China’s Plenum Disappoints, Asia Down

U.S. markets tracked lower overnight coming off record highs. With the lack of data, this was profit taking but in Asia, markets fell thanks to a disappointing statement from China’s Third Plenum Meeting.

Investors were not too happy with the lack of solid information given to them regarding policy reforms from China’s secretive economic policy meeting. The leaders of the world’s second largest economy pledged to allow markets to play a decisive role in the economy, but released no other details.

Overnight, U.S. Secretary of the Treasury Jack Lew was interviewed by CNBC. He is very optimistic with the recovery of the U.S. economy but mentioned the world should not count on the United States to help support the global economy.

Later today, during the U.S. markets, Federal Reserve chief Ben Bernanke will be watched as he is set to speak. Investors will be very keen to hear about the direction of the country’s monetary policy. Also, Vice Chairwoman Janet Yellin is set to begin her confirmation hearing to replace Bernanke.

STOCKS

Overnight, the DJIA went from gains to losses and then closed lower by 23.43 points. The Dow ended the day at 15,750.60. The S&P 500 lost 4.2 points to close at 1,767.69. The index was led lower by financials and utilities. The Nasdaq Composite was up a tiny bit to close at 3,919.92. The tech heavy index also traded with a great deal of volatility most of the day going from gains to losses.

We would like to point out that 653 million shares traded and the volume on the Composite was 3.2 billion. Decliners beat advancers nearly 2-1 on the day.

In Asia, the Shanghai Composite was down nearly one percent and hovering near a fresh two month low as investors waited on the government to issue better and more concrete statements regarding reforms. The Nikkei 225 is 0.3 percent lower as of right now as weak economic data is disappointing investors. Machinery orders for September fell 2.1 percent. This is a strong indication that Shinzo Abe’s plans to boost capital expenditure has not worked very well.

The ASX 200, in Sidney, is trading over 1.3 percent lower as metal commodities are selling off. Gold is now near a one month low. In Seoul, the Kospi is down 1.3 percent as off shore traders were sellers for the seventh straight session. The Kospi is at a new two month low.

CURRENCIES

EUR/USD (1.3444) has moved higher and is above 1.34. We are now testing 1.3450. A move above this can test 1.3500 and then 1.3550. We are seeing the Sterling fall like a stone in water. GBP/USD (1.5889) is now testing 1.58850. The resistance level at 1.5950 is holding very well as we had thought. A break below the current level can see us move towards 1.5750.

USD/JPY (99.479) the Dollar broke above 99.50 but could not break above 99.80. We need to break this level to bounce to 100.50 then 104.00.

COMMODITIES

Metals have sold off hurting the exporting economies like New Zealand and Australia this morning.

Gold (1269.50) is now below 1275 which opens the doors for 1250 and then maybe 1225. Silver (20.705) retreated from 21. We see strong support at 19.00 which needs to hold in order to prevent further losses. Copper (3.211) fell off from 3.22 on worries output in China could be falling off. A fall below 20.00 can target 3.15.

TODAY’S OUTLOOK

Investors will be paying very close attention as Ben Bernanke speaks later in the U.S. session. Investors feel the taper can begin sooner than 2014 and will be listening to any indication of that as well as any mention regarding future monetary policy.