The on-again, off-again US stimulus talk is keeping the markets in play as the USD once again dips sharply. The yuan heading into fresh highs on the back of better macro numbers adds to this feeling of a risk-on environment.
September quarter numbers thus far have been ahead of estimates and there appears to be a scramble to catch up. Festive season sales are attracting crowds as witnessed in Chennai where there was a need to seal a saree shop for not enforcing social distancing.
Coupled with lockdown fatigue, there is a growing desire to get back to "normal", whatever that normal entails.
With the US election just a few weeks away, I'd wait for that event and watch for a break above recent highs, but with the market reacting to news flows in the appropriate direction, I'd venture to say that it's positioned poorly.
If, as is being expressed, FPI flows keep their faith, and a risk on expression gains momentum, the US yield curve needs to be watched as it turns steep. In any case, there is a consensus that post the US election, the stimulus will be released and a demand surge in commodity could ensue if the holiday buying kicks in there. The crude spread has shrunk sharply off late and BDIY also has headed higher.
Now, 12025 is the level to breach as we make another attempt at all-time high, something SPX has done already.
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