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Global Market Wrap:
Sideways Moves Ahead Of The Fed
Equity Futures: Dow +16.00. S&P +2.50. NASDAQ +4.00. Japanese Nikkei +50.00. German Dax +33.00
The global equity markets saw a relatively strong European session, even though the trading volumes were subdued. The S&P futures managed to break above Tuesday’s high during the European trading hours, while the major European indexes are still struggling to pull the same move off. The indication from the German Dax is that Wall Street may struggle to draw in large buying volume, and ahead of the FOMC at 14:15 EDT, may find the path of least resistance to be banking of recent profits.
European Trade: European markets found the strength to post some small gains in Wednesday trade, but still the major indexes halted near the highs of the current year. The German Dax is currently testing the 5750.00 area, where the market had topped during the last five days of trading. At the same time, the other major European index, the U.K. FTSE, is struggling to break above the 5190.00 area, where the current high of the year can also be found.
Even though most European markets headed higher in Wednesday morning, the trading depth was pretty light. This comes as the market is preparing for the FOMC meeting. Almost every investor in the financial market will be expecting a hold decision from the Fed, but the main focus point will be the interest rate statement, which might provide important clues about the Fed’s next move to contain future inflation yet still initiate growth. As such, trading might remain subdued for the rest of the session.
S&P Futures: The S&P futures had a small trading range during the overnight session, of only 6 points, but still the index was able to break above the 1068 area, a very important price point during the last cash session, with the S&P futures running multiple attempts to break higher, and failing to make the move.
S&P Technical View: TheLFB Member Charts
4 Hour chart trend: Short possibilities. Main price points: 1070, and 1085. Looking for: Break through the trend line support
S&P futures have bounced from the lower support line of the trading channel recently, which drove the U.S. dollar lower against the majors in the last two sessions. Traders should not look on the short side of this market yet, as this bounce may be the key for another move into new highs before the bears will be show themself again. Any break and hold of the 1070 highs will put a new target of a fifth wave into play, somewhere around the 1085 Fibonacci resistance area, while the break through the lower support line with a daily close below 50% Fibonacci level will suggest that the highs are in.
Sector Moves: The commodity stocks continued to be the stars of the market in the U.K. FTSE, being among the top gainers in the index. Also in the FTSE, insurers, led by Aviva and Prudential PLC extended the rally seen over the last few days of trading, as analysts raised their earnings estimates. Financials traded mixed in the U.K., but advanced in the other major European markets
Economic Moves: The economic calendar was loaded with important reports during the European session, but these had only limited effects in the stock market. The German and the European PMI numbers came in weaker than expected, but still showed some small improvements from the prior reports. The PMI reports showed the manufacturing and service sides of the economy improved during the month of September, but not at the pace that the market had been expecting. Ahead, investors prepare for the FOMC meeting, scheduled at 14:15 EDT.
Crude oil for October delivery was recently trading at $71.50 per barrel, down $0.20. Crude oil saw very thin volume overnight, moving up and down in a $0.60 range. Looking ahead, crude oil is expected to gather additional momentum, as later in the day, a report is likely to show that crude inventories dropped by 1.4M during the prior week.
Crude oil Technical View: TheLFB Member Charts:
4 Hour chart trend: Short possibilities. Main price points: 67.00, 69.00-69.50 and 73. Looking for: Move lower
On a four hour chart, oil prices slid very calmly over the last few days, after touching the 76.4% Fibonacci resistance area, around $73 per barrel. The prices have recently reached the support line for a third time in September, from where the market bounced to the upside over the last two sessions. It seems that this recent pull-back could be a black wave ii, so a move lower is expected where a break through the 69.00-69.50 support zone will signal a move lower into the red wave III) leg. The prices however, need to stay below the 73 resistance area until that break-out appears, otherwise the corrective count of the red wave II) will have to be re-worked.
Gold for October delivery was recently trading up by $2.00 to $1017.50. During the overnight session, gold extended the side-ways channel seen during the prior U.S. session. As such, gold traded flanked by the $1018 area and by the neutral pivot point, in the $1013.50 area.