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Global Market Wrap:
Europe Heading Towards Best Quarter Since 1999
Equity Futures: Dow +19.00. S&P +2.70. NASDAQ +2.75. Japanese Nikkei -13.00. German Dax +3.00.
Equity markets once again saw again a very slow session in European trading. The major European indexes posted some small gains near the opening bell, due to the activity seen in the futures market, but since then, the European indexes moved mostly side-ways. The S&P futures have a similar story-line, moving less than 4 points since the day had started.
European Trade: Almost every market is trading in the green in Europe, helped by the activity seen in the futures market. Until now, the gains are led by the Nordic and Eastern European markets, which are up somewhere around 1.00%. At the same time, the U.K. FTSE and the German Dax advanced only 0.20%.
The DJ STOXX 600 stock index, which tracks the performance of the most representative 600 European companies, advanced 0.50% in Wednesday morning trade. Since the beginning of the current quarter, the DJ STOXX 600 index advanced nearly 20%, the most since 1999, something that denotes the depth and breadth of the current rally.
S&P Futures: The S&P futures had a very small range overnight, moving up and down around the 1055 area. The futures index might gain some additional momentum throughout the U.S. open, as the market is preparing for a calendar loaded with important news reports. To the upside, the next important resistance is in the 1060 area.
S&P Technical View: TheLFB Member Charts
4 Hour chart trend: Short possibilities. Main price points: 1075.25. Looking for: Wave II top
S&P futures have traded sharply to the up-side during the last few sessions with the recent top between 61.8% and 76.4% of wave I distance. These are typical Fibonacci retracement levels where the corrective waves, such as wave II of an impulse count or wave B of a correction count, find the top which indicates a possible turning point. On our count shown below, the wave II must not make a retrace for more than 100% of wave I distance, otherwise the wave count will have to be re-worked. The critical area of the wave count is shown at the 1075.25 top.
Sector Moves: Banks were trading below the break-even line in most of European trade, as a new round of earnings season reporting is approaching and some investors might be tempted to take profits ahead of what tends to be a very volatile period. Insurers were higher in most markets, with Allianz up 3.0%, Swiss Re and Zurrich Financial advancing 1.50%, and with Aviva up a little more than 4%. Technology stocks a traded mostly in the green as well, with Infineon up 6.0%, being the best performer in the German Dax.
Economic Moves: The economic calendar is loaded with important reports during both the U.S. session. At 08:15 EDT investors prepare for the ADP Non-Farm Employment Change. Investors might use the ADP numbers to gauge Friday’s NFP report, which usually has a very strong effect in the global markets. The last three ADP reports came in worse than expected. At 08:30 EDT, the monthly Canadian GDP report may show that the economy expanded 0.4% in July, the most in almost a year.
Crude oil for October delivery was recently trading at $67.40 per barrel, up $0.70. Crude oil continues struggling to break above the $67.50 area, where it topped since the beginning of the week. A break above this level can only come on positive S&P futures and on a market able to sell the dollar. At 10:30 EDT, the market prepares for the Crude Oil Inventories news report.
Crude Oil Technical View: TheLFB Member Charts
4 Hour chart trend: Short. Main price points: 63-64. Looking for: Extended wave iii
On the four hour oil chart, prices are still trading around the 38.2% retracement area, discussed yesterday, where the top of a blue wave iv) may be reached. The current wave count structure signals for another push lower in the coming days with wave v), which should complete an extended black wave iii somewhere around the 63-64 dollars per barrel. After that we will be looking for a long pull-back in a black wave iv, before the down-trend continues.
Currently, we are also monitoring the oscillator movement that has made a retrace to the zero line recently, which usually happens in wave two or wave four of an impulse count. In our case this oscillator suggests that the top of a blue wave iv) is near.
Gold for October delivery was recently trading up by $7.00 to $1001.50. Gold manage to break above the $1000 area for the first time in almost a weak. The breakout came during the European session, as the precious metal gather additional momentum.