Trendline Resistance Continues To Limlit Dow Upside Potential
December 1, 2009 at 10:27 am by John Rivera · Leave a Comment
As is often the case in Elliott, the picture is becoming much clearer as the rally has matured and nears its end. The advance from the March low is a complex W-X-Y (a-b-c-x-a-b-c) rally. Notice the broadening formation since August. Broadening patterns almost always signal tops (called ending diagonals in Elliott terminology). Levels to watch for resistance are 10365 and 10495 (100% extension).
The Dow’s has regained its footing after but trendline resistance still looms as a barrier making a move above 10,500 formidable. We could see a retrace back toward support before an ultimate test of resistance at 10,581-61.8% Fibo of 13,136-6,469.
The S&P is in a similar situation to the Dow. The count from the March low is the same but the recent surge that propelled the Dow to a new high has yet to do the same for the S&P. A broadening formation from the August low is evident here as well, which again does warn of a top. A new high exposes 1110.30 (top of gap from October 2008 in December contract), then 1134 and 1159 (100% extension) in the index.
The S&P 500 has consolidated just below resistance at 1,120- 50.0% Fibo of 1,576- 666 opening the door for a test of trendline support near 1,060. A break above the Fibo level exposes 1,150.
The NASDAQ pattern is the same as the S&P pattern in that the index has yet to make a new high. The more volatile index also broke a support line and dropped below its October low (red line) – something that the other indexes failed to do. Clearly, the technical situation for bulls is deteriorating. A new high would expose 2341 (100% extension).
The NASDAQ has regained its footing and is looking to take another run at resistance found at former trendline support. A test of short-term trendline support near 2,090 still remains a strong possibility but could come after a test of Fibo resistance at 2,251.
U.S. Stocks Fall in Shortened Trading Day
November 27, 2009 at 6:07 pm by CFDTrading Analyst · Leave a Comment
U.S. Session Key Developments
• Commodities Fall, Dollar Shows Strength
• Concerns Over Dubai Diminish Risk Appetite
U.S. equities followed the downward global trend as investors retreated risk on concerns over Dubai’s attempt to reschedule its debt. The MSCI World Index fell 2.3 percent in the last two days as Dubai World attempts to extend the maturities of some of its $59 billion of liabilities. Financials stocks took the biggest hit as banks in the MSCI World Index fell 2.4 percent yesterday, followed by JPMorgan and Bank of America losing over 2 percent each in today’s U.S. session. Overall, investors showed a clear aversion to risk over the last two days and commodities were sold off in addition to stocks. Crude oil traded down $1.91 to $76.05, while gold plummeted to $1133 in the morning before gaining back much of the loss to close at $1175. Investors moved their money towards safety, pushing up U.S. Treasurys and the Dollar Index which rose back above 75 during intraday trading. The U.S. stock exchanges closed three hours early, after 4.5 billion shares were traded, the least since December 26. Looking forward to next week, key economic data released will include ISM Manufacturing, housing data, and jobs data. The unemployment rate for November will be released on Friday and is expected to remain unchanged at 10.2 percent.
DJIA 30 10,309.92 -154.48 -1.48%
The Dow Jones Industrial Average fell over a percent as all thirty stocks in the index closed lower on the day. Investors showed concern over the economic recovery and pulled money out of riskier, speculative assets such as commodities driving energy stocks and basic materials lower by 2 percent each. Caterpillar and Alcoa fell over 2 percent each while General Electric lost just over a percent.
S&P 500 1,091.49 -19.14 -1.72%
The broader S&P500 index closed lower today as each of its sectors were in the red. The financial sector was the worst performer, down 2.72 percent on concern over Dubai debt exposure. U.S. stocks pared declines, however, after bank analyst Richard Bove said that American lenders have “minimal” exposure to Dubai. By the end of the day, all but four of the S&P’s 500 stocks fell on the day.
