U.S stock markets look set to move higher after shrugging off geopolitical concerns and with earnings season kicking into gear. There is some relief that a direct confrontation between the U.S. and Russia over Syria seems to have been avoided after Russian President Vladimir Putin just warned that further Western attacks in Syria would bring chaos to world affairs. Also, expectations that the missile attacks on Syria will not be repeated helped the positive sentiment. Investors now look ahead to earnings from companies such as Netflix, Bank of America, IBM, Alcoa and General Electric reporting this week. Last week saw reports from J.P. Morgan, Citigroup and Wells Fargo, all beating bullish estimates which may serve as an indication of a strong earnings season.
On the daily chart, the S&P500 (SPX) is trading clear of the 200MA highlighted in our previous reports. There is now the possibility of an inverted head and shoulders pattern, with a measured target of 2800, which will be activated if the index breaks above 2675. Upside resistance will be found at the 61.8% retracement level of 2705, and then, 2760. However, if there is a bearish reversal, a break of 2345 could open the way for another test of the 200MA near 2605.
In the daily timeframe, the US30 index is testing trend line resistance. A break of the trend line and 61.8% retracement level of 24600 could open the way for further upside movement towards 25050 and 25500. On the flip-side, a reversal below 24300 will likely find support at 23950, before testing the 200MA near 23635.