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Global Market Wrap: Alcoa’s Results Lift European Markets
Equity Futures: Dow +85.00. S&P +10.60. NASDAQ +14.50. Japanese Nikkei +12.00. German Dax +2.00.
European Trade: The overnight session proved to be very strong on Thursday, after the prior session saw the market come to a virtual standstill. The European markets are up around 1%, with the European blue-chip companies, as tracked by the DJ STOXX 50 index, up by 1.50%, the highest of the last few weeks of trading. On the other hand, blue chip companies from the emerging European markets are up only 0.60%, even though on the longer term, emerging markets have a tendency to outperform the developed markets. The gains in Europe are led for a second consecutive day by Holland’s AEX index, with AEGON and ING up 3.30% and 4.25% respectively.
The gains in the equity market came during the U.S. after-hours session, following Alcoa’s better than expected Q3 results. Alcoa was the first major company to report the third quarter results, and this had a strong influence in the market. The profits were not top-line income increases, moreover the positive cash flow came from job cuts and squeezing of operating costs.
S&P Futures: The S&P futures tested the 1065 area during the overnight session, but until now the futures market failed to find the necessary momentum to move any higher. To the upside, the next target lies in the 1075 area, the same place where the market formed a swing point high on Sep 23 09.
S&P Technical View: TheLFB Member Charts
4 Hour chart trend: Long. Main price points: 1011.50, and 1075.25. Looking for: Wave A top
S&P futures have made another push higher in the red wave A, discussed yesterday, which means that at least three waves of retrace are expected in the mid-term. Traders will be looking now for a wave B pull-back, down near to the 1040-1045 support region of a previous black wave IV area of a lesser degree.
Currently, an expanding diagonal in the black wave 5 or C position is still valid, so once the expected wave B drop is done, the market should make another push to the highs with wave C to complete the pattern.
Sector Moves: The basic resource sector posted one of the strongest gains of the last few months during the European session, gaining almost 4%. This was best seen in the U.K. FTSE, where commodity stocks have an important weight. The financial sector shares were up in most of Europe, with a 1.70% performance, but U.K. banks declined as Lloyds announced plans to raise £15bn by issuing new shares. Consequently, Lloyds and RBS were the worst performers in the U.K. index.
Strong performances also came from the European automobiles & parts sector, with a 2.25% gain in Thursday trade. The ultra-defensive health-care sector continued to be the worst gainers in Europe, gaining only 0.60%.
Economic Moves: The economic calendar was clear in Europe, but a long list of red-flag reports prepares to hit the news wires in a relatively short period starting at 07:00 EDT with the Bank of England rate decision. The day will start will the BoE and the ECB interest rate decision, followed by the ECB’s press conference. This will probably cause strong volatility in the forex market, but its effects in the equity markets will be less volatile. However, at 08:30 EDT investors prepare for the U.S. Unemployment Claims, something that has recently impacted price structures.
Crude oil for November delivery was recently trading at $70.20 per barrel, higher by $0.60. Crude oil saw a relatively volatile trading session overnight, but still it failed to move too far into new technical ground, even with the dollar losing ground overnight, something that would normally increase speculative long interest in crude oil.
Crude Oil Technical View: TheLFB Member Charts
4 Hour chart trend: Short possibilities. Main price points: 73. Looking for: Wave II) top
Oil made a sharp decline from 71.50 per barrel down to the 68.60 area in the previous session, which may be the first signal that the black wave c top is in. If this is the case then a whole red wave II) correction should also be completed. Traders know that once the complex correction is done the powerful moves are just around the corner, which in our case should be to the down-side, into the red wave III).
Gold for November delivery was recently trading higher by $11.10 to $1055.50. Gold seems to the star of the last few trading sessions, setting new record highs on a regular basis. Overnight, gold managed to breach the $1050 benchmark level, where the market topped during the prior day of trading.