Global Market Outlook: Asia Up On Investors’ Optimism

Global Market Outlook:

Asia Up On Investors’ Optimism

Equity Futures: Dow +2.00. S&P -0.30. NASDAQ +0.00. Japanese Nikkei +140.00. German Dax -16.00

Asian shares are trading broadly higher, on optimism that the economic recovery, visible in some macroeconomic data will have a positive influence on companies’ earnings results. Moreover, Asian currencies have lost some ground against the dollar in Monday trade, something that gives a strong push to investors. The weakness of the greenback seen lately tends to be a major problem in the region, since most Asian countries are export orientated. 

The gains are currently led higher by the Hang Seng index, which is trading up 1.8%, followed by the Jakarta Composite index, which advanced 1.10% in Tuesday trade. With the gains posted tonight, the Asian stock markets reach the highest level in 13-months, practically outperforming the European and the U.S. equity markets. 

S&P Futures Technical View: TheLFB Member Charts
Weekly chart trend: Mixed. Main price points: 665.50, and 1252.50. Looking for: 50% Fibonacci level
 
S&P futures are still bullish on the weekly chart, after a powerful bounce off the 665.50 support area that was established at the start of this year. This recent uptrend could be a pull-back in wave 4 of a bearish impulse count, with wave 5 yet to come. In this case, wave 4 must not overlap the territory of wave 1, shown below (1252).

The converse technical view is that it may also be a start of a new long-term uptrend, if we consider a possible three wave structure from the 1586 top to the 665.50 lows.

Sector Moves: Steelmakers were the best gainers in the Nikkei index, after the sector was upgraded to “buy” by a number of analysts. Ahead of the earnings season, machinery and electric machinery stocks were also among the top gainers in the Nikkei index, with only a very small number of shares declining in the two sectors. 

The Hang Seng Index, which is currently the best gainer in the region, advanced on energy and technology shares, both sector being up around 2%. Moreover, exporting companies were among the best gainers during the Asian session. 

Economic Moves: During the session, The U.K. released a report showing that retail sales increased during September 2.8 percent on the year after posting a 0.1 percent loss last month. Also, the housing market has shown signs of strength in September as more realtors saying home prices are increasing to the highest level since May 2007.

The National Australia Bank issued a report that shows business confidence index has dipped after surging higher over the past six months. The index dropped 4 points to 14 due to declines seen in manufacturing, wholesale and retail sectors.

Crude oil for November delivery was recently trading at $73.00 per barrel, down by $0.30. Crude oil is consolidating just below the $73.30 area, the resistance area of the last few months of trading. In order to break higher, the dollar index will need to de stay in the green, while the S&P futures should break above the 1075.00 resistance area. 

Gold for November delivery was recently trading down by $0.70 to $1054.95. Gold fell nearly $5 during the early Asian session, but the market recovered this move very quickly. Now gold is trading once again near the opening bell, waiting for the market to move decisevely in one direction. 

Gold Technical View: TheLFB Member Charts
Weekly chart trend: Long. Main price points: 864, 1005 and 1090. Looking for: Move higher

The price structure on the weekly gold chart is still looking extremely bullish for the next couple of months or maybe even years. The market completed a large complex red wave B correction with a “triple-three” pattern, labeled as wave W, Y and Z.These are separated by wave X and XX at the end of 2008’s price of $681 per ounce. After that, the market made a bullish move near the $1000 per ounce area that we labeled as a blue wave 1, followed by a corrective wave 2.

Wave 2 looks to be complete at the 864 area as the market already broke through the blue wave 1 and red wave A top. As such, traders may already be targeting the 1090 zone, around the 161.8% Fibonacci resistance level.

The current Stochastic read suggests that a temporary top is in, after the bearish divergence and cross in the over-bought area. As such, some pull-back to test support around the 1000 area may be the case.