Global Market Outlook: Regional Ebbs and Flows
Equity Futures: Dow +20.00. S&P +2.20. NASDAQ +4.75. Japanese Nikkei +50.00. German Dax +12.00
Asian trade: Asian shares, together with the S&P futures are trading slightly above the break-even line. The Japanese Nikkei index remains closed in Tuesday trade, something that is reflected in the overall market that has very light Asian based trading volume. The overnight global session has seen just one index moved more than -/+ 1%, the Korean Kospi Index, which advanced 1.17%, after the Korean economy was upgraded to developing from emerging by FTSE.
Even though most Asian stock markets headed higher, the S&P/Asx and the PSE Composite indexes were trading slightly in the red. The Australian S&P/Asx declined for a second day in Tuesday trade, affected by the selling going on in the commodity market.
European and U.S. based futures markets are indicating a green start to Tuesday trade, and that is backed by a weaker dollar index (76.70), and a commodity market that has found good support at the current levels.
Daily chart trend: Short possibilities. Main price points: 865, and 1070. Looking for: Wave 5 or C top
The wave count on the weekly chart, above, offers a question; is it wave 4 or not? The price structure on a daily chart is also showing two valid scenarios. On the left side of the chart below, it shows an impulse structure with five waves up from the 665 lows to the current highs. If this is the case, the wave 4 discussed on the weekly chart, above, will be rejected, since the fourth wave is a corrective wave, which means it cannot be sub-divided by a five wave move. However, in this scenario, a three wave push lower into a corrective wave 2) is expected.
On the right side of the chart, we have a different picture, with a wave count that has a clear zig-zag correction, which is valid for a wave 4 scenario. In this case wave 5 going lower will follow.
Overall, the current price structure signals for a turning point, since the market is trading on the top of wave 5 or wave C leg, around the Fibonacci resistance levels. For a down-trend confirmation the market needs to make a daily close below the 50% Fibonacci retracement level, and also must break through the lower support line.
Sector Moves: Mining stocks are helping to lead the declines in the Australian S&P/Asx index BHP Billiton LTD, which is the world’s largest mining company lost over 2 percent while Rio Tinto, the third largest mining company in the world had declines of 3.4 percent. In the Hang Seng Index, most sectors posted small gains after China’s sovereign fund bought a 15% stake in Noble Group, a commodity company.
Economic Moves: The economic calendar houses two red flag releases, Canadian 08:30 EDT Core Retail Sales Exp.0.1% Pre.1.0%, and New Zealand 18:45 EDT GDP Exp.-0.2% Pre.-1.0%. Ahead of Wednesday interest rate decision and statement from the FOMC the market has very little macroeconomic data to work with.
Japanese markets are closed for a 5 day bank holiday this week. The Australian S&P/Asx declined 2.00 points (0.04%) to 4,675.40
Crude oil for October delivery was recently trading at $70.00 per barrel, up $0.30, in very thinly traded markets. On the daily chart, crude oil is approaching a 5-month old trend-line, in the 68.00 area. A break below this level would trigger a strong wave of sell orders, shifting its outlook to the downside, temporarily.
Weekly chart trend: Mixed. Main price points: $33, and 74.90. Looking for: Wave 2).
Oil is still moving very slowly around the trend-line resistance and previous wave 1) top, which suggests that wave 2) still may be developing. As such, traders may see another move down to test the 38.2% retracement area again before the real gains come into the market. This scenario will be valid so long as the $33 low holds. A near-term break through the trend line support on the RSI indicator should be the key for move towards the $50-$60 area.
Gold for October delivery was recently trading up by $2.80 to $1,007.80. Gold declined $9 to test the 20-day moving average in Monday trade, but the precious metal bounced back from this support area. This shows that gold is building a strong support area, which may allow it the necessary time to consolidate around the $1000 value.