US stocks staged the strongest come back since 2009 overnight. DOW closed up 4.98% or 1086.25 pts at 22878.45. S&P 500 rose 4.96% to 2467.70. NASDAQ jumped even more by 5.84% to 6554.36. Positive sentiments somewhat carry forward to Asia. Nikkei is currently trading up 4.15% or 802 pts at 20129.59, back above 20000 handle. Singapore Strait Times is also up 1.95%. But Hong Kong HSI is only up 0.62% while China Shanghai SSE is up 0.56%. Not all Asian markets are convinced.
Movements in the currency markets are also relatively muted. For the week, Dollar is the weakest one so far, not Yen. And Canadian is the second weakest. Australian Dollar, Swiss Franc and New Zealand Dollar are indeed the strongest ones but all are held below last week’s highs. It seems forex traders are not buying too much into the return of risk appetite yet.
There are two things to note. Firstly, in S&P 500, price action from 2940.91 is seen as a long term correction, no chance in that view despite yesterday’s rebound. The question for all correction is the form, in particular whether it’s a deep pattern or a sideway pattern. The test for SPX is on 38.2% retracement of 2940.91 to 2346.58 at 2573.61. As long as this fibonacci resistance holds, fall fro 2940.91 is still expected to develope into a deep correction, targeting 2000 handle at least. Though, break of 2573.61 will open up the chances for sideway consolidation instead.
Secondly, US treasury yields staged strong rebound overnight. 5-year yield rose 0.056 to 2.637. 10-year yield rose 0.048 to 2.797. 30-year yield rose 0.045 to 3.048. The rebound was slightly weaker towards the long end. Also the yield curve remains inverted from 1-year (2.631) to 2-year (2.628) and 3-year (2.606).
