S&P 500 futures are swinging between gains and losses in premarket trading as traders take a pause after yesterday’s strong upside move.
On Monday, the U.S. reported that Services PMI increased from 59.8 in February to 60.4 in January compared to analyst consensus of 60. The strong performance of the services segment provided additional support to stocks which moved to new all-time high levels.
Interestingly, Treasury yields have pulled back from recent highs despite indications of a strong economic rebound. This pullback served as an additional bullish catalyst for tech stocks and provided support to the general market.
WTI Oil Rebounds After Yesterday’s Sell-Off
Yesterday, energy-related stocks did not join the broad upside move as WTI oil was under significant pressure and made an attempt to settle below the $58 level.
Problems on the coronavirus front served as the main catalyst for the move, but traders have also started to pay attention to Iran. Some analysts believe that Iran will ultimately come back to the negotiation table with the new U.S. administration. This position has received more attention in recent days, although it remains to be seen whether Iran is ready to make any concessions.
At this point, it looks that the market does not believe that Iran will be able to get any material sanctions relief in the foreseeable future, but traders should continue to monitor the developments on this front.
Gold Tries To Settle Above The Major Resistance Level At The 20 EMA
Gold is currently testing the major resistance level at the 20 EMA at $1730. The 20 EMA has served as a major obstacle on the way up for gold in March, and a move above this level will be a major positive development for gold bulls.
In case gold settles above the 20 EMA, it will have a good chance to develop material upside momentum which will be bullish for shares of gold miners. I’d note that gold is trying to break above the 20 EMA at a time when the U.S. dollar is gaining some ground against a broad basket of currencies which indicates that demand for gold is strong today.