NASDAQ 2,138.44 -37.61 -1.73%
Trading in the tech-heavy NASDAQ led to the largest decline of the three indices as its technology stocks fell over 1.7 percent. Research In Motion and Oracle fell over 2 percent each, while Microsoft, Apple, and Google each dropped over 1 percent.
Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com
US Markets Rally With Dow Reaching another Fresh High
November 25, 2009 at 6:40 pm by CFDTrading Analyst · Leave a Comment
U.S. Session Key Developments
• Commodities Rise Following Volatile Session
• Dollar Strengthens into Close
• Indicators Post Mostly Higher
US equities closed roughly at the same point of trading on Monday as markets recovered on higher commodity prices while fundamental indicators helped lead sentiment. Dollar weakness had been noted for much of the trading session until the greenback recovered to end stronger in the final hours. Several key data points included weaker mortgage approvals in the past week while durable goods orders surprised lower in October. Despite this, investors found optimism in an increase to personal spending and income, along with a rise in new home sales and jobless claims at the lowest since October 2008. Elsewhere in trading, gold surged higher to above $1190 per ounce, helping raw material producers to climb. Ultimately, the Dow managed yet another fresh 2009 high that could lift sentiment and lead to further gains across equities into the year-end. While there remains some clout as to the sustainability of recovery once government incentives are pulled back, it appears that this is far from becoming a chief concern. Following the strong data today, investors will be look ahead this week to lower volatility as trading in the US will be closed Thursday for the Thanksgiving holiday while Friday will see a half-day session of trading. Consequently no indicator releases are scheduled, with investors left in global crosswinds to watch releases abroad that range from jobs and sales in Japan to confidence in the Euro-Zone and other regions.
DJIA 30 10,464.40 +30.69 +0.29%
Trading in the Dow led to a fresh high just slightly above the top set on Monday. Most sectors advanced while a third of stocks closed lower including the financial sector. Moves proved limited today with no stock gaining or falling two percent or more. Ultimately, euphoric buying continues in equities with the index appearing to show little restraint while volume fell sharply for the third consecutive session. Concern should be noted, although the Dow remains the worst performer on the year-to-date of the three major indices, with a gain just shy of 20%.
S&P 500 1,110.63 +4.98 +0.45%
The broader S&P500 index closed strong with all sectors advancing, with the exception of Financials. More than 75% of stocks climbed while Basic Materials and Oil & Gas led with gains of 1.67% and 0.95%, respectively. Of the ten largest firms, six closed higher while none posted more than a fractional move.
NASDAQ 2,176.05 +6.87 +0.32%
Trading in the tech-heavy NASDAQ led to a gain of one-third of one percent, while the index remains the most dominant since the start of the year with a gain of 38%. All sectors advanced with the exception of financials, down 0.15% on the day while Basic Materials rallied nearly two percent. Big index movers included Oracle, up 2.08%, as the only stock to add a point or more to the index. Of the ten largest firms, five closed higher with minimal losses in Microsoft, Apple and others.
Written by Roman Kadinsky, CFDTrading Research
Please send any comments about this report to Rkadinsky@fxcm.com
U.S. Stocks Fall From Yearly Highs
November 24, 2009 at 7:24 pm by CFDTrading Analyst · Leave a Comment
U.S. Session Key Developments
• Oil, Stocks Weaken As GDP Growth Less Than Previously Stated
• Gold Surges Higher For An Eighth Consecutive Day
U.S. equities fell slightly from the 13-month highs set yesterday after negative revisions to the third quarter GDP and personal consumption figures. Third quarter economic growth was revised to 2.8 percent from previously estimated 3.5 percent and consumption was weaker-than-expected giving pause to investors over the strength of the economic recovery. Oil fell in tandem with stocks despite some dollar weakness on expectations that crude-oil supplies rose by 1.5 million barrels in the week ended November 20. Gold, however, rallied for an eighth consecutive day to close at a spot level of $1168. Other factors affecting stocks included the release of November’s FOMC Minutes in which policy makers predicted that unemployment could remain in the mid 9 percent range through 2010. This gloomy forecast may further belief that the current bull rally has surpassed the fundamentals of the U.S. economy and has been speculative in nature thanks to low rates and government stimulus. Looking towards tomorrow’s session, there are numerous economic indicators to be released including personal income and spending, durable goods orders, and jobless claims. Being the day before Thanksgiving, light trading volume should be expected in tomorrow’s session which could be a cause for significant volatility.
