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Global Market Wrap:
European Shares Advance As Banks Plunge
Equity Futures: Dow +3.00. S&P +0.10. NASDAQ -1.00. Japanese Nikkei -10.00. German Dax -5.00.
European Trade: European markets opened the trading session slightly above the break-even line, recovering a small percentage of the declines seen in Monday trade. However, the vast majority of companies are trading flat, with gains coming almost exclusively from the energy sector.
The increases in the commodity sector were best reflected in the U.K. FTSE, were the raw material companies have an important weight in the index. Since the session started, the U.K. FTSE advanced 0.50%, leading the gains in Europe. At the same time, France’s Cac 40, Germany’s Dax index and Spain’s IBEX advanced between 0.15% and 0.25%.
Despite the small gains seen in the advanced European markets the Eastern European block took a strong beating in Tuesday trade. Poland moved down 1.20%, Russia fell 1.50%, Romania dropped almost 2%, while Hungary lost 0.90%. The worst participant in Tuesday trade is the Austrian stock market, which tumbled almost 2.50%, as Verbund, Voestalpine and Wienerberger plunged almost 5.5% in intra-day trading.
S&P Technical View: TheLFB Member Charts
4 Hour chart trend: Long. Main price points: 1062.50, and 1098. Looking for: Wave 5) top
S&P futures fell powerfully on Monday, exactly into the 1062.50 support region we discussed here last week. This area needs to be taken out for a down-trend continuation with our primary wave count, which will suggest that the top is in. Traders however, should also be watching the alternative wave count where a move higher in wave Y may be the case if the current support around 1062 with wave X holds. This is a swing point of great importance, and may be guided by earnings momentum to move long, or worries in the financial sector to move short.
Sector Moves: The financial sector continued to decline at a very strong pace in European trade, extending the declines seen during the prior day of trading. On the German Dax, Commerzbank plunged 4.50%, while in the U.K. FTSE Barclays fell 5.50%, Lloyds 3.40% and Barclays 2.80%.
In the Swiss stock exchange, banks were a little more sheltered from these strong declines, but still the banking sector is the worst performer of the day. Credit Suisse lost 1.80%, while UBS declined 1.20% in Tuesday trade. The selling seen in the financial sector comes after ING was forced to split its insurance and banking units, which makes some investors believe that other financial corporations will be likely to follow suit.
Despite the selling seen in the financial sector, the energy industry helped most European markets float above the break-even line. This happened after BP and Vestas Wind managed to beat analysts’ expectation.
Economic Moves: The European calendar was clear of any red-flag reports, but the upcoming U.S. session holds two very important reports, Conference Board Consumer Confidence, and the Case-Shiller Home Price Index.
Crude oil for November delivery was recently trading at $78.55 per barrel, lower 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 has traded lower over the last few sessions, away from the 81.95 wave III) top. The current price structure suggests that wave IV) is in progress, which may fall for at least 38.2% of the wave III) distance before the up-trend continues. In the 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.
Gold for November delivery was recently trading lower by $0.40 to $1056.00.
Gold Technical View: TheLFB Member Charts
4 Hour chart trend: Long. Main price points: 1043, and 1070. Looking for: Wave 4)
Gold has finally broken through the 1043 support zone of wave A, we discussed here recently. This break-out put the current wave C in play, where traders may see another 25-30 dollar drop over the coming days, to hit the 38.2% Fibonacci retracement zone, of a red wave 3) distance. In this area is also shown a trend-line connected from August to this month lows, which may be a good support area for another bounce higher.