Sept 1 9:45 a.m. CT--U.S. stocks are rallying Wednesday, the U.S. dollar index and U.S. Treasuries are down and the risk appetite switch has been turned back on.
News that the Institute for Supply Management (ISM) Index jumped higher than expected to 56.3 in July bolstered appetite for U.S. equities Wednesday.
BULLISH CHART PATTERN
Short, term the rally cements a minor bottom on the daily chart. The S&P 500 Index has blasted above a minor "triple bottom" formation on the daily chart, which has a measured move objective around 1090.00.
However, the more significant resistance level to watch is 1100.00. The index would need to conquer that ceiling near term in order to target a move back to the medium term technical range top at 1130.
FOREX MOVERS
Switching over to the forex arena, the Aussie/dollar and kiwi/dollar are posting healthy gains Wednesday. Those two pairs are considered "high beta" currencies and they benefit from global risk appetite.
Australia, in particular, is a major commodity exporter, with the majority of its goods heading to China. Australia has been hiking interest rates for months now and currently offers the highest rate among major industrialized nations at 4.50 percent.
CORRECTION OVER?
The Aussie/dollar saw a corrective retreat take hold throughout much of August, but the dominant technical uptrend off the May low was not harmed. The next major target for Aussie/dollar lies at the Aug. 6 peak at .9221.
With risk appetite back in fashion, that Aug. 6 high will be the next objective bullish traders are eying.
JOBS DATA FRIDAY
With the latest U.S. employment report due out on Friday, that news could either reinforce the renewed risk appetite and bullish attitude toward stocks, or it could severely dampen the view.
However, U.S. stocks rallied on good news Wednesday and will continue that rally if better-than-expected jobs data hits the tape on Friday morning.
USE CAUTION
Traders will need to be nimble and may want to consider evening up positions ahead of Friday's 7:30 a.m. CT release. Once the news emerges, a new short-term trend could appear.