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Global Market Wrap: European Financials Send Markets Lower

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Global Market Wrap:
European Financials Send Markets Lower

Equity Futures:
Dow -22.00. S&P -2.80. NASDAQ -4.50. Japanese Nikkei -30.00. German Dax -4.00.

European Trade: The European markets were surrounded by a downbeat sentiment in Tuesday morning trade after futures trade gapped higher and then failed to hold, something that sent the major regional indexes lower. S&P futures also dropped a points overnight, but the trading volume in the futures market continues to remain very light.

The European cash markets opened near the break-even line, but as the session progressed, the market started sliding lower. This sell-off looks rather strange, since lately, a number of positive news reports hit the newswires, including the bailout of Dubai World and Exxon’s decision to buy XTO Energy. A few days back, this would have created strong upward pressure.

Most European markets are trading in the red, breaking a run of three straight days in which the market only advanced. The German DAX has lost 0.30% during the current session, while Spain’s IBEX fell 0.55%. However, some markets managed to hold in the green, as Switzerland’s SMI, which is up 0.20%, and Holland’s AEX, which is up 0.05%. The sell-off was more accentuated among the emerging European markets, which fell 0.80% on average, due to the higher risk profile of the region.

S&P futures moved again very slowly throughout the overnight session, ahead of the U.S. PPI and TIC data releases. The selling seen in the European cash markets dragged the S&P futures a few points lower, helping it to break below the 1110.00 level.

TheLFB Charting LinkS&P Technical View: TheLFB Member Charts
4 Hour Chart Flows: Mixed Price Points: 1066, 1084, and 1118 Looking for: An ending diagonal (reversal pattern)

Momentum: The S&P futures market confirmed a Long momentum read on Nov 11th and has built a near-term support base around 1095. The 1115 area will be a major resistance point to battle this week. The moves to test and hold support are impressive, and now backed with Japanese and German markets that are also looking bullish.

Elliott Wave: S&P futures are trading higher, and away from last week's 1084 lows, after the market was unable to break through the support line of an ending diagonal pattern at 1084. Currently, the S&P is bullish, with moves that are trading very close to the 1118 top, which is threatens for our primary wave count. We have already put together an alternative (boxed) wave count, which will put the 1130-1140 target in play if the 1118 top is taken out.

Sector Moves: The banking sector is the biggest decliner in European trade, and is responsible for the vast majority of selling seen until now. The largest European banks have moved broadly lower, with Deutsche Bank dropping 1.60%, Barclays and HBSC falling 2%, Dexia falling 2.10% and Credit Suisse shedding 1.30%. 

In the German Dax, strong gains came from carmaker companies, with MAN leading the pack. The German truck maker MAN surged 3.5%, to become the best gainer in the DAX index, while VW advanced 0.70%.

Economic Moves:
08:30 EST USD PPI Exp 0.8% Prev 0.3%
09:00 EST USD TIC Long-Term Purchases Exp 38.3B Prev 40.7B
19:30 EST AUD GDP Exp 0.4% Prev 0.6%


Crude oil
was recently trading at $69.50 per barrel, lower by $0.05

Gold was recently trading lower by $8.20 to $1115.60.



Disclosure: No positions