US indices soared to record highs last Friday, lifted by energy, industrial and material sectors.

US indices soared to record highs last Friday, lifted by energy, industrial and material sectors. This new wave of the “Trump rally” was largely driven by anticipation of President Trump’s tax reform plan, reduced regulations and hope for fiscal stimulus. Trump will announce the most ambitious tax reform plan since the Reagan era in the next few weeks.

The S&P 500 index hit a record high of 2,316 points. The theoretical resistance level of 2,300 has been broken and thus it will become the immediate support level in the future. The Fibonacci extension suggests that the next major resistance level can be found around the 2,410 area.

The US dollar Index extended gains to reach the 100.9 area this morning. We’ve seen a reverse of the downtrend in early Feb when the MACD formed a ‘golden cross’ and its 10-day simple moving average turned upwards. Fundamental elements are supportive of a stronger dollar too, as robust US jobs data and Trump’s stimulus plan will likely lead to a more hawkish Federal Reserve.

Separately, China’s trade balance data showed a strong rebound in both exports and imports in January, showing improvement in both domestic and external demand. The trade balance rose to US$51.3billion versus a consensus if 47.9 billion. Exports and imports rose 7.9% and 16.7% respectively, far more than what market had anticipated. The Aussie dollar and other risk assets were cheered by the strong figures on Friday, with favourable sentiment spreading over to Asian markets.

US SPX 500 – Cash

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