Global Market Wrap: European Shares Follow Asian Momentum

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Global Market Wrap:

European Shares Follow Asian Momentum

Equity Futures: Dow -50.00. S&P -6.50. NASDAQ -8.00. Japanese Nikkei -70.00. German Dax -5.00.

European Trade: Overnight markets saw negative momentum, even from the opening bells with the major Asian and European indexes posting relatively strong declines. The S&P futures followed a similar pattern as well, dropping almost seven points during the overnight trading hours.

In Europe, the vast majority of equity indexes are heading lower as the heavyweight basic materials and food producers added strong downside pressure. Despite the overall weakness seen overnight there were some notable exceptions in the Belgium and Luxembourg stock markets, which advanced on average 0.15%. Apart from these two, equity indexes have moved constantly lower, but at a slow pace due to very thin liquidity and order flows. France’s CAC 40 is down 0.60%, Italy’s FTSE MIB lower by 0.75%, while the U.K. FTSE shed 0.40%. The DJ STOXX Eastern European index, which tracks the performance of the emerging Eastern European market is down 0.80%.

S&P Technical View: TheLFB Member Charts 
4 Hour chart trend: Long. Main price points: 1082, 1105, 1115, 1120. Looking for: Wave C top

S&P futures found a top around the 1112 area in this week; just 3 points below our pre-set 1115 target, where the Long, wave V), may be complete. We can clearly count five black waves up from the red wave B low, which suggests that wave C may be trading around the top.

After every five wave move, a three wave correction is expected, so a move lower on the S&P, near to the 1082 support zone should not be a surprise technically. If this follows through, traders may see some dollar buying in the near-term, which will pull the euro away from the major $1.50 level, at the same time that the 74.70 dollar index low holds. These markets are all inter-connected at the moment, with a 90%+ correlation between S&P and dollar index trade.

A bearish confirmation on S&P futures hits if there is a short breakout of 1082.

Sector Moves: Except for retail, and personal & household goods, every other sector declined in Thursday trade. The largest declines came from basic materials, which shed 2% on negative commodity markets, and from food & beverage sectors. 

The food-giant Danone led the food & beverage sector lower, plunging nearly 5% after the company said that it expects lower sales growth. Since the Holiday season is approaching and is the period when companies report increasing income streams, investors interpreted this report as very bearish.

Economic Moves: During the European session, a report showed that U.K. retails increased 0.4% in October, below analysts’ estimations. At the same time, the numbers for the month of September were revised significantly higher, from 0.0% to 0.4%. Ahead, investors prepare for the U.S. weekly Initial Jobless Claims

Crude oil was recently trading at $79.20 per barrel, lower by $0.40. 

Crude oil Technical View: TheLFB Member Charts 
4 Hour chart trend: Mixed. Main price points: 75.50, and 82. Looking for: Wave V

Oil prices are slow and choppy at the moment after the recent tests of the upper resistance line of a bearish channel. Traders could see some near-term down-side pressure in the near-term, before the market can trade higher in a Long wave V).

A daily close above 80.50, and outside of the trading channel shown will put 83-84 target area in play. Once that target area is reached, traders should be very careful with any new long positions, as a turning point will very likely be seen after the red wave V) completes the up-trend.

Gold was recently trading lower by $4.90 to $1136.40.

Gold Technical View: TheLFB Member Charts
4 Hour chart trend: Long. Main price points: 1152, and 1100. Looking for: Wave 5) top

Gold is currently trading 15 dollars below its latest 1152 highs, where a Long blue wave V, of a larger red wave 5) top, may be in place. If this is the case then the market should trade lower over the coming sessions. A break through the lower support line of our trading channel will signal for a Short move towards the 1100 support zone (wave IV area).

Any break of 1100 support will confirm a bearish reversal