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Global Market Wrap:
One-Day-Up Equity Pattern In Play
Equity Futures: Dow +29.00. S&P +4.50. NASDAQ +4.50. Japanese Nikkei +33.00. German Dax +5.00.
European Trade: The last two weeks of trading had been characterized by indecision in the global market, with the equity markets moving one day up, the next two down. The pattern was continued in Friday trade, helped by gains posted by S&P futures and the European equity markets.
The regional indexes in Europe opened higher in the last trading session of the week. Overall, shares advanced approximately 0.50%, helped by the commodity market which bounced on weaker dollar trade. The gains were not spread evenly through the market, as had happened lately. Germany’s DAX added 0.60%, but Italy’s MIB and Holland’s AEX indexes were trading barely above the breakeven line. In the emerging European region markets trade was also split, with Hungary’s BSE gains of 1% being the top mover in Europe, as shares declined in Poland and Czech Republic.
Throughout the overnight session, the S&P futures bounced from the 1090.00 area, near a trendline that has been holding the market since mid July. The outlook is mixed, with equities being susceptible to strong moves on both sides of the trend-line. However, a break lower would be seen as a very negative sign, sending the global markets into risk-aversion.
The next six week period is historically very bullish for equity trade (Shwartz Stock Market Handbook).
4 Hour Chart Flows: Mixed Price Points: 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 1085. This week the trend flattened out. The 1105 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 were unable to break through the 1118 top this week, which was a bullish sign for the U.S. dollar. If the S&P breaks through and holds under the lower support line of an ending diagonal at 1095, the dollar could make further gains against the major pairs if the Usd/S&P correlation holds as it has done recently. For this scenario to follow through, the wave 5) highs shown at 1118 must remain unbroken.
If there is be any break through the 1118 top, we will look for a move into the 1130-1140 area (alternative, boxed wave count), and to a Long reversal of the current down-trend on the majors to follow.
Sector Moves: The heavyweight bank and insurance companies were the only decliners in European trade. The gains posted by the basic resources, oil & resources, chemicals, healthcare and technology sectors helped the market trade the green and to post modest gains. European technology and healthcare companies advanced 1%.
Within the technology sector, the gains were led by the German companies SAP and Infineon Technologies. Infineon Technologies added almost 5%, the most in the German DAX, after JP Morgan updated its price’s target, while Commerzbank recommended buying the company. Remaining in the German index, the utility companies E.ON and RWE rose after Credit Suisse said that the two might see a year-end rally. E.ON is trading up 1.90%, following closely SAP and Infineon.
Upcoming Economic Moves: Clear of red-flag reports
Crude oil was recently trading at $73.40 per barrel, higher by $0.75
Gold was recently trading up by $0.90 to $1108.30.
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Disclosure: No positions