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Global Market Wrap: Semiconductors Lead The Declines In Wall Street Trade Global Market Wrap: Semiconductors Lead The Declines In Wall Street Trade - Nov 19 09 16:31 EST
Equity Futures: Dow -114.00. S&P -16.50. NASDAQ -30.50. Japan Nikkei -60.00. German Dax -9.00 U.S. Trade: U.S. shares moved broadly lower in Thursday trade, with almost each of the representative companies trading in the red. The equities sell-off came only after Bank of America downgraded the semiconductors industry, sending the global market into a risk-aversion phase. For a second consecutive day, the technology sector has a substantially negative influence on the U.S. market, after Wednesday trade, the same sector was among the top decliners. The S&P futures moved lower from the overnight session, in-line with the Asian and the European markets. However, the strongest declines came near the U.S. opening bell. The declines seen in the equity markets had a wide influence in the financial world, strengthening the dollar and U.S. Treasuries. As long as the market stays in a risk-aversion mode, as it currently is, chances are that the U.S. Dollar and Treasuries will continue their run.
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 clear zig-zag correction, which is valid for a wave 4 scenario. In this case, lower blue wave 5 will follow. Sector Moves: Each of the nine sectors represented in the U.S. market traded lower in Thursday trade, with the biggest declines coming from semiconductors, which fell approximately 4.0%. Semiconductors fell after Bank of America downgraded its profit outlook for the sector, and in particular, reduced the rating on 10 companies, including Intel and Texas Instruments, which declined 4.5% and 3.5% respectively. Banks also had a strong downside contribution to the overall direction of the market, with the XLF index dropping 2%. These declines came as analyst Meredith Whitney said that banks are “grossly overvalued”. Economic Moves: There was only one red-flag report throughout the U.S. session, the weekly Unemployment Claims. The reports showed that initial unemployment claims remained unchanged over the last two weeks, but are still above the 500K benchmark level. Ahead, investors await the interest rate decision from the BoJ Crude oil was recently trading at $77.60 per barrel, lower by $1.90.
Daily chart trend: Long. Main price points: 68.00, and 82. Looking for: Wave V top Oil 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 once the 83 – 84 area is reached. Gold was recently trading higher by $3.70 to $1144.90.
Daily chart trend: Long. Main price points: 1026.40, and 1115-1130. Looking for: Wave III top On the daily gold chart, the market is still searching for a wave III top before an expected bounce lower, into a corrective wave IV. Currently the market is testing the 161.8% Fibonacci extension level of the wave I distance, which is a typical Fibonacci level for a wave III target. Therefore, a turning point around the current levels should not be a surprise. Treasuries are currently in a very strong downtrend, triggered by the fact that the Fed will not be able to raise interest rate any time soon. As such, the shorter-term maturities are trading near decades long lows, with the yield on the 6 month Treasuries hitting the lowest value’s since 1958. For a forex proprietary news feed for your site, contact us. Written by TheLFB Trade Team, © 2007-2009 LFB Services, LLC. All rights reserved. |
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