It appears that some of the selling pressure that had gripped equity markets has subsided at the moment with major indices holding above key support levels. This suggests that for now equities continue to attract strong underlying support. Ongoing concerns over sovereign debt, however, may weigh over the markets for some time. After all, so far debt concerns have cropped up over the last couple of years mainly in smaller countries like Dubai, Iceland, Greece and Latvia. The question remains as to whether debt problems could spread to more or larger countries, which could impede advancement beyond current resistance levels. Also recall that the Copenhagen climate conference continues through the end of next week and that the Kyoto conference of 1997 was accompanied by uncertainty in global equities.
As such, it appears that indices may remain range bound for some time. Current trading channels include 10,200-10,500 for the Dow Industrials (US30 CFD), 1,080-1,120 for the S&P 500 (SPX500 CFD), 1,740-1,800 for the NASDAQ 100 (NDAQ100 CFD), 5,000-5,400 for the FTSE (UK100 CFD) and 670-700 for the S&P/TMX 60 (Toronto60 CFD).
Commodities update: Even inventories can’t save crude
It has been another tough day for commodities overall, but particularly for precious metals and U.S. crude oil. Despite a surprisingly positive inventory report for crude (-3.8 mmbbls vs. Street +0.25 mmbbls), the type that sparked rallies earlier in the year, the price of crude has continued to drop, taking out support at $72.50 bbl and falling toward a test of $70 support. This suggests that the rebound in USD and concerns that some commodities may have overextended themselves are playing a larger role in sentiment these days.
Gold has also been under pressure today, taking out support at $1,140 and $1,125oz with $1,100 appearing as next key support. Silver, meanwhile, has broken down through $17.50oz support. Copper has been a bit soft as well, but continues to hold in its $3.10-$3.20 lb trading range.
Even natural gas has backed off a bit despite the arrival of the first big winter storm of the year in consuming regions. Gas has slipped back under $5 mmbtu after encountering resistance at $5.20 with next main support near $4.75.
This commentary is based upon technical analysis. Technical analysis is the study of price and volume and the interpretation of trading patterns associated with such studies in an attempt to project future price movements. Technical analysis does not consider any of the fundamentals of an underlying company, and as such is inherently uncertain and should not be the only factor considered by an investor in making an investment decision.
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