Equities dipped yesterday after the NY open but then recovered well. The drop lower was driven by gloomy forecasts and slow sales growth from MSFT and 3M. MSFT reported the slowest sales growth in over six years but the stock recovered well sending Nasdaq higher. As long as investors are willing to buy these dips it makes sense to go with the flow. Much depends on the Fed rhetoric next week. Gold remains strong while USDJPY drifts lower. Both markets are interest rate sensitive so if you are looking trade them keep an eye on the Fed. Today’s main risk event is the US GDP and durable goods orders releases at 1:30 pm GMT.
DJ is back at the resistance area
DJ – After a quick return move to levels near the 33 227 support the market is once again testing the resistance area is at 33 800 – 33 880. If bulls can’t push through the area then we’ll have a lower swing high in the daily chart. That would be bearish in this context. If the bulls now manage to push the market above the resistance area they’ll probably move DJ 34 200 or so. The nearest key support level is at 33 267. Below the level we should focus on the 32 960 support.
NAS rallied from 11 547
NAS remains bullish above 11 547. Below the level, we could see the market trading down to 11 260 or so. Yesterday, NAS traded down to 11 550 and buying started at 11 547. The big investment funds seem to be reading my analysis! 😉
Yesterday’s higher low increases the probability for the market breaking above the 11 900 resistance but at the same time, the daily candle is top heavy (bearish indication). Given the relatively low valuations of technology stocks and the fact that the Fed is downshifting we should still see upside momentum in this market. The market remains in uptrend above yesterday’s low (11 547)
FTSE consolidates at support
FTSE consolidates near the 7720 – 7732 support area and remains bullish above it. Below the range FTSE probably trades down to 7690. The market has created a descending channel but if the general mood stays bullish on equities I expect the market to eventually rally and break to the upside. A measured move target (based on the channel width) is at the 7875 resistance.
Gold tries to break above the wedge formation
Gold – Uptrend in gold remains intact above 1919. Below the level the market moves outside the bull channel and could trade down to 1896. Gold has tried to break out of the wedge to the upside as the higher lows suggested but at the time of writing this, the market is hesitating a bit. The nearest key resistance level is at 1998.
USDJPY remains weak
USDJPY trends lower below 131.57. The next level the bulls would be likely to run into difficulties is around the 132.60 – 132.80 range. The nearest major support level is at 126.35.
The Next Main Risk Events
- USD Advance GDP
- USD Core Durable Goods Orders
- USD Durable Goods Orders
- USD Unemployment Claims
- USD New Home Sales
- USD Core PCE Price Index
- USD Pending Home Sales
- USD Revised UoM Consumer Sentiment
For more information and details see the TIOmarkets economic calendar.
Chief Market Analyst
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