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Global Market Wrap:
Equities Hold Green On Low Momentum
Equity Futures: Dow +23.00. S&P +3.20. NASDAQ +5.25. Japanese Nikkei -20.00. German Dax +4.00.
European Trade: European markets opened below the break-even line following weaker than expected (but still showing growth) GDP reports from the main European economies. However, as the session progressed the regional equity markets turned into the green, and at the same time, S&P futures posted small gains, although on very light momentum.
The same light order flows were seen in the European cash market, were the major indexes are currently posting very small gains. Since the session started, the German Dax has gained 0.20%, while the U.K. FTSE rose 0.5%. The strongest gains among the European markets came from the Belgian and Luxembourg stock markets, which advanced 0.90% and 1.30% respectively. The emerging European markets traded broadly lower, with the DJ STOXX Eastern Europe 300 index shedding 0.60%.
S&P Technical View: TheLFB Member Charts
4 Hour chart trend: Long. Main price points: 1098.50, and 1015-1120. Looking for: Wave C
S&P futures traded lower into the 1080 – 1083 support zone as discussed and posted here yesterday, where traders may already be seeing some up-side reactions from the 38.2% Fibonacci test. The current wave count structure signals for a final push higher in wave V), which may find the top somewhere around the 1115-1120 zone, especially once the wave III) top at 1100 is taken out.
Overall, an expanding diagonal pattern in black wave 5, or the C position, does not look to be complete. 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: British Airways and Iberia announced a $7 billion merger deal, which would create the third-biggest airline company globally. This has helped the travel & leisure sector gain 1.30% in Friday trade, the most among the European sectors. In Thursday trade, British Airways advanced 7.5%, while Iberia moved up by 11%%.
The heavyweight banking, and basic resources sectors, posted very small gains, something that might explain the market’s inability to trend too far. Over the last few weeks of trading, these two sectors were the main growth-drivers for the European and global markets. Without price action coming into those sectors the Friday session may be tough sledding.
Economic Moves: During the European session, the GDP numbers for Germany and for the Euro-zone area economies were released. The German economy expanded 0.7% in the second quarter on investments and business inventories, however, the market expected a 0.8% growth rate. At 5:00 EST, a report showed that the economy of the euro area advanced 0.4% in the third quarter, which trails the growth rate of both the U.S. and Australian economies.
Crude oil was recently trading at $77.44 per barrel, higher by $0.50.
Crude oil Technical View: TheLFB Member Charts
4 Hour chart trend: Long. Main price points: 71.92, and 82. Looking for: Double zig-zag
Oil prices moved lower after the U.S. Crude Oil Inventories report on Thursday, resulting in a move lower to test the 76.00 support zone. As such any triangle formation that was being monitored was invalidated by the severe nature of the move. The overall view is still to the long side, as the chart below shows a double zig-zag pattern, in the red wave IV).
If the wave count and zig-zag pattern is correct then the market should trade higher over the next few sessions, with the first minimum objective around the 79-80 dollars per barrel area.
The wave count remains valid so long as the 71.92 critical support area holds.
Gold has reached new highs recently, which means that bulls in our blue wave V may not be done yet. As such, traders should wait on a break of the 1083 support zone, before they can confirm a bearish reversal. Until that happens, a move up into 1130 area may still be the case, especially if U.S. dollar breaks through the 75.00 support zone.
Disclosure: No positions