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Daily Global Market Review

Daily Global Market Reviews are split into three sections covering Commodities, Equities/Dollar Index, and individual Currencies. The content focuses on 4-Hour mid-term analysis covering trend, momentum, participation, and overall global market correlations in any given session. The table below provides a visual snap-shot of global market alignment.

Current Global Market Outlook

Inconsistent reads from one session to another, with price action that is not backed by sustainable momentum, continues to be the pattern of trade set by global market mechanics. Head-line news is setting daily sentiment, and in the reaction to test and find fair value as each regional session opens and closes traders are seeing unreliable patterns of trade.

The very mixed global asset class outlook is a fair reflection of the unwinding of previous fiscal exuberance that now has a price to pay. Banking early and often, and leaving long-term opinions at the door, seems to be the way that tenured traders will look to handle whatever 2012 produces. 

Commodity Update

Weak Commodity trends with neutral near-term momentum reads are creating intra-day tests of resistance followed by consolidation and jagged price action, but seem unlikely to change the overall long outlook. The mid-term Commodity view remains bullish in light of heightened Middle Eastern tensions, and erratic Government bond auctions that are not allowing fair value to easily form. It will take a week of sustainable positive price action to create solid bases to make the next legs higher from, which could target 12-month high levels.

Near-Term Support and Resistance: 

Gold: Sup 1615 Res 1640 Neutral 1610. Silver: Sup 29.50 Res 30.75 Neutral 28.85. Oil: Sup 101.50 Res 104.30 Neutral 101.25. 

Equity/Dollar Index Update

Equity Indices are maintaining very weak order flows and low historical participation levels as the January Earnings Season unfolds. Recent bounces off oversold conditions have not been enough to change the mixed outlook and neutral view on equity valuations. The outlook is very mixed, and given that S&P 500 trade has not been able to break and hold Dec 1998 valuations things are likely to stay in the one-day-up, one-day-down pattern.

Long Dollar Index trends that are over-bought may create short intra-day reversals, but seem unlikely to easily change the overall trend, unless equity trade can find buyers in large quantity. The USD long-term outlook is very mixed, but the dollar will be bought to support inter-bank liquidity if regional bond auctions fail. The US Administration will not want to see the greenback at these levels, preferring instead that the USD wins the race to the bottom of major currency devaluation.

Near-Term Support and Resistance:

S&P500: Sup 1275 Res 1305 Neutral 1274. Dax: Sup 6120 Res 6220 Neutral 6040. DXY: Sup 80.30 Res 82.05. Neutral 81.45.

Currency Pair Update

Very mixed Currency trends that carry neutral momentum reads may create intra-day reversals against the USD, but seem unlikely to change the overall trend. The Currency outlook remains very cloudy, and in-line with 2011 trade that was unable to change major valuations over a tumultuous global 12-month period of trade. Eur, GBP, and CHF have looked weak in the near-term, while JPY is holding a bullish stance, as AUD and CAD appreciate in-line with bullion and oil buying.

Near-Term Support and Resistance:

EUR: Sup 1.2620 Res 1.2850 Neutral 1.2740. GBP: Sup 1.5370 Res 1.5525 Neutral 1.5445. JPY: Sup 76.75 Res 77.45 Neutral 77.10.

Global View

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Table Notes
When 4-hour chart trend and momentum reads are aligned across Equity Indices, Commodity, and Currency asset classes, a trending market is more easily achieved, and trade exposure and initial targets are generally increased.

When trend and momentum reads are not aligned, a choppy and overlapping period of trade is more easily achieved, and trade exposure and initial targets are generally reduced.

A long trend that is over-sold generally sets up for a long reversal off support. A short trend that is over-bought generally sets up for a short reversal off resistance.

Markets that are over-bought into a long trend, or over-sold into a short trend, can remain that way for a long time. Any positions that are taken against the 4-hour trend will have to absorb choppy and volatile price action.