Global Market Wrap: Europe Steady Ahead Of U.S. GDP Numbers

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Global Market Wrap:

Europe Steady Ahead Of U.S. GDP Numbers

Equity Futures: Dow +37.00. S&P +5.20. NASDAQ 5.75. Japanese Nikkei -15.00. German Dax +1.00.

European Trade: European markets started the day in red, being dragged lower by the activity seen in the equity futures market, but turned around with most indexes now trading close to the break-even line. 

Since the beginning of the current week the global equity market has traded in the red, after a number of reports that disappointed investors. This has allowed the major equity indexes to shed important price points and reach multi-weeks lows. However, investors are in a wait-and-see position ahead of the U.S. GDP report at 08:30 EDT. The GDP release is likely to play a major role in market direction on Thursday. 

The major European indexes are currently trading near the break-even line, with the German Dax falling 0.06% and with the French CAC 40 index gaining 0.10%. The emerging Eastern European block market continues to trade in the red for the fourth consecutive day, with Czech’s Prague stock exchange down an impressive 4.40%, even from the first few hours of trading. 

S&P Technical View: TheLFB Member Charts 
4 Hour chart trend: Short. Main price points: 1011.50, and 1069. Looking for: Impulse move lower

S&P futures are lower as the market forms the impulse structure that we discussed yesterday. As such, traders may be looking for an extended red wave III with a bullish black sub-wave IV) in progress, before another bearish push down into the black wave V).
 
Traders may be looking for a red wave III bottom somewhere around the 1011.50 support zone.
 
An impulse wave count will be valid so long as the market trades below the 1069 level.

Sector Moves: After acting as a major drag on the market over the last four days of trading, the banks and basic resources sectors turned around and advanced 0.8% in Thursday trade. 

The basic materials sector advanced on the back of Rio Tinto, BHP Billiton and Anglo American, but the declines seen in the oil & gas sector, shed most of these gains. In particular, Royal Dutch Shell tumbled 3.5% in Thursday trade, being the worst gainer in the U.K. FTSE, after a report showed that third quarter profits fell 62%. 

The gains in the banking sector were led by the U.K’s Lloyds and RBS, which both surged 4.5%, after rumors emerged that Lloyds might exit from the government’s toxic asset plan. In German Dax trade, Commerzbank moved 3.60%, after being among the worst gainers in the index over the last few cash sessions. 

The real estate and the travel & leisure sectors also posted strong gain in European trade, but the overall weight of the companies listed in these two sectors is too small to have a vital influence in the major European indexes. 

Economic Moves: There was only one important release during the European session, the German Unemployment Change, which showed that the German economy added workers for the fourth consecutive month, something usually seen as bullish. During the U.S. open, investors prepare for the GDP report, which is likely to have a strong influence in the financial market. Investors expect the news release to show that the U.S. economy advanced 3.2% in the third quarter, a huge change from the last two quarters, when the economy contracted 6.1% and 0.7% respectively. Anything other than the +3.2% number will create a strong response from the financial market.

Crude oil was recently trading at $77.70 per barrel, higher by $0.20. 

Crude oil Technical View: TheLFB Member Charts 
4 Hour chart trend: Long. Main price points: 71.92, and 82. Looking for: Wave IV) low

Oil hit the 38.2% support level recently, where be the bottom of a red wave IV) may be seen. Traders however, still need to be very patient here as another push down to the 50% area may appear over the coming sessions, especially if the dollar can continue higher off negative equity trade.

Once wave IV) is finished, a move up towards the 83 area will be expected.

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

Gold was recently trading higher by $4.70 to $1035.20.

Gold Technical View: TheLFB Member Charts 
4 Hour chart trend: Mixed. Main price points: 1015-1020, and 1070. Looking for: Wave 4)

Gold has traded lower recently, after the 1043 break that appeared this week. As such, wave C is now in progress which may be targeting the 1015-20 region over the next few days if equity trade moves lower, before technically bouncing at support and going higher again.

The area around the trend-line support shown will have to hold for a move higher in the red wave 5), because any break lower, through that area may drive gold into the 985 area, which will invalidate the wave count.