US GDP lifts bulls spirits

31 March, 2017

US markets were relatively upbeat today despite the recent Trump movements, as the market responded positively to the final GDP figures that came out showing that Q/Q growth was 2.1% (2.0% exp). The market will now be eyeing up tomorrows consumer sentiment data to see if the Trump momentum is continuing to run in consumer markets, which have been very upbeat since he was elected. Any drop here could have strong implications as the consumer market is the bedrock of the US economy, and markets will be keeping a close eye on the figures that come through.

For the S&P 500 it has so far managed to find some ground, and the figures today helped push it higher to resistance at 2367. A positive consumer sentiment reading could help boost it above resistance and perhaps even back up to the 2400 level which the market has only tested once. Any falls backwards on the chart in the event of a poor reading are likely to be defended by the 50 day moving average which is holding fast at present, it would be surprising to see it crash through completely as it has acted as a dynamic support area in recent times. Regardless of that support at 2337 is likely to help support any further drops and the market has so far looked to be quite bullish in the short term.

Oil has shown some new life in trading over the last few days as a weak USD has lead to bullish action on the charts. This has also been supported by oil inventories showing a weaker surplus than originally expected at 0.87M barrels (1.36M exp). While a positive result for bullish traders and OPEC it does not deal with the fundamental issue that we still have record supply in the market, and a push towards moving away from oil products in the long run - could we see $100 barrels of oil again, it's certainly hard to say. However, in the mean time the jump upwards is a positive after the bears have punished traders in the previous week.

The move up the chart has seen some key bullish action as it crashed through resistance yesterday at 49.70, to lift all the way up to the 38.2 fib level. This key level is likely to be a tough one for the bulls to crack unless we see some strong momentum gathering, or alternatively some OPEC comments that may be in the favour of the bulls. Further extensions higher are likely to target the next major level of resistance at 51.68, and could potentially in the long run fall back into a ranging pattern.

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