Global Markets Short Momentum-Long Potential

Includes: AET, CI, QQQ, SPY, UNH
by: The LFB

Equity Futures: Dow +91.00. S&P +7.40. NASDAQ +11.00. Japan Nikkei +50.00. German Dax -10.00

U.S. Trade: The overall trading momentum continues to be light in the global markets, with the U.S. equity markets gaining 0.70%. The same pattern was seen in practically every market, including commodities, currencies and Treasuries.

Interestingly, the report calendar was loaded with important news report on Thursday, but even this has failed to move the market anywhere. Through the U.S. session, the equity market added a few points around the opening bell, helped by the positive Trade Balance and Unemployment Claims numbers, but since then, the major indexes have been trading flat, unable to push or even to test any important price point.

Right now, the S&P futures are trading below the 1110.00 area, which has been an important swing point over the last four weeks of trading. A break above it will allow the market to set new yearly highs and would practically clear the path up to the 1035 area, where the market formed a swing point low on Sep 18 08.

TheLFB Charting Link

S&P Technical View: TheLFB Member Charts
Daily chart trend: Short. Main price points: 74.19, and 76.82. Looking for: A Long wave A)

Prices on the dollar index have reached new lows over the past week around the 74.00 zone, where the trend has quickly reversed. As such, traders may look for a completed ending diagonal in wave V) position as we can count three completed waves down in a blue wave V).

If the wave count is correct, (and if the dollar bears are done), then market should continue to trade higher towards the 76.82 resistance, where a breakout will confirm a current turning point. A Long wave A) is in progress.

Sector Moves: The U.S. equities have been pulled higher by the utilities, services and by the healthcare sectors, advancing approximately 1.00%. On the opposite side were the heavyweights financial and conglomerates, which advanced only 0.3%. To some extend, this can explain the market’s resilience to push anywhere.

Among the broader industries, the strongest gains came from the health care plan companies, which advanced on average 4.5%. Within this industry, Unitedhealth Group (NYSE:UNH) added 6.50%, Cigna (NYSE:CI) advanced 5.40%, while Aetna (NYSE:AET) rose 4.17%. Unitedhealth Group and Cigna were also among the top gainers in the S&P 500 index. Health insurers surged in Thursday trade after the news regarding President Obama’s healthcare program hit the newswires.

Economic Moves: During the U.S. session, a report showed that the trade balance deficit for the month of October narrowed to 32.9B, helped by surging demand for exports. At the same time, the U.S. Unemployment Claims advanced to 474K during the prior week, after three consecutive weeks in which the payroll only got smaller.

Crude oil was recently trading at $70.90 per barrel, lower by $1.70.

Gold was recently trading lower by $14.10 to $1,129.30.

Treasury notes and bonds declined for a second consecutive day on Thursday, reflecting the gains seen in the equity market. However, the yield curve is getting steeper and steeper, whit the spread between the 2-year and the 30-year bonds reaching the highest value since 1980. This means that investors are expecting strong inflationary pressures on the long term.

Disclosure: No positions