Summary:

• US stocks begin final session of the week near all-time highs
• US30 continues to be the leader. Looking for 8th consecutive record close
• The market has now moved above the 22k handle

It’s been another good week for US stock bulls as the recent rally has shown little sign of letting up. The US30 has been the leading light amongst the major indices across the Atlantic with the past 8 days seeing green candles – the past 7 of these have been new all-time closing highs. There’s often a tendency to try and call a top during these sort of moves but in the absence of any reversal signal there is very little to offer encouragement to the bears. The trend does look over-extended and several metrics suggest that the market is overbought but that doesn’t necessarily mean that a pullback is imminent.

 The US30 is enjoying an incredible run higher with 7 consecutive record closes. The market has now breached the 22k level. Source: xStation

Looking at the fundamentals there’s plenty of reasons from a political perspective to believe that this rally could be unsustainable. Trump has been continually frustrated in his attempts to repeal Obamacare, and with this taking priority over tax reforms and other pro-growth policies the there has still been no concrete action to support the rally that greeted his victory last November. 

Data wise the economy on the whole appears to be in relatively good health with this afternoon’s release of the NFP report announcing 209k jobs were added in the month of July. In addition to this, wages picked up and the unemployment rate remains ticked lower once more. 

In terms of market sentiment XTB clients are heavily short this market. According to the XTB website 94% of XTB clients currently have short positions in this market. 

 

 94% of XTB clients are currently short this market. Source: XTB.com