus could lead to a push back lower and support could possibly be found at 44.90 on the charts. Regardless of the surplus though OPEC continues to be the wild card element for oil traders and could lead to further volatility.


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