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Stock Market Breadth Remains Strong

Stock Market Breadth Remains Strong

Stock Futures Trade Lower 

US stock futures are trading flat on the final trading day of the year, and it is highly likely that volume in the stock market is likely to remain on the low side. Overall, this year, we have seen remarkable progress for the US equity markets and despite the Covid Variant-Omicron, the US economy remains healthy. There wasn’t much on the economic data yesterday apart from the US unemployment claims which came in pretty decent. It is of significant importance that we continue to see improvement in the economic data. This is because the Fed is tightening up their monetary policy and no wants to see weakness in the economic data as it would mean that the Fed has made a monetary policy mistake as they should have waited a little longer.

Oil prices are also soaring today and on track to post some solid gains for this week. Oil traders are confident that they will see some strong gains for the oil prices going in 2022, and Omicron is likely to impose only short-term threats to oil supply. It is likely that we may see the Brent oil price going towards the 100-dollar mark.

Forex 

The dollar index, which is considered by many as a safe haven commodity, has been on a declining trajectory as appetite for risk has risen among investors, mainly due to reduced concerns about the Omicron variant rampaging markets. Despite a rise in infections, deaths and hospitalisations have not jumped significantly, appeasing investors into resuming their exposure to riskier assets such as equities. The trend is likely to continue as governments around the world seem reluctant to tighten restrictions and implement national lockdowns, which could be destructive to global economic recovery.

Asian Markets 

The Asian stock market traded mostly mixed in shortened trading holiday. The Nikkei index plunged 0.40%. The Shanghai index increased by 0.43%, while the HSI index increased by 1.24%. The ASX index decreased by 0.92%.

Dow Jones and S&P 500: Market Breadth

The Dow Jones’ market breadth gained a bit more momentum during the last session. 73% of the Dow Jones stocks traded above their 200-day moving average. 

 The S&P 500 stock breadth also confirmed strong momentum. 71% of the shares traded above their 200-day moving average. 

Dow Jones Futures Today

The Dow Jones futures are trading lower today. In terms of economic data, investors will be looking at some real economic numbers coming out of the US next week. Traders will be focusing on the US NFP data, and we also have the Fed minutes. The message that traders are likely to get from the Fed is that they are going to increase the interest rate three times next year.

The US 30, also known as the Dow Jones Industrial Average, formed a double top a couple of days back which is a bearish pattern. After forming that pattern the price retraced from that level and is moving lower. It is important to keep in mind that US 30 prices are overextended as the price is trading far from its 50, 100 and 200-day moving averages.