S&P 500 testing all-time highs again, ASX 200 retraces its December drop, Aussie dollar struggling to break below 81c, ASX futures 17 points higher

This time last week I had written off the likelihood of a Santa Claus Rally (see Oliver Gordon's technical & seasonal analysis of this phenomenon by clicking here); however, all of a sudden markets began shaking off the blues from the middle of last week and the US S&P 500 posted an intra-day high on Friday night of 2,077.85, less than two points shy of its all-time 2,079.47 high. Implied volatility didn't fall significantly, but it does remain well off last week's highs of 25, closing at 16.49 on Friday. There definitely seems to be a growing sense that tensions between Russia and The West are easing, but I see this as temporary. There is no doubt that, as is the case in Ukraine, a latent support movement for Russia from former soviet states such as Latvia, Lithuania and Estonia will be courted by Vladimir Putin so long as he is in power. While Russia's not in great shape economically, neither Europe nor the US are in the mood for a fight, with the US delicately massaging its economic recovery and the European Union struggling more than ever. Last week's Putin press conference may have been a cleverly-timed tactic to get some relief - the rouble has settled back to reverse last week's extraordinary volatility and the Russian stock market has bounced from its 578.21 lows back to 768.06, which is still a near-50% fall from its highs this year.

In today's first chart you can see the S&P 500 (black line) back at its highs and the ASX 200 futures (orange line) almost managing to reverse its December sell-off. The second chart shows the US S&P 500 implied volatility index (VIX) dropping back to a level that is elevated, but well off those that were triggered by some panicky selling early last week.

The last chart today plots the AUDUSD currency pair on a daily basis. It has traded sideways for four sessions now and is beginning to present traders with an entry opportunity to either buy or sell on a break higher or lower. We need to look all the way back to the second quarter of 2010 to find a point where buying support existed just under current prices, so one could enter long positions now and set stops at around US$0.0850 or choose to enter a sell order at a stop entry price of US$0.8050.

Today’s charts are taken from the Rivkin Trader platform. 30,000 global instruments available to trade including FX, commodities, index, ETFs and international shares. Trade Australian share CFDs from just $8 or 0.10%. Click here or phone 1300 748 546 to get your free $100,000 demo account.

Upcoming economic announcements: No important data releases today.

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