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Global Market Wrap:
Pledge For Liquidity Lifts Global Markets
Equity Futures: Dow +75.00. S&P +9.00. NASDAQ +12.50. Japanese Nikkei +40.00. German Dax +12.00.
European Trade: G-20’s pledge to maintain the quantitative easing methods in the real economy has helped the European markets to gain important ground in Monday morning trade. As such, the regional European indexes and U.S. futures markets have advanced an average 1%, while gold pushed easily through the $11000 benchmark level.
This comes after two weeks of global equity markets moving mostly lower, and shedding close to 5% on average, on concerns that the major central banks will draw in liquidity, created throughout the credit crisis via interest rate cuts and quantative easing. The fear was that move would send the global economy back into recession.
However, these rumors were denied after the G-20 officials pledge to continue to support the economy via low interest rates and huge fiscal deficits. In short, the developed countries are pledging to back most asset classes with central bank liquidity, and in real terms, back-stop risk.
In Europe, Luxembourg is the only stock market that did not advanced more than 1%. At the same time, the German Dax is trading up 1.30%, while Spain’s IBEX 35 Index advanced 1.10%. The emerging European markets saw a very strong session, with the DJ STOXX Eastern Europe 300 index rising 2.20%, one of the strongest gains of the last few weeks of trading.
S&P Technical View: TheLFB Member Charts
4 Hour chart trend: Mixed. Main price points: 1025, and 106 -1070. Looking for: Wave 2) top
On the S&P 4 hour chart the market is still searching for a blue wave 2) top, with the current prices between the 61.8% (1071) and 76.4% (1082)resistance areas. Traders with a short bias may be looking for a turning point in this area, where a possible bounce lower would push the dollar higher.
The wave count is showing a clear set-up for an expected move lower, into a wave 3)/C) leg, which will be confirmed if the wave B low and 1025 support are taken out.
The critical resistance zone of the wave count is shown at the 1098.50 area, where the break-out would invalidate things, as wave 2) must not make a retrace for more than 100% of the wave 1) distance.
Sector Moves: The mining sector added important gains in Monday trade as gold moved above the $1100 area. Miners were among the top gainers in the U.K. FTSE, with Kazakhmys PLC, Prudential, Rio Tinto and Antofagasta advancing between 3.50% and 4.50%.
Banks and insurance companies also rose in Monday trade, advancing on average over 2%. The most notable mover in the financial sector was Allianz, which surged 4.7% after it posted strong Q3 earnings. Also in the financial sector, Commerzbank advanced 3.45%, Societe General added 3.30%, while Credit Suisse rose 2.2%.
The worst performing companies in European trade came from the food & beverages sector, as some market participants consider that Kraft Foods may have to raise $16 billion for their Cadbury bid. Since the trading day started, Cadbury is up 1.2%, while the heavyweight Nestle only 0.15%. Kraft foods lost 0.10% in the after and pre market activity.
Economic Moves:
08:30 EST Cad Housing Starts Exp 157K, Prev 149K
Crude oil was recently trading at $78.70 per barrel, higher by $1.30.
Crude oil Technical View: TheLFB Member Charts
4 Hour chart trend: Long. Main price points: 76.47, and 82. Looking for: Triangle
Oil prices are trapped between the 81.95 highs and 76.47 support for the last two weeks, which suggests that the wave IV) structure is a little more complex than first thought. As such, the market may be forming a triangle formation, where the 76.47 support area must hold.
A break of the 81.95 highs will put a wave V) target around 84 dollars in play.
Gold was recently trading higher by $13.00 to $1108.70.
Gold Technical View: TheLFB Member Charts
4 Hour chart trend: Long. Main price points: 1026, and 1110-1120. Looking for: Wave 5) top
Gold is trading higher after the small triangle formation shown below, in the blue wave IV. The last push of a red wave 5) looks to be developing with an up-side target shown around the 1110-1120 area. Once this level is reached, traders should be very carefully with new long positions, as some larger corrective bounces will be expected after the red wave 5) top. Theses will complete the larger black wave III form our daily chart review. After every five wave move, market reacts with at least three waves of a pull-back.