European Equities Are Positive and the Dollar Holds on

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Global Market Wrap:

Equities Rise On Japanese GDP

Equity Futures: Dow +62.00. S&P +8.20. NASDAQ +8.75. Japanese Nikkei +32.00. German Dax +11.00.

European Trade: European markets opened the Monday trading session with very strong momentum, following the much better than expected Japanese GDP report and APEC’s pledge to maintain the monetary stimulus. The boldness seen in Asian trade, where the markets reversed initial loses, allowed a risk aversion wave to sweep into the overnight session.

European Equity markets saw positive momentum from the opening bell. All regional stock markets are currently trading in the green, with the gainers led by Norway’s OBX, which jumped 2.20%. The heavyweight German Dax and U.K. FTSE gained approximately 1% in Monday trade, while in Emerging Europe, Poland’s Wig Index gained 2.10%.

The European stock market was pushed higher on the back of Asian market momentum that followed very strong Japanese GDP numbers. In the third quarter, the Japanese economy expanded 1.2%, beating market’s expectations of a 0.7% read. The growth rate of the Japanese economy is stronger than the one seen in Europe or U.S., even though the market had been pricing in a slow Japanese recovery.

Further positive momentum came from the Asia-Pacific Economic Cooperation [APEC] meeting, where the major economies in the Asian region pledged to maintain the stimulus programs, echoing the G20’s statement made earlier this month.

S&P Technical View: TheLFB Member Charts
4 Hour chart trend: Long. Main price points: 1098.50, and 1115-1120. Looking for: Wave C

S&P futures are trading higher, away from the 1082 support area where wave IV) finished. As such, wave V) of an extended red C is in process and signals technically for a break through the 1100 area over the coming sessions, which will put the 1115- -1120 area in play.

Overall, an expanding diagonal pattern in black wave 5 or C position is not done yet. Each leg of our expanding diagonal pattern should be structured by three waves, labeled as wave A, B and C. On the four hour chart below, the market is trading in the last leg of our pattern, wave 5), with an extended red wave C in process. If the fundamental driver hits that allows global risk tolerance to hold, this technical set-up may have legs. However, on a week of red flag U.S. economics the near-term volatility may increase.

Sector Moves: The vast majority of the gains in European trade came from the basic materials sector, which surged 3% after gold reached a new record high during the session. This was reflected in the U.K.’s FTSE, where miners have a crucial weighting in the market. As such, the six best gainers in the FTSE 100 index came from the mining sector, with Lonmin jumping 7.85%. Also in the U.K. index, Rolls-Royce jumped 3.20% after it managed to secure a £1.5 billion pound contract with Air China. Since the beginning of the year Rolls-Royce has constantly returned higher yields than the FTSE index.

In the German Dax, ThyssenKrupp advanced 3.0%, being the second best gainer in the index after Infineon. ThyssenKrupp advanced after it was upgraded by JPMogan to “overweight”.

Economic Moves: The only notable macroeconomic report seen during the European session was the euro-area CPI, which came in at a -0.1% read from one year earlier. Ahead, investors prepare for the U.S. retail sales numbers and for the Empire State Manufacturing Index, which will probably have an important impact on the market. Both reports are scheduled at 08:30 EST.

Crude oil was recently trading at $77.35 per barrel, higher by $1.00.

Crude oil Technical View: TheLFB Member Charts
Latest Updates: Nov 16 09 05:50 EST Overall View: Looking for final legs of wave V (daily chart)

4 Hour chart trend: Long. Main price points: 71.92, 75.50, and 82. Looking for: Double zig-zag

Oil prices were lower at the end of the last week, after the U.S. Crude Oil Inventories report on Thursday. As such the triangle formation that we were monitoring was invalidated, but the overall is still on the long side, since we can see a double zig-zag pattern in the red wave IV), with the recent low at 75.50 area.

If the wave count is correct then the market could trade higher over the next few days with the first minimum objective around the $79-80 per barrel area.

The wave count remains valid so long as the 71.92 critical support area holds.

Gold was recently trading higher by $14.10 to $1130.80.

Gold Technical View: TheLFB Member Charts
4 Hour chart trend: Long. Main price points: 1083, and 1130. Looking for: Wave 5) top

Gold has reached new highs recently, which means that the bullish outlook in our blue wave V may not be done yet. Traders should wait on a break of the 1100 support zone, of a re-worked wave IV, before they can confirm a bearish reversal. Until that happens, a move up into the much higher levels (1150) may still be the case, especially if U.S. dollar breaks through the 74.78 support zone.

Author's Disclosure: No positions