Markets bounce on S&P support, Gold lower but Aussie doing well

January 29, 2014

The S&P has found some natural support in terms of technicals (see below) which has helped the tone in markets across the globe. Apple had a shocker though is one of the big movers having been hit hard by disappointing earnings but it didn’t stop activist investor Carl Icahn who reportedly bought another $500 million worth of the stock. At the moment it is down 7.91% at $506.95 – which by the way is why I trade currencies mostly, they don’t crash like that.

On the data front US durable goods were disappointing -4.3% in December against an expectation that they would rise 1.8%. Taking out the volatile transportation component saw durables goods still falling but a less ugly 1.6%. Elsewhere Case Shiller house prices printed 13.7% as expected while the Richmond fed index was a smidge weaker printing 12 versus 13 expected.

So with  a few minutes to go before the close the Dow is up 88 points to 15,930 for a rise of 0.57%, the Nasdaq is up 0.28% while the S&P 500 is up 10 to 1,793 for a gain of 0.64%.

No surprises that the S&P 500 has rallied today as the trendline you can see in the chart below is a fairly good one which stretches back to October 2012 and the price was outside the Bolly bands which is always and everywhere a sign you will get a bounce (or retracement if on the topside).

1760 the big level to respect and watch.

Across the pond in Europe the FTSE was buoyed by a Nomura upgrade of miners which saw BHP and Rio up 1 and 3% respectively but it didn’t really gain from the GDP report which showed a fairly solid 2.8% growth rate. At the close the FTSE was up 0.33%. In Germany the DAX rose 0.62%, the CAC was 0.98% higher and the FTSE MIB in Milan and the IBEX 35 in Madrid were up 0.9% and 1.24% respectively.

On Forex markets the US dollar has benefitted a little against the Yen from the better tone in markets and USDJPY sits at 102.86 but off the high of 103.25. The Aussie also benefitted from the improved sentiment and the very solid NAB Business survey yesterday making a high of 0.8820 but it is back at 0.8773 this morning having made a solid 0.44% gain on the day.

The Aussie has had a good and solid recovery off the lows from a night or so ago fueled by an exhaustion of the bears and the big jump in the NAB business survey yesterday which saw conditions improve materially suggesting the recovery is on track.

I went long after the number and set a target of 0.8807 but due to non-market reasons (last day of school holidays activities with the kids) I took the money in the mid 80’s. The eventual high at 0.8820 was a good one but the market is now consolidating the move to see if the support is anything other than fleeting as the chart below shows.

So the key level to watch today is 0.8750 – if it breaks watch out below.

Euro and GBP are largely unchanged at 1.3660 and 1.6573 respectively.

On commodity markets the gold bulls will be further disappointed by the yellow metals inability to hold the break of the trendline resistance over the past few trading days. It’s around the levels of yesterday morning at $1252.21 having made an aborted push higher again last evening.

Price action tells us everything always.

That is not to say I am only a technician but it certainly conveys whether your rhetoric has any hope of being right.

For the moment the signal from the gold price is that it has yet to shake off its bearish burden – all is not lost though as the chart below shows. Gold remains in a nice little uptrend but it feels like a test lower is in the offing to gauge support.

The key levels to watch are $1247 and then $1238 – a break of the latter would return the focus of the market lower.

Crude rose 1.64% to $97.29 Bbl but Dr Copper lost another cent to $3.28 lb. On the Ags things were fairly quiet with Corn up just 0.06%, wheat up 0.44% and soybeans fell 0.17%. Bitcoin is at $965 on Mt Gox.

On the data front today we get the Westpac leading index in Austalia and president Obama’s State of the Union Address before the German Gfk confidence survey and UK house prices tonight. In the US we see the release of mortgage applications and then tomorrow morning the FOMC decision and the taper or not.

Have a great day and good hunting

Greg

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