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Global Market Wrap:
European Shares Looking For Inspiration
Equity Futures: Dow -50.00. S&P -6.20. NASDAQ -10.50. Japanese Nikkei -50.00. German Dax -5.00.
European Trade: The European equity markets opened the Thursday trading session flat, and soon after the regional indexes started declining, only to once again reverse roles and head back higher. This has been a roller coaster of a ride that has gone nowhere, and has also created an unclear picture of market momentum and sentiment. The same swings in momentum were seen in the commodity market and in S&P futures trade, which bounced from the highest values touched over the last few weeks of trading.
Most European markets finished morning trade in the red, with the Germany’s Dax and France’s CAC 40 falling 0.40% and 0.50% respectively. Since the day had started, the DJ Stoxx 50, which tracks the performance of the biggest 50 European blue-chip companies lost 0.60%. However, some markets did manage to post small gains during the first part of the session, like Finland’s and Austria’s stock markets, which gained approximately 0.40%. Among the emerging European markets, the Czech’s stock market was the only one that advanced, gaining 0.30%. As the afternoon session moves on, traders are coming in to bid prices higher, in an effort to get index numbers back into the green.
S&P futures moved lower overnight, but the trading volume was light, as has been the case in the whole 60% run since March, it seems that volume-to-price links are something that was left in the pre-quantative easing world. After a failed test in the 1100.00 area, the S&P futures market started retracing down to the 1090.00 price point where right now, the market seems to have found a temporarily base.
S&P Technical View: TheLFB Member Charts
4 Hour chart trend: Long. Main price points: 1025, and 1098.50. Looking for: Wave C
S&P futures have reversed lower after a break of the 1098 highs shown on Wednesday that failed to hold. The black wave III) discussed yesterday may already be completed, and as such the current prices in the wave IV) pull-back may fall down to the 38.2% support level in the near-term, before the market can trade higher again.
Overall, an expanding diagonal pattern in the 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.
Sector Moves: The vast majority of stocks moves lower in early European trade as investors used the current valuation to book some profits. The companies with the biggest negative contribution to the equity markets were insurers and banks. The insurance sector lost about 1%, after AXA, one of the biggest names in the industry announced together with AMP a $10 billion offer for its Asian unit.
However, the European car-marker sector added some points in European trade, after the CEO of BMW and Daimler made positive comments. The carmaker sector is trading up 0.50%, being Europe’s top gainer together with the telecommunication companies.
Economic Moves: There was only one important news report during the European session, the euro area Industrial Production numbers, which failed to reach the markets’ expectations. Ahead, investors prepare for the U.S. Unemployment Claims and for the Crude Oil Inventories reports which were delayed by 24 hours because of the Veterans Day celebrations.
Crude oil was recently trading at $78.90 per barrel, lower by $0.40.
Oil prices are trapped between 81.95 highs, and 76.47 support, which suggests that the wave IV) structure is a little more complex than first initially thought. Recently, the wave d leg was completed around the upper triangle line, which means that the final triangle leg, wave e, is in progress. The wave e leg should find support somewhere above the critical 76.47 area for a valid wave count formation. Once wave e completes, a move towards the 82 resistance area should follow, where a break-out will put the 84.00 target area in play.
Gold reached new highs recently, which means that the bulls in our blue wave V are not done yet. As such, bearish traders should wait on a break of the 1083 support zone, before any reversal can be confirmed. Until that happens, a move into the 1130 area may still be the case in the current blue wave V leg.
The RSI indicator is showing a bearish divergence which indicates that the top may be near.
Disclosure: No positions