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  • Australia’s S&P/ASX 200 index was down 0.33% in the open.
  • Wall Street stocks slide and investors think twice ahead of US NFP.
  • Bulls have not quite made it to the 61.8% Fibo retracement, do they have the legs?

The benchmark S&P/ASX200 fell 0.33 per cent at the open after Wall Street ended its four-day run of gains as investors capitulated ahead of key US jobs data on Friday. The Nonfarm Payrolls reports could come as a stark wake-up call to investors looking through rose-tinted glasses at the outlook for a post coronavirus world and weigh on stocks for the forseeible sessions ahead. 

meanwhile, the global stock market has rallied as if it were a forgone conclusion that there will be no further spikes in the virus and that there were not millions of people around the world out of work.

However, headlines pertaining to new coronavirus cases in the US was taking a front seat and alarming investors who are also concerned of a subsequent contagion considering the riots.

A Los Angeles Times analysis shows that the number of weekly cases in California continues to rise, exceeding 17,000 last week for the first time in the pandemic. But it’s not just Cali’ where this is happening, California is one of about 20 states where new cases are increasing over the past five days, according to Johns Hopkins University.

Consequently,  the S&P 500 lost ground as investors took profits in advance of Friday’s jobs report, which is expected to show the US unemployment rate to jump to a historic 19.7 per cent. The Dow Jones Industrial Average rose 11.93 points, or 0.05 per cent, to 26,281.82, the S&P 500 lost 10.52 points, or 0.34 per cent, to 3,112.35 and the Nasdaq Composite dropped 67.10 points, or 0.69 per cent, to 9,615.81.

Meanwhile, the Australian government outlined changes to foreign investment laws, which are designed to protect companies critical to Australia’s national security. More on that here: Australia PM Morrison: New foreign investment rules will protect Australia’s interests

ASX 200 index levels

The bulls had been pressing on towards a 61.8% Fibonacci retracement of 6134. There is some consolidation taking place here and a reversal of the latest impulse brings in a 50% mean reversion as a support stricture to lean on at 580, 9th March structure. 

However, MACD is bullish on both the daily and 4HR time scales as well as the hourly. A pullback may only make it to the 27th May highs of 5922 or a 38.2% Fib of the impulse at 5910, in which case will leave the outlook more bullish. 

Failures below the prior resistance structure, bears can seek a run back to the previous resistance around 5500.