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Equity Market Swing Change

The three main global equity markets moved higher in trade on Thursday, retracing part of the losses seen in reaction to the Japanese earthquake and tsunami. It must be said however that most sustainable equity price action, especially in S&P 500 trade, is coming via the front-end futures market, that sees swings and repositioning completed ahead of the Wall Street cash open. The Japanese Nikkei and German DAX futures charts are covered with price gaps, in reaction to the ever-changing momentum in S&P front end futures trade.

The Japanese Nikkei near-term charts have just turned bullish with a break above 9000, which will act as a solid area of support as traders position themselves from upwards test of 9480, and 9620. Upside areas of note will be 9990, the 20-day simple moving average, and 10300, the 50-day simple moving average. Holding above 9350 on a weekly chart will add further confirmation to the fact that 9000 will be hard to break as support. There will be no signals on the Japanese Nikkei until clarification comes on the rebuilding process after the tragic consequences of the recent earthquake.

The German DAX traded at 6950 ahead of the Wall Street open on Thursday, and now battles the 20 and 100-day simple moving average areas around 7000. The near-term trend is long, sentiment has turned bullish, and a solid area of support at 6750 looks to be in place. There have been few signals or alerts on German DAX trade over the course of the last three months, due mainly to the fact that most price action and sustainable movement is coming from price gaps at the open of each futures market day. There are very few European sessions that are able to break the ranges set in futures trade ahead of the cash market open.

S&P 500 futures trade has seen the front month contracts push up to test 1300, which is a major resistance area that houses the 50-day simple moving average. There is now a defined trading channel that has 1260 as support and 1305 as resistance, which have contained price action since Mar 09 11. A weekly close above 1305 could draw in tests of 1315, and possibly 1325, if global news headlines stay contained. However, next week's economic calendar is very busy with potential price moving action. A weekly close below 1289 will draw in a test of 1277 if sentiment changes and profit-taking hits from the recent bounce off support. It is unlikely that any new signals or alerts will be issued on S&P 500 trade until early next week.