DJIA 30 10,433.71 -17.24 -0.16%
The Dow Jones Industrial Average fell from its 13-month high as a majority of its sectoral components were losers on the day. Only 11 out of the Dow’s 30 stocks gained on the day, as Verizon and AT&T were the biggest winners up over 1 percent each. All in all, trading was light in each index as total volume was 23 percent lower than the three-month average.
S&P 500 1,105.65 -0.59 -0.05%
The broader S&P500 index closed slightly lower as financial stocks dropped over 0.7 percent after the FDIC said that the number of problem lenders climbed to a 16-year high. Investors showed interest in defensive stocks today as telephone and health care stocks were the biggest winners of the index.
NASDAQ 2,169.18 -6.83 -0.31%
The tech-heavy Nasdaq posted the biggest loss of the major indices as technology stocks fell over half of 1 percent today. Dell stock dropped over 3 percent on the day, while Yahoo and Adobe Systems fell over a point each.
Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com
Dow Threatening To Break Above Trendline Resitance Leaving Potential To 11,000
November 24, 2009 at 10:13 am by John Rivera · Leave a Comment
As is often the case in Elliott, the picture is becoming much clearer as the rally has matured and nears its end. The advance from the March low is a complex W-X-Y (a-b-c-x-a-b-c) rally. Notice the broadening formation since August. Broadening patterns almost always signal tops (called ending diagonals in Elliott terminology). Levels to watch for resistance are 10365 and 10495 (100% extension).
The Dow is back testing trendline which could lead to a retrace back toward the lower bound before an ultimate test of resistance at 10,581-61.8% Fibo of 13,136-6,469. A break above resistance leaves potential to 11,000.
The S&P is in a similar situation to the Dow. The count from the March low is the same but the recent surge that propelled the Dow to a new high has yet to do the same for the S&P. A broadening formation from the August low is evident here as well, which again does warn of a top. A new high exposes 1110.30 (top of gap from October 2008 in December contract), then 1134 and 1159 (100% extension) in the index.
The S&P 500 found resistance slowed ahead of resistance at 1,120- 50.0% Fibo of 1,576- 666 opening the door for a test of trendline support near 1,060. We saw bearish momentum slow at the longer-term trendline at 1,090 which could lend support as well. A break above the Fibo level exposes 1,150.
The NASDAQ pattern is the same as the S&P pattern in that the index has yet to make a new high. The more volatile index also broke a support line and dropped below its October low (red line) – something that the other indexes failed to do. Clearly, the technical situation for bulls is deteriorating. A new high would expose 2341 (100% extension).
The NASDAQ has regained its footing and is looking to take another run at resistance found at former trendline support. A test of short-term trendline support near 2,110 still remains a strong possibility but could come after a test of Fibo resistance at 2,251.
