Global Market Wrap: U.S. Shares Flat Going Into 2010

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Global Market Wrap:

U.S. Shares Flat Going Into 2010

Equity Futures: Dow +23.00. S&P +1.80. NASDAQ -0.50. Japan Nikkei +30.00. German Dax +16.00

U.S. Trade: As expected, the U.S. cash session continued to be dominated by very light trading volumes as the market heads towards the New Year holiday. Despite this, the macroeconomic calendar had some pleasant upside surprises.

The cash market moved very little since the Wednesday session started, with the three major indexes having a range of less than 0.50%. This is similar to how the market behaved over the last few days of trading; moving out of inertia rather than real momentum. Looking  ahead, this is expected to continue until mid-January, when the Q4 earnings season kicks off.

Even though the S&P 500 index spent most of the day beneath the breakeven line, a report showed that business in the Chicago area expanded at a much stronger pace than expected for the month of December. However, the Chicago PMI release had an important influence in the currency market.

S&P Technical View: TheLFB Member Charts
4 Hour Chart Flows: Mixed Price Points: 1128, and 1135 Looking for: An ending diagonal (reversal pattern)

Momentum: The S&P futures market confirmed a Long momentum read on Nov 11th and built a solid near-term support base around 1095. The 1125 area will be a major resistance point to battle this week. The moves to test and hold support are impressive, and are backed with global equity markets that are also looking bullish.

Elliott Wave: S&P futures reversed recently, around the 1128 zone where a top may be in. We need to see an impulse structure to the down-side, before we can confirm a bearish reversal.

Overall, we are looking for an ending diagonal pattern, which is a pattern that indicates a coming turning point. If that is the case then we can expect a huge decline in the equity market in the first part of 2010, which may attract Usd buyers.

If 1128 resistance is taken out in the near-term, then we will focus on the next resistance zone at 1135.

Sector Moves: Except for technology shares, every other sector declined in Wednesday trade. However, the declines were very small, reflecting the light trading volume. Technology shares gained approximately 0.30%, based on the performances posted by Apple, Dell and Texas Instruments, which advanced between 1% and 3%.

Also in strong demand were companies that deal with security technologies, following the recent attack on the Northwest Airline. As such, ICx Technologies that jumped 27%, while RAE Systems advanced 31% as investors think that airports will start once again to increase their security measures.

Only 450 million shares changed hand on the NYSE, approximately the same as in the last two days. However, this is far below the average of the last few months of trading, and represents only a fraction compared to the trading volumes observed at the height of the credit crisis.

Upcoming Economic Moves: Clear

Crude oil was recently trading at $79.35 per barrel, higher by $0.45.

Gold was recently trading down by $4.70 to $1,093.30.

Treasuries traded flat, reflecting the activity seen in equity market. The spread differential between the 10-year U.S. notes and the similar maturity German bunds has reached 40 basis points, even though earlier this year they were negative (meaning higher yields for German debt instruments).