Further gains in metals prices and a rally in US stock index futures suggest the local stock market will open on a firm note this morning
However, with US markets closed for Thanksgiving last night and a number of key stocks sitting at resistance levels, the question for traders today will be whether buyers are prepared to act independently of a lead from US markets by pushing the Australia 200 Index meaningfully clear of the 5500 level. To be safely clear of this resistance, the index probably needs to end up north of 5530.
Commonwealth Banks shares, for example have arrived at the $78.50- $79.20 resistance zone that has put paid to 3 previous bouts of optimism this year. CBA is not aggressively valued by historical standards and there is scope for a year-end rally. However, recent gains have been steep and with US markets closed last night, traders may be cautious about pushing aggressively clear of the resistance today unless other Asian markets join the party.
The oil market looks like being a major feature of next week’s market landscape. Brent Oil is parked just below $50 as traders wait on the outcome of the OPEC meeting. This sets oil up for a significant move next week depending on whether or not OPEC achieves an agreement on meaningful production cuts. Worthwhile production cuts from OPEC could see oil in the mid $50’s, creating a good week for energy stocks next week. Failure by OPEC is likely to see a return to the low $40’s given the current supply overhang and inventory levels. That scenario should lead to profit taking in stocks like Woodside and Santos after recent gains.