US Markets Rally With Dow Reaching Fresh 2009 High
November 23, 2009 at 6:01 pm by CFDTrading Analyst · Leave a Comment
U.S. Session Key Developments
• Commodities Pare Gains into Close
• Dollar Weakens on Risk Appetite
• Existing Home Sales Rise at Record Pace
US equities closed higher to start the week following favorable indicators in the US and Europe, along with comments by Dallas Fed President Evans that alluded to a long time horizon before interest rates see an increase, while emphasizing that recession risk is now unlikely. Evans expects no increase until late 2010, echoing investor sentiment in fed funds futures. Should this forecast become reality, the US dollar may continue to see weakness as it recently passed below favorable support. Rallying in response, commodities saw significant upside with gold at a fresh high above $1170 per ounce while crude tested $80 per barrel before paring sharply in the afternoon, perhaps a sign of lingering concern. Also boosting sentiment today was a morning release of existing home sales for October, which came in with record growth north of 10% in October. Ultimately, the Dow reached a fresh 2009 high that could lift sentiment and lead to further gains across equities into the year-end. While there remains some clout as to the sustainability of recovery once government incentives are pulled back, it appears that this is far from becoming a chief concern. Following the strong data today, investors will be look ahead this week at revisions to third quarter GDP, consumer confidence, and other important event releases for the Tuesday session of trading.
DJIA 30 10,450.95 +132.79 +1.29%
Trading in the Dow Jones Industrial Average led to a higher close by more than one percent with all sectors higher while only aluminum producer Alcoa and drug maker Merck saw fractional losses. On the other end of the spectrum, telecom rallied the most with AT&T and Verizon both up nearly three percent. Ultimately the index set a new high today, which could bode well for further upside.
S&P 500 1,106.24 +14.86 +1.36%
The broader S&P500 index closed strong with all sectors advancing while more than 88% of stocks gained. Leading the advance was a 2.73% gain in Telecom, while seven sectors posted moves in excess of one percent. 19 of the 20 largest firms posted higher on the session with Exxon Mobile up 1.77% as crude advanced.
NASDAQ 2,176.01 +29.97 +1.40%
Trading in the tech-heavy NASDAQ led to the largest move of the five majors, while the index remains the most dominant since the start of the year with a gain of 38%. All sectors advanced with technology accounted for the bulk of the index move. Major contributors included Apple, up nearly three percent, along with a 2.18% rise in iPhone carrier AT&T.
Written by Roman Kadinsky, CFDTrading Research
Please send any comments about this report to Rkadinsky@fxcm.com
S&P 500 Seeing Trendline Support, But Downside Risks Remain
November 23, 2009 at 10:19 am by John Rivera · Leave a Comment
As is often the case in Elliott, the picture is becoming much clearer as the rally has matured and nears its end. The advance from the March low is a complex W-X-Y (a-b-c-x-a-b-c) rally. Notice the broadening formation since August. Broadening patterns almost always signal tops (called ending diagonals in Elliott terminology). Levels to watch for resistance are 10365 and 10495 (100% extension).
The Dow has traded lower since being slowed by trendline resistance as we have started to see the current upward trending channel begin to widen. We could see a retrace back toward the lower bound before an ultimate test of resistance at 10,581-61.8% Fibo of 13,136-6,469. A break above resistance leaves potential to 11,000.
The S&P is in a similar situation to the Dow. The count from the March low is the same but the recent surge that propelled the Dow to a new high has yet to do the same for the S&P. A broadening formation from the August low is evident here as well, which again does warn of a top. A new high exposes 1110.30 (top of gap from October 2008 in December contract), then 1134 and 1159 (100% extension) in the index.
The S&P 500 slowed ahead of resistance at 1,120- 50.0% Fibo of 1,576- 666 opening the door for a test of trendline support near 1,060. We saw bearish momentum slow at the longer-term trendline at 1,090 which could lend support as well. A Break above the Fibo level exposes 1,150.
The NASDAQ pattern is the same as the S&P pattern in that the index has yet to make a new high. The more volatile index also broke a support line and dropped below its October low (red line) – something that the other indexes failed to do. Clearly, the technical situation for bulls is deteriorating. A new high would expose 2341 (100% extension).
The NASDAQ has started to trade lower after finding resistance at former trendline support opening the door for a test of trendline support near 2,100.
