Yesterday’s positive momentum has continued through overnight markets, particularly in the Asia Pacific region which staged a big catch-up rally. Disappointing German IFO survey results have further stoked speculation that flagging economies could force more governments to shift their fiscal focus from austerity to stimulus.
As the US exchange open approaches, markets have started to backslide. A round of positive earnings reports in the US led by Apple and Boeing has been offset by disappointing durable goods orders.
The enthusiasm has spread to commodities today with copper rebounding, UK crude retaking $100.00 and US crude trading back above $89.00. Gold and silver have also been on the rebound today, both gaining over 1.00%
Showing that the laws of supply and demand still work, in the week since the big gold crash, demand for physical gold from individuals has apparently soared. Anecdotal reports from Asia have been circulating for a few days and today there have been reports suggesting that the smallest American Eagle gold coins have sold out.
Italy’s MIB has slumped back a bit while treasury yields have risen to retest 4.00% after Italian President Napolitano has called on the PD’s Enrico Letta to try to form a coalition government. As a much younger (46) and lesser known figure this may create a bit of short-term uncertainty until more is known about him.
Currency action shows traders moving back toward a more risk on stance. NZD has been bounced back strongly after the RBNZ held steady on interest rates. Other resource currencies (SEK, NOK, CAD and AUD) have also been among the stronger performers today with GBP outperforming EUR slightly.
Significant economic announcements released overnight include:
NZ interest rate decision 2.50% no change as expected
Germany IFO business climate 104.4 vs street 106.2
Germany IFO current assessment 107.2 vs street 109.5
Germany IFO expectations 101.6 vs street 103.0
UK house purchase loans 31.2K vs street 31.4K
US durable goods orders (5.7%) vs street (3.0%)
Economic reports due later this morning include:
10:30 am EDT US Crude oil inventories street 2.0 mmbbls
10:30 am EDT US gasoline inventories street (0.6 mmbbls)
Earnings season continues today. Highlights include:
Apple $10.09 vs street $9.98, announced a 15% dividend increase, increased share purchase program to $60B from $10B
Barrick Gold $0.92 vs street $0.86
Boeing $1.73 vs street $1.49, no charge taken for 787 problems
P&G $0.99 vs street $0.96
Ford $0.40 vs street $0.37
Whirlpool $1.97 vs street $1.90
Eli Lilly $1.14 vs street $1.05
North American indices
US30 has cleared 14,700 again, keeping its uptrend going with next resistance near 14,750 and 14,900. Support rises toward 14,680.
SPX500 has broken through 1,575 keeping its uptrend intact. Key resistance remains in place near 1,600 with trend support rising toward 1,565.
NDAQ100 is holding above 2,820 with next resistance on trend near 2,865 and next support near 2,800.
US SmallCap 2000 is climbing toward 930, near the midpoint of a 900-955 channel. A failure here be trouble as it would confirm a RSI signs of fading momentum and could form the right shoulder of an H&S top. .
Canada60 (Toronto60) continues to consolidate and base build in the 680 to 700 zone.
UK and European Indices
UK 100 tried to break through 6,415 but has started to struggle a bit. Next resistance on trend appears near 6,470 then 6,500 with support near 6,340 should it falter.
Germany30 is seeing its upward momentum slow with the index unable to retake 7,725 and the RSI stalling short of 50 suggesting that this rally may be a normal bounce within a broader downtrend. Next support appears near 7,600 then 7,560.
France 40 continues to rally, breaking through 3,800 supported by a rising RSI. Key channel resistance remains in place near 3,880 with trend support rising toward 3,750.
Italy 40 has been knocked back from 16,600 toward 16,400 but has been holding above its 16,260 recent breakout point. This combined with a rising RSI suggests this looks to be a normal correction in an emerging uptrend.
Spain 35 is rallying for a third day but has fallen back somewhat after running into resistance near 8,400 in normal backing and filling with initial support rising toward the 8,275 to 8,300 area.
Gold continues to recover with $1,400 emerging as new support. A move through $1,445 remains necessary to confirm the start of a new recovery trend.
Silver continues to consolidate in the $22.00 to $24.00 range. RSI suggests that it remains extremely oversold and washed out.
Copper has bounced up from $3.05 to $3.15 but needs to clear $3.20 to signal the start of a turnaround. RSI has moved back above 30 from oversold, a common bullish technical signal.
US crude has retaken $89.00, an encouraging sign that base building may be underway. Next upside resistance near $90.00 then $91.00.
UK crude has peeked back above $100.00 but needs to clear $101.00 to confirm the start of a new upswing where trend resistance near $103.00 could be retested.
Gasoline is retesting $2.70 but could form a double bottom if it holds with next resistance near $2.80 then $2.95. Next support on a breakdown in the $2.60-$2.62 area.
Natural Gas is retesting the low end of a $4.20 to $4.55 trading range. RSI keeps falling suggesting upward momentum fading. A break of $4.20 would signal a deeper correction with next support near $4.10 then $3.85.
Robusta Coffee is breaking down today, completing an H&S top to go along with last year’s triple top. 2,000 becomes new resistance with next potential downside tests near 1,930 then 1,820.
USDCAD is holding $1.0250 support as it continues to form a continuation ascending triangle below $1.0290 with next resistance on a breakout in the $1.0330 to $1.0340 where prior highs and a measured move cluster.
EURUSD is breaking down today with the pair falling under $1.3000 and the RSI dropping back under 50 to suggest that upward momentum has faded and its primary downtrend may be reasserting with next support near $1.2880.
GBPUSD continues to consolidate near $1.5250, keeping its uptrend intact. RSI suggests momentum turning neutral in the $1.5220 to $1.5400 area.
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