President Trump announced via Twitter on Tuesday that US and China will finally sign the elusive phase one trade deal on 15th of January. Taking place at the White House, high level representatives of China will be present. Moreover, Trump also said he will go to Beijing himself “at a later date” where talks will begin for phase two. With phase one close to being signed, markets can now obsess over phase two.
Given how long it has taken to reach phase one (which isn’t yet ‘in the bag’) then it’s anyone’s guess as to how long the next phase will take. Yet with the US elections looming, it remains in Trump’s best interest to get it over the line sooner than later, which inadvertently puts him in a weaker spot in terms of negotiating. Whilst Trump has publicly said he doesn’t need a trade deal before the election, it seems unlikely he won’t want phase two complete. So, we could well see delaying tactics from China in order to squeeze extra concessions for phase two.
S&P500 E-mini futures gapped higher on Tuesday and now trade just below their record highs. A small bullish candle on New Year’s Eve respected the 10-day eMA and suggests a swing low could be in at 3213. Yet if 3213 is to be broken, it points towards a deeper correction and not a trend reversal.
Looking at seasonality for the S&P500, January tends to fare well as it’s posted average positive returns over the past 30, 10 and 5 years. Median returns are all positive over these lookback periods, and it’s seen bullish closes 60% of the time over the past 30 years.
Time will tell if January will see it break to new high, but the trend structure on S&P500 is clearly bullish with its series of higher lows and remains above its bullish trendline.
- Near-term bias remains bullish above 3213.
- A break below support suggests a deeper correction is on the cards, and bulls can then refer to the bullish trendline to see if a swing low is carved out.
- A break above 3254 assumes bullish continuation. As this would be a fresh all-time high, we’d use an open upside target.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.
Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.