Dow Trades Heavy After Finding Trendline Resistance
November 20, 2009 at 10:18 am by John Rivera · Leave a Comment
As is often the case in Elliott, the picture is becoming much clearer as the rally has matured and nears its end. The advance from the March low is a complex W-X-Y (a-b-c-x-a-b-c) rally. Notice the broadening formation since August. Broadening patterns almost always signal tops (called ending diagonals in Elliott terminology). Levels to watch for resistance are 10365 and 10495 (100% extension).
The Dow has been slowed by trendline resistance as we have started to see the current upward trending channel begin to widen. We could see a retrace back toward the lower bound before an ultimate test of resistance at 10,581-61.8% Fibo of 13,136-6,469.
The S&P is in a similar situation to the Dow. The count from the March low is the same but the recent surge that propelled the Dow to a new high has yet to do the same for the S&P. A broadening formation from the August low is evident here as well, which again does warn of a top. A new high exposes 1110.30 (top of gap from October 2008 in December contract), then 1134 and 1159 (100% extension) in the index.
The S&P 500 slowed ahead of resistance at 1,120- 50.0% Fibo of 1,576- 666 opening the door for a test of trendline support near 1,060. We saw bearish momentum slow at the longer-term trendline at 1,090 which could lend support as well. A Break above the Fibo level exposes 1,150.
The NASDAQ pattern is the same as the S&P pattern in that the index has yet to make a new high. The more volatile index also broke a support line and dropped below its October low (red line) – something that the other indexes failed to do. Clearly, the technical situation for bulls is deteriorating. A new high would expose 2341 (100% extension).
The NASDAQ has started to trade lower after finding resistance at former trendline support opening the door for a test of trendline support near 2,100.
Stocks Falter for Second Straight Day
November 19, 2009 at 7:41 pm by CFDTrading Analyst · Leave a Comment
U.S. Session Key Developments
• U.S. Morning Data Falls Short of Expectations
• Commodities Fall Despite OPEC Raising Growth Forecasts
US equities closed lower for a second consecutive day following worse-than-expected data and falling commodities prices. The Labor Department announced today that the number of Americans filing claims for unemployment held at 505K last week and continuing claims fell to 5611K, higher than 5598 expected. This data along with slightly worse-than-expected leading indicators was evidence of the sluggish nature of this U.S. economic recovery and raised concerns that equity prices have outpaced fundamentals. Investors made a move into U.S. dollars and U.S. Treasury securities as evidenced by three-month Treasury bill yields turning negative for the first time since the market skittishness of 2008. The Dollar Index recovered from its early-week drop below the 75 level to trade as high as 75.55. The dollar strength was the main driver of commodity prices as crude oil traded down $2.12 (2.66 percent) to $77.46, its lowest level since last week. The weakness in crude came despite the Organization for Economic Cooperation and Development (OPEC) doubling its growth forecast for the leading developed economies next year and a further acceleration for China’s recovery into 2011. Altogether, equities across the globe fell today as the MSCI World Index dropped 1.7 percent but trading has been on very light volume throughout the entire week showing a lack of conviction in any stock market move right now.
DJIA 30 10,332.44 -93.87 -0.90%
The Dow fell nearly a full percent as the Basic Materials and Energy sectors gave back some of their gains from earlier in the week. Alcoa Inc. declined nearly 4 percent as the prices of aluminum, copper, lead, nickel, and tin all retreated during the session. Chevron dropped 2 percent and Exxon shed nearly a full percent as crude oil prices fell to their weekly lows. The only Dow sector that gained was health care thanks to modest gains from Johnson & Johnson and Merck.
S&P 500 1,094.90 -14.90 -1.34%
The broader S&P500 index closed lower for a second day as Bank of America Corp. downgraded chipmakers and lower commodity prices hurt stocks. The BAC downgrade caused Intel Corp. and Texas Instruments to lose over 3 percent on the day. Each S&P sector fell during trading today with energy stocks and Financials falling about 2 percent each. Bank Analyst Merideth Whitney suggested that banks are still “grossly overvalued”, sending JPMorgan and Wells Fargo down 1.9 percent.
NASDAQ 2,156.82 -36.32 -1.66%
Trading in the tech-heavy NASDAQ led to the largest loss of the majors, while the index remains the most dominant since the start of the year with a gain of more than 39%. The eighteen largest tech stocks on the index each fell including a 5 percent loss for Marvell and a 4 percent fall in Intel after chipmakers were downgraded.
Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com
Stocks Close Lower Following Weak Morning Indicators
November 18, 2009 at 5:53 pm by CFDTrading Analyst · Leave a Comment
U.S. Session Key Developments
• Asia/Europe Contributes to Risk Appetite
• Commodities Higher as Dollar Falls
US equities closed lower today following weak indicators on housing and inflation. Early on, futures had pinpointed the major indices for further upside as stocks in Europe had traded higher, but this tilted quickly on event releases at 08:30 EST. Data on housing starts showed a significant fall in October as builders pared back expansion while expecting the new homebuyer tax credit to be concluded in November. Also released was the monthly consumer price index, which showed core prices rising faster than expected to 1.7% from 1.5% in September. Further upside will affect speculation on the Fed’s policy actions and may lead to a quicker-than-expected increase in the target for the Federal Funds rate. In other markets, commodities managed to sustain gains as weekly inventories of crude and gasoline declined. Meanwhile, the greenback recovered across most of its major crosses, losing out mainly to the Swiss Franc and Euro. Ultimately, despite a strong showing in the early part of the week, stocks have now treaded into dangerous territory with the early appearance of a possible top forming. The S&P500 best shows this as a candlestick chart of the index indicates a hanging man and doji in the past two trading sessions. At the same time, one shouldn’t look to this as a clear sign of downside ahead. Fundamental indicators have overall continued to improve, while corrections in equities have, since July, been notably short and brief as sidelined liquidity buys opportunistically into gaps built by selling pressure. Regarding the overall situation, movement in the dollar continues to play a major role in trading. So long as the Federal Reserve continues to maintain its dovish tone on monetary policy, despite purportedly claiming to favor a strong dollar, further weakness appears imminent for the greenback and consequently equity gains could continue into the year-end.
DJIA 30 10,426.31 -11.11 -0.11%
The Dow fell from a fresh high yesterday as the index closed within 0.04 points of its open. Despite this potential warning sign, the index has rallied sharply this week with gains already at more than 1.5% in the first three sessions of trading. Overall, more than half of the 30 stocks tracked closed higher along with five of nine sectors. Health Care and Financials rose the most, while Industrials saw a drop of 1.09%. Leading gains today was a 3.68% gain in Bank of America, following Moody’s credit-rating upgrades and a circulated report from hedge fund manager John Paulson, who bullishly expects the stock to double by the end of 2012.
S&P 500 1,109.80 -0.52 -0.05%
The broader S&P500 index closed lower fractionally as a 0.84% rise in Financials helped pare losses in seven of ten sectors. Major movers included greater than ten percent upside in chipmaker AMD and financial services firm MBIA. Of the ten largest firms traded, seven closed higher while moves in all ten were of less than one percent in either direction. Caution seems to be seeping into markets following the rapidity of the recent advance off the early November bottom.
NASDAQ 2,193.14 -10.64 -0.48%
Trading in the tech-heavy NASDAQ led to the largest loss of the five majors, while the index remains the most dominant since the start of the year with a gain of more than 39%. All sectors fell with minor losses, with the exception of a 0.24% increase in Financials, while nearly 60% of stocks closed lower. Ultimately, activity in the ten largest firms led to only Microsoft trading higher, while telecom giants Vodafone and America Movil both fell more than two percent. While the tech sector’s weighting should keep the NASDAQ as a safer play given the strength in the balance sheets of firms such as Microsoft, the index’s overall outperformance comes priced with more speculation than its broader counterparts.
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