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Global Market Wrap:
Slow European Session Tops Out Heady Week
Equity Futures: Dow +7.00. S&P +0.70. NASDAQ -2.00. Japanese Nikkei -5.00. German Dax -10.00.
European Trade: European markets are posting small gains in Friday trade, as the major indexes are trading close to important price levels. The German Dax opened the day below the 5750.00 area, the same place where the market topped over the three weeks of trading. The U.K. FTSE is in a similar situation, starting the trading session below the 5200.00 resistance area, the high of the last few trading sessions.
The European blue-chip companies, tracked by the DJ EURO STOXX 50 index, advanced only 0.10% during Friday morning trade, being outperformed by the Eastern European blue chip companies, which are up 0.50%. Until now, the best gainer in Europe is Italy’s MIB, which is up 0.50%, while the worst performer is Norway’s OBX, which is down 0.10% on basic materials and consumer goods sectors.
S&P Futures: The S&P futures traded flat during the Asian session, but picked up some additional momentum as the European session approached. During the London open, the S&P futures had an attempt to break above the 1067.00 area, the high reached in Thursday trade, but the move was retraced very quickly.
S&P Technical View: TheLFB Member Charts
4 Hour chart trend: Long. Main price points: 1011.50, and 1075.25. Looking for: Wave A top
S&P futures have made another push higher in the red wave A over the last few sessions, which means that at least three waves of retrace are expected in the mid-term. Traders will be looking now for a wave B pull-back, down near to the 1040-1045 support region of a previous black wave IV area of a lesser degree.
The volume coming into the wave A leg was reducing in sub-waves IV) and V) once the wave III) was done, which suggests that the temporary top is near, so a move lower is be expected.
Currently, an expanding diagonal in the black wave 5 or C position is still valid, so once the expected wave B drop is done, the market should make another push to the highs with wave C to complete the pattern.
Sector Moves: The basic resources sector is down for the first time this week in European trade. Until now, the basic resources sector was the star of the market, being responsible for most of the recent uptrend seen in the equity markets. However, offsetting these declines is the automobiles & parts sector, which is up 0.80%, after in Thursday trade, it was the second best gainer. The gains within this sector are led by Italy’s Fiat, which is expected to report on Oct 21 its third quarter results.
Telecommunications and technology stocks also gained in Friday trade, after Spain’s Telefonica announced larger than expected dividends. Telefonica traded 1.80% higher in Spain’s IBEX, being among the only shares that managed to stay above the break-even line in this Spanish market.
Economic Moves: The market is expecting at 07:00 EDT data coming from the Canadian labor market. Analysts say that the Canadian economy added jobs in the month of September, but still the unemployment rate kept rising to 8.8%. Later in the day, at 08:30 EDT, the U.S. and Canadian trade balances will be published for the month of August. Both countries are expected to have a deficit in August, with U.S.’s reaching -32.8B.
Crude oil for November delivery was recently trading at $71.20 per barrel, lower by $0.40. Crude oil is trading slightly below the break-even line, after it formed on the 4-hour chart a bearish pin-bar as it bounced from the $72.50 area.
Crude Oil Technical View: TheLFB Member Charts
4 Hour chart trend: Short possibilities. Main price points: 68.33. Looking for: Wave II) top
Oil hit new highs of the week on Thursday, after the U.S. currency was lower across the board in-line with higher equity moves. The market has made a sharp move up near to $72.50 per barrel, into the area, where the wave v) of an impulse c may be completed. If this is the case then a whole red wave II) correction should also be completed.
Traders know that once the complex correction is done the powerful moves are just around the corner, which in our case should be to the down-side, into the red wave III). The stochastic oscillator is also signaling for a move lower over the coming session after the bearish divergence and cross that are shown.
The break of 68.33 support will confirm completed impulse move from 64.97 low to current highs around 72.50 zone.
Gold for November delivery was recently trading lower by $10.30 to $1046.00. Gold appears to be in a corrective downtrend phase, after it bounced from the $1060 area in Thursday trade. In the medium term, the gold outlook continues to lay to the upside, as long as the dollar index is sold in almost every circumstance.