Having recently successfully tested key support levels, equity markets have started to rebound within their current trading ranges. For the moment, it appears that sovereign debt concerns have eased a bit, while better-than-expected trade data from the U.S. and Canada and some positive news on the corporate side appears to be helping to boost sentiment a bit. That being said, with the usual holiday slowdown in trading approaching after next week, climate treaty negotiations ongoing and lingering concerns over whether there are more shoes left to drop on the global financial system appear to be keeping bullishness in check. Current trading channels for key indices remain 10,200-10,500 for the Dow Industrials (US30 CFD), 1,080-1,120 for the S&P 500 (SPX500 CFD), 1.740-1,810 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: Another big day for natural gas
Natural gas started out the day trading quietly, but has soared following the release of a positive inventory report. Last week, inventories declined by 64 BCF, more than the 45BCF expected. Further drops in temperature in consuming areas this week, suggests that seasonal heating demand may be finally kicking in and giving a near-term boost to pricing. Initial resistance appears near $5.