Post-Breakout Consolidation Continues
Global markets this morning: After showing some signs of life yesterday, stock markets have started to drift back again today. Another profit warning out of the US transportation sector along with mixed flash PMI results and softish US jobless claims all suggest that the global economy continues to struggle.
It’s too soon to tell what impact all of the new QE coming from central banks may have although the pickup in German PMI was encouraging. Treasury yields for countries like Spain and Greece remain relatively low as meltdown fears recede, while stocks remain well above where they were trading at the start of the month.
In currency markets, USD continues to bounce back while EUR and AUD have been weakening. Crude oil also remains under pressure today as the implications of a soft global economy on demand continue to weigh on energy markets.
North American indices: The Dow Industrials (US30 CFD) has slipped toward a retest of the bottom of its 13,500 to 13,650 trading channel with next major support at its previous breakout point near 13,350.
The S&P 500 (SPX500 CFD) has drifted back toward the low end of its 1,450-1,475 trading channel but remains well above its 1,435 breakout point.
The S&P/TSX 60 (Toronto60 CFD) remains under accumulation with 710 support holding and resistance in place near 717 and 722.
Commodities today: Copper continues to consolidate recent gains in the $3.73-$3.84/lb range keeping its uptrend intact.
US crude remains under pressure following yesterday’s breakdown as it continues to trend toward a retest of support in the $89.00-$90.00/bbl range with resistance near $91.50.
UK crude has stabilized for now in the $107.50 to $109.50 range working off a short-term oversold condition generated by yesterday’s plunge but a lot of technical damage has already been done.
Gasoline has bounced back above $2.90/gallon but remains in a downtrend below $3.00 with support in the $2.84-$2.88 area.
Natural Gas is stabilizing near $2.80/mmbtu within a wider $2.60 to $3.05 trading channel.
Corn remains in a downtrend, currently consolidating between $7.40 and $7.65/bushel.
Soybeans have turned down after failing to hold above $17.00/bushel with next support near $16.60 then $16.20.
Wheat remains adrift, currently trading in the $8.45-$8.65/bushel range.
FX this morning: Gold continues to consolidate between $1,750 and $1,775/oz with next uptrend resistance near $1,790.
Silver remains well supported in the $34.00 to $35.00/oz area.
USDCAD is bumping up against the key $0.9800 level with next resistance on a breakout near $0.9860 and $0.9920 and support in place near $0.9760.
EURUSD has broken down through $1.3000, but has held $1.2920, a former resistance level so far.
GBPUSD is holding steady near $1.6200, above $1.6150 where it broke a long-term downtrend. Next upside resistance appears near $1.6250 then $1.6300.
USDJPY has drifted back into the middle of its 77.00-79.00 trading channel.
AUDUSD has broken down through $1.0400, completing a short-term head and shoulders top that also completed a double top near $1.0600. The $1.0400 neckline may be retested as new resistance with next downside support near $1.0360 and $1.0320. A measured move suggests longer downside risk toward $1.0180, which coincides with the low set earlier this month.