October 14 Morning Update
Submitted By Nic Lenoir of ICAP
Earnings are coming in higher than expected not surprisingly. Some of the details though such as margin for Intel are trully better than what was baked in. On the day we are getting close to the topside resistance trend joining recent highs around 1,087/1,088. Above that the topside of the expanding triangle is resistance at about 1,100, but given divergence I would rather expect ranging between 1,077 and 1,087 during the day before the next wave of earnings barring any data coming way off line one way or the other. There is a minor resistance around 1,071 below that, but should we break 1,077 the real support comes in at 1,065.
The Dax future has a very clear resistance coming up at 5,907 corresponding to the topside of the channel, I would watch it in parallel to what is happening in the US equity markets as the market structure is much clearer there.
Regarding the Nikkei I was relatively pleased with the price action last night. Given how Intel earnings propped the market up in after hours in the US, finishing down on the day confirms the weakness we saw in the charts yesterday. The attached chart highlights once again the resistance area between the neckline of the H&S and the gap left open on 09/28. As long as the market remains under 10,230 we would have a relatively strong bearish preference.
Overall we are running extensions in the US, getting close to a strong resistance in the Dax, and retesting the bearish acecleration level in Nikkei. US treasuries however still look bearish here, and until the next big support at 116-25 is tested I remain bearish in 10Y futures from 119-23. That would not really sit well with weaker equities in the US. Strongest views are in Treasuries and Nikkei, and I would recommend observing the 1,077/1,087 in S&P futures for now.
Good luck trading,