Although yesterday’s selloff worked its way through Asia Pacific trading overnight as expected, there has not been follow through into European and North American trading. Strong Service PMI data which indicated that economic activity generally picked up across all three of the main global economic regions has helped to shore up support, leaving those who panicked yesterday thinking twice about getting too bearish. With many major global indices trading just below their 2007 highs we could see more quick reversals of sentiment in coming sessions as traders try to determine whether economic and political conditions support taking indices to new highs. On the bullish side, today’s service PMI data provides further confirmation that China and a number of other economies around the world continue to improve. Easing political fears in Europe and the US have propelled capital to move out of defensive havens back into risk markets like stocks and commodities. Also, increased cheap money from QE programs may continue to find its way into the stock market. On the bearish side, the strong rally of recent weeks has left many markets overbought on the RSI and vulnerable to corrections like the one we saw yesterday. With earnings season wrapping up and with a lot of big data for this month likely out by the end of this week, some may be looking for an excuse to take short-term profits off the table. These opposing forces could keep markets active over the next few weeks. Because of this, it’s important for traders to not get too complacent or too despondent, and to keep an eye on opportunities as market swings may be short lived and within consolidation ranges for the near term. Although markets may struggle in the near term with resistance, as long as political trends don’t go completely off the rails and economies continue to make progress bullish trends may remain intact over the longer term. There’s a lot of significant action in currency markets today. USD and JPY are giving back some of yesterday’s gains, but precious metals are breaking out, led once again by platinum with gold also rallying. Gains in crude oil and gold are helping propel CAD higher while AUD and NZD slip back a bit. EUR has stabilized after yesterday’s downdraft and continues to trade above $1.3500, keeping its uptrend intact. GBP also continues to consolidate and base build with recent selling pressure subsiding. Economic News The Reserve Bank of Australia maintained its cash target rate at 3.00% as had been widely expected. Service PMI numbers have been coming out overnight. Highlights include: China HSBC 54.0 vs previous 51.7 India 57.5 vs previous 55.6 Brazil 54.5 vs previous 53.5 UK 51.5 vs previous 48.9 Germany 55.7 vs previous 55.3 France 43.6 unchanged Spain 47.0 vs previous 44.3 Italy 43.9 vs previous 45.6 United States 10:00 am ET, street 55.0 vs previous 56.1 Corporate News Dell confirmed the rumours this morning, announcing it has agreed to a going private deal with Michael Dell and Silver Lake at $13.65 per share. North American indices The Dow Industrials (US30 CFD) are bouncing around between 13,900 and 14,020 as it works off an overbought RSI. Next support in a correction appears near 13,860 then 13,775. The S&P 500 (SPX500 CFD) has bounced back above 1,500 as is it continues to consolidate recent gains in the 1,495 to 1,515 range with more support near 1,475. The S&P/TSX 60 (Toronto60 CFD) bounced off of 725 toward a retest of 732 with next resistance after that near 744. Commodities today Copper remains above $3.72 and continues to trend toward a retest of $3.82 key resistance as a bullish ascending triangle continues to form. US crude has rebounded but is struggling with the extension of an old trend support line near $97.00. A failure to retake that level would suggest the start of a new downtrend or at least that crude may remain stuck in a $95.60 to $98.00 trading channel for some time. UK crude has bounced up off of trend support near $115.50 but needs to break through $117.50 to signal the start of a new upleg. A failure to do so could create a double top. Gasoline continues to consolidate above $3.00 with next upside resistance near $3.10 then $3.20. Natural Gas is bouncing around between $3.20 and $3.40 trying to decide whether its ten month uptrend can prevail over a bearish H&S top that continues to form. Corn has pulled back a bit but remains in an uptrend above $7.15 with resistance near $7.45 then $7.60. Soybeans continue to creep toward a retest of $15.00 where a breakout would complete a bullish ascending triangle. Wheat has turned lower again, trading below $7.60 with next key support near $7.35. FX this morning Gold is breaking out today, taking out a downtrend resistance line by clearing $1,680. This looks encouraging but gold still needs to clear $1,700 to confirm the start of a new uptrend with next resistance after that near $1,725 then $1,755. Silver is testing $32.00 trend resistance this morning where a breakout would signal the start of a new upswing with next resistance near $32.50 then $34.00. Rising RSI suggests upward momentum continues to grow. Platinum is trying to break out today, briefly trading above and still testing the high end of its channel today at the key $1,700 level. A breakout would signal the start of a new upleg on trend with next resistance near $1,730 then a measured $1,745. USDCAD has drifted back under par but would need to break down through $0.9900 to call off a big ascending triangle that continues to form below $1.0100. EURUSD is holding above $1.3500, keeping its uptrend intact with initial upside resistance near $1.5620 and $1.5700. GBPUSD keeps attracting support above $1.5700 and RSI suggests negative momentum has been easing but it still needs to clear $1.5890 to call off the current downtrend and signal a recovery play. USDJPY is breaking out again today, clearing 93.00 with next upside resistance on trend near 94.00 then 95.00. Support moves up toward 92.00. AUDUSD continues to falter, trading back under $1.3400 once again. A drop below $1.0380 would signal the start of a new downleg with next support near $1.0365 then $1.0280-$1.0300.