US stock markets rose strongly overnight, with both DOW and S&P 500 reaching new record highs. This coincided with a mild dip in 10-year yield as bonds rebounded. A key factor influencing this movement was Treasury’s announcement of a reduction in its borrowing forecast for Q1. The Treasury indicated plans to borrow USD 760B, which is USD 55B less than its previous estimate in October. This adjustment is attributed to “projections of higher net fiscal flows and a higher beginning of quarter cash balance,” as per the Treasury’s statement.
Technically, strong resistance could still be seen from 100% projection of 28660.94 to 34712.28 from 32327.20 at 38378.54 to bring a near term pull back. Break of 37796.71 support will indicate the start of a correction back to 55 D EMA (now at 36737.49).
Conversely, decisive break of 38378.54 could trigger reacceleration to 138.2% projection at 40690.15, which is slightly above 40k psychological level, before topping.
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