Global Market Outlook: No Relief For Asian Market

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Global Market Outlook:

No Relief For Asian Market

Equity Futures: Dow +25.00. S&P +3.00. NASDAQ +3.25. Japanese Nikkei -10.00. German Dax -30.00

Asian markets continued to tumble in Thursday trade, extending the global rout as investor sentiment switched this week from acceptance of no top-end growth from earnings, to disappointment at the number of companies missing expectations this week. The turning point seemed to come last week, in the reaction to very positive Apple Inc. numbers that did not follow through to positive equity trade. 

It has been tough sledding since then, and may reflect the fact that since March global equity markets have surged approximately 60%, making this one of the strongest rallies in history, even though the global economy is barely moving. The Mutual Fund year-end finishes this week, and that may be weighing on sentiment as traders weigh the investors needs as books get closed. 

There are some important earnings numbers coming in U.S. trade, including Exonn Mobil, Sprint Nextel, Proctor & Gamble, and Monster Worldwide, all of which could impact the direction of trade in U.S. stocks.

Currently, every main market in the Asian region is trading in the red, with the Nikkei, Hang Seng Index and the S&P/Asx indexes tumbling around to 2%. However, it should be noted that the vast majority of declines were built into futures trade before the opening bell in reaction to negative Wall Street trade, while the cash session has been relatively flat.

S&P futures have lost 50 points (5%) from the high reached in Monday trade down to the lowest values seen in three weeks. Following closely, the Nikkei index has plunged nearly 600 points (6%) since Monday, to also reach to the lowest value in three weeks. 

S&P Futures Technical View: TheLFB Member Charts
4 Hour chart trend: Short. Main price points: 101.50, 1062.50, and 1098. Looking for: Move lower
 
S&P futures are still trading lower with the latest break going through the 1062.50 resistance area, which is confirming that the U.S. dollar bottom, and equity top, are temporary placed.
 
The wave count of an expanding diagonal in wave 5 or C that we have been monitoring for a few weeks now was completed at the 1098.50 top, which needs to hold if a bear market move can easily happen. As such, we will be looking for an impulse structure towards the 1011.50 area.

Sector Moves: The vast majority of stocks declined during the Asian session, as the major indexes held lower from the start of trade. The biggest losers came from the same basic materials and technology sectors, which have posted impressive declines over the last few trading sessions. 

The financial sector also moved lower, after a top executive of ANZ Banking Group said that Australia’s economy is still in a fragile situation. On top of this, most companies that were expected today to report missed analysts estimates, like PetroChina, Advantest Corporation or NEC Electronics Corp.

Economic Moves: The Conference Board released a report detailing Australia’s leading economic indicators. The index has advanced 1.8 percent while the coincident index declined 0.2 percent. This index is made up of several economic indicators which were previously released.

Manufacturing in Japan has increased production for the seventh consecutive month. Factory output has 1.4 percent over the last month after climbing 1.6 percent in August. Earlier in the year factories in Japan had cut production as the global recession shut consumers wallets.

Crude oil was recently trading at $77.30 per barrel, down by $0.10. 

Crude oil Technical View: TheLFB Member Charts
4 Hour chart trend: Long. Main price points: 76.60, and 82. Looking for: Wave IV)

Oil is still trading lower, with the prices in the middle of a corrective red wave IV), we discussed recently. A solid support zone for a possible wave IV) bottom and then a coming bounce higher, is shown between 38.2% and 50% of wave III) distance, around 75 area.

In this current wave IV), prices must not trade into the wave I) territory shown around the 71.92 area, otherwise the wave count will be invalidated as wave I) of an impulse count must not trade into the territory of wave I).

Gold was recently trading higher by $2.00 to $1,032.50. 

Gold Technical View: TheLFB Member Charts
Daily chart trend: Long. Main price points: 1070. Looking for: Wave 3) top

On a daily gold chart, the market reached a new top recently around $1070 per ounce, where an extended red wave 3) may be completed. The market is currently trading around a significant Fibonacci extension resistance area, where a move lower into the corrective wave 4) may follow over the coming days and weeks, towards the lower support line of a trading channel.