May is traditionally a weak month for equity markets. However, May has very much run counter to the long-term trend of “Sell in May”. What has the USA30 Index revealed? This and more are discussed in this 21 May USA30 Index Analysis.
21 May, HotForex – Global equity markets got a fillip by comments from the US Treasury Secretary Mnuchin. He said there had been meaningful progress in the latest U.S.-China trade talks and will increase U.S. exports to China significantly. He said that lowering of tariffs with China was discussed.
U.S. and China have agreed to suspend tariffs
Mnuchin said the U.S. was unified on the trade talks with China and Trump didn’t dictate any terms on the U.S. review of China’s ZTE, where some possible enforcement changes were being reviewed. He said both the U.S. and China have agreed to suspend tariffs and the U.S. could increase energy exports to them, though talks have to be turned into binding agreements with companies.
Yet Commerce Secretary Ross earlier said that only a framework on trade has been considered, and they’ve not ruled out any options at this stage (in line with Trade Rep. Lighthizer’s view). Ross will be sent back to China to put the framework in place, some of which will take time to implement. Speaking in an extended interview on CNBC, Mnuchin also reiterated the favoring long term dollar strength that reflected the health of the U.S. economy, which he expects to exceed 3% average growth ahead.
21 May USA30 Index Analysis: Eyes 25000 & Beyond
The European markets are mostly firmer, with the Germany/Switzerland and Norway closed for Whit Monday, while Canada is out for Victory Day as well. Asia was narrowly mixed with the HK Hang Seng +0.6% outperforming Japan’s Nikkei +0.3%. The key UK100 rose to record highs this morning north of 7800 with 8000 the next psychological hurdle. The USA30 is looking at 25,000 and the last Fractal high at 25,120.
The March high of 25,320 and February high at 25,750 are the next resistance levels. The support levels reside at the 20 and 200 day moving averages at 24,410 and 23,750 respectively. May is traditionally, a weak month for equity markets and with the final week of the month traditionally also the weakest 2018 may yet return to trend. However, so far this year May has very much ran counter to the long term trend of “Sell in May”.
Disclaimer
This article was written by Stuart Cowell, Market Analyst at Hotforex. The provided article is a general marketing communication for information purposes only. It does not constitute an independent investment research. Nothing in this communication contains an investment advice or an investment recommendation. It also does not contain a solicitation for the purpose of buying or selling of any financial instrument.
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