Global stocks marginally higher, oil lower, ASX futures flat

Last night served up a very similar result to the night previous, as volatility continued to fall and US stocks made very small gains. The S&P 500 has closed three consecutive sessions above 2,000 points, which will help fortify support that sits underneath current levels and insulate investors from any sharp falls that might get triggered below current buying support at 1,995 or so, where stops would otherwise get triggered. So while no exciting advances have taken place in the last few sessions, any short traders looking to exploit fear know that they'll have a lot of buying to get through before they can reach vulnerable levels. So it's all pretty smooth sailing for the moment.

Today's second hourly chart is the ASX 200 index CFD, which shows the Australian market meeting selling resistance at the 5,300 level, which is where this instrument topped out after it bounced back from the 25 August lows. So whereas the US S&P 500 is sitting just above buying support, the ASX 200 is sitting just below selling resistance, meaning that our market might be more inclined to range trade the 5,100-5,300 zone if no compelling trends come about to break higher through 5,300. So traders looking to pick levels should probably sell at the high 5,200 levels with tight stops above 5,300, or set up bullish trades to buy above 5,300 - there will likely be a lot of buys latent in the market to trigger at that level, so an impulsive move is likely to ensue if we to break through 5,300.

Today's last chart is one that I feel compelled to revisit because I used it to make historical comparisons relating to the most recent spike in volatility. You can see that the latest volatility event died down a lot faster than the previous two post-GFC spikes. I think this highlights the lack of a systemic nature to this event. Whereas previously things like the European sovereign crisis had the potential to seriously damage consumer and business sentiment, this August volatility was a flash in the pan.


Source: Rivkin, Saxo Bank

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This article was written by Scott Schuberg, CEO of Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3600.

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