Sentiment trades continue to deliver

USA30, Daily                 

U.S. equities extended their rally yesterday while in the sweet spot between French election results and renewed U.S. tax cut promises, which unleashed animal spirits once again. Wall Street closed positively with the Dow over 21,000 again, after NASDAQ cleared 6,000 earlier in the day. About 50% of the gains in the Dow were accounted for by CAT +6.7% and McDonald’s +4.6%, which knocked the cover off their earnings reports. The dollar index is up, off yesterday’s lows near 98.85, WTI crude is 0.4% lower near $49.20 bbl and gold is lower near $1,265 The VIX equity volatility index sank 2.2% to the 10.60 area, compared to 10.22 session lows and just above 9.97 year-lows.

The stock market rally took our USA30 position from Monday (April 24) to Target 1 (21000) for a net gain of 250 points, the Risk On sentiment also helped the AUDCAD position (April 17), and the GBPJPY trade (April 20) both to hit Target 2. The total gain from the three positions was over 700 pips.


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Stuart Cowell

Senior Market Analyst


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