|
Related Stories »
Latest Forex TV Video »
Global Market Wrap: Fed Bearish On Rates- Equities Confused Global Market Wrap: Fed Bearish On Rates- Equities Confused - Nov 4 09 16:16 EST
Equity Futures: Dow +105.00. S&P +7.80. NASDAQ +11.50. Japan Nikkei +40.00. German Dax +10.00 U.S. Trade: The global equity markets denoted positive momentum for most of the day, but the trading participation was light, and that seems to have been a factor in the Wall Street close ending in a heavy drop. Both the futures and the cash equity markets managed to advance throughout the U.S. session, even though two important macroeconomic reports, the ISM Non-Manufacturing PMI and the ADP Non-Farm Employment Change failed to reach market’s expectations. However, the volatility of going into the FOMC announcement on interest rates at the high of the day was always going to then require some extra volume to hit the floor, if that long play was to be extended. The whole day’s gains, that were accrued in 23 hours or stair-step moves higher, were wiped out with the elevator ride that hit with just 15 minutes left in the session. It was enough to take our minds back to the halcyon days of the sub-prime and credit crisis moves, where traders would flick a coin, for heads or tails, on which direction the market went in the last 15 minutes of trade. It was a given that it would crash 1.5% either way, but nobody really knew which way that would be. Ahead of the Fed, the S&P futures market tested the 1060.00 area, but failed to break above that price point. From there, the they lost a few points, but recovered everything shortly after the Fed’s meeting statement was released. The rest however, as they say, is history, and leaves as many questions as answers as to what Chicago futures traders will wake up to on Thursday, after Asian and European markets absorb a raft of red flag economics, that includes two interest rate decisions. The Fed’s interest rate meeting had an important weight in the market, with traders appearing somehow cautious most of the day. In the statement released by the Fed, the central bank had said that interest rates are likely to remain at low levels “for an extended period”, which echoes the prior messages that the bank has sent.
The price structure on the daily chart is showing two valid scenarios. On the left side of the chart below, it shows an impulse structure with five waves up from the 665 lows to the current highs. If this is the case, the wave 4 discussed on the weekly chart, below, will be rejected, since the fourth wave is a corrective wave, which means it cannot be sub-divided by a five wave move. However, in this scenario, a three wave push lower into a corrective blue wave 2, with a targets somewhere around 950 area is expected. On the right side of the chart, we have a different picture, with a wave count that with a zig-zag correction, which is valid for a wave 4 scenario. In this case lower blue wave 5 will follow. Overall, the current price structure signals for a coming turning point with at least three wave push lower over the coming weeks, since the market is trading around the top of wave 5 or wave C leg. Sector Moves: The nine sectors represented in the U.S. market moved jointly higher for 90% of the trading day, with the strongest gains coming from utilities, up approximately 1.6%, while the smallest from consumer goods, which gained 0.8%, ahead of the Wall o’ Worry that hit at 3.45 pm local time. The healthcare sector advanced initially as much as 1.4%, being the second best gainer in the market, as question surface as to whether the healthcare reform will be delayed. Over the last few weeks of trading, the healthcare companies had constantly underperformed the equity market, since traders speculate that the government’s plans will affect the profitability of this sector. Economic Moves: Wednesday’s calendar was loaded with important news reports during the day and will continue on the same note over the next two days. During the U.S. session, apart from the Fed’s interest rate decision, a report showed that the ISM Non-manufacturing fell to 50.6 in October, down from 50.9 in the prior month. Earlier in the day, at 08:30 EST, the ADP Non-Farm Employment Change report showed that the economy lost 203K jobs, even if the market expected the economy to shed 188K. Crude oil was recently trading at $80.20 per barrel, higher by $0.80
Oil has made the latest top around the 82.00 zone, very close to the Fibonacci resistance levels shown between 83 and 84. Volume has not been strong over the last ten days, and the MACD is showing bearish divergence. All these reads are characteristics of a wave V move, which is the final sub-wave of a black wave 1), and is indicative of a reversal set-up, in this case, short. Gold was recently trading higher by $10.60 to $1095.50.
On the daily gold chart, the market has broken through the 1070 wave 3) top, after hitting the 1026 wave 4) bottom around the bullish trend line. This break has put wave 5) in progress, which has already reached the first target at the 1090 area as discussed last week. Once wave 5) of an extended black wave III finds the top, traders should look for a pull-back into the black, corrective wave IV. Treasuries took a deep dive after the Fed said that the economy is improving and after the phase “extended period” appeared once again in the central bank’s statement. Wednesday was the third consecutive day in which Treasuries declined, however the late demise of equities will allow the bond market to recover some lost ground. For a forex proprietary news feed for your site, contact us. Written by TheLFB Trade Team, © 2007-2009 LFB Services, LLC. All rights reserved. |
Top Content » |
Contributor Login | Free e-mail Alerts | About Us | Contact | Advertise With Us |
| Rates | News | Video | Currency Focus | Resources |
| Forex Spot Rates | Top Forex TV Economic News | Most Recent ForexTV Video | Euro (EUR) | Global Economic Calendar |
| Cross Rates | Commodity News | Forex News | Japanese Yen (JPY) | Currency Converter |
| Equity Market News | Stocks & Bonds | Sterling (GBP) | Glossary | |
| Charts | World Market Previews | Education Video Series | Swiss Franc (CHF) | Currency Codes |
| Forex Charts | Forex Market Commentary | ProSticks Analysis | Canadian Dollar (CAD) | Global Statistic Resources |
| ProStick Charts | Technical Analysis | Australian Dollar (AUD) | CPI Avg. Price Calculator | |
| New Zealand Dollar (NZD) | CPI Inflation Calculator | |||
| Nordic (NOK) | CIA World Factbook | |||
| EMEA | Pivot Point Calculator | |||
| Content Sharing | ||||
| RISK DISCLAIMER: By using this web site you agree to its terms and conditions. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. Forex (or FX or off-exchange foreign currency futures and options) trading involves substantial risk of loss and is not suitable for every investor. The value of currencies may fluctuate and investors may lose all or more than their original investments. Risks also include, but are not limited to, the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency. The impact of seasonal and geopolitical events is already factored into market prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and such may work against you as well as for you. Past results are no indication of future performance. Information contained this web site is intended for informational purposes only and was obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. | ||||
| Privacy Policy | Terms and Conditions | ||||