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Market Update: A Few Targets Reached, A Touch More To Come
Submitted by Nic Lenoir Of ICAP
We saw almost to the tick the downside targets mentioned last night in S&P futures and EURUSD as per the hourly and 3-hour charts. However we see more downside potential on the Dax as we have not yet reached the target at 5,396. Also we do not have much hourly divergence in S&P and EURUSD's RSI low coincides with the lows which would suggest we can push a bit lower while remaining in the downtrend channel. S&P futures should bounce (maybe as high as 1070 here) but a break of 1051 on the downside could take us to 1,038.50 as the last leg started yesterday seems to be missing a 5th wave lower (caveat is that catching wave 5 of 5 is a tricky game as it can sometimes be so protracted you hardly see it on a chart!).
Fixed Income has been bid other than the first couple eurodollars/euribors which are under pressure as FRA/OIS spreads are widening on credit dislocation. The Bund is broke out through its major resistance at 123.70 last night and should be headed for the top of the channel at 124.64, while 10s have bypassed 118-10 and could rally up to 119-03/05 here, both of which should be major resistances especially coming on the heels of a large rally and divergence in the indicators.
Overall markets are getting close to major support/resistances, and it is surprising all this unfolded AHEAD of NFP. Canadian numbers this morning were better than expected but there was some concern that a fair share of jobs created are part-time, and the market is waiting for news out of Europe and US numbers to really factor the news in. On the other end other than a monster surprise on the upside for NFP, it seems hard to think the number can just wash out the turmoil out of Europe. It's probabl fair to think this weekend could see some announcements. Surely market price action this week will have caught the ear of dogmatic european politicans and even if a bit of weakness in the Euro pleases them, credit spreads including sovereigns blowing out is probably less of an intended consequence here.
Good luck trading,
Nic
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Holy moly. Get a load of the downward revisions to Dec and Nov job numbers. They were only like 2x what they "estimated" originally, e.g., Dec 150k from 85k down. Oct, even worse.
Come on, surely the SPX has one more little bounce to make before the mass correction...for the love of God please give me one more bounce.
I have been waiting to short the market for 4 months, I take a 2week holiday and BAM the world changes over night!
And the futures market loves those revisions (or ignored them) as well as the mysterious drop in unemployment - jobs are lost again this month, past revisions are down, yet unemployment is down? Huh?
Supplicate in the face of magical seasonal adjustment, heathen!
"caveat is that catching wave 5 of 5 is a tricky game as it can sometimes be so protracted you hardly see it on a chart!"
You can't see it, but it does exist. Honest!
it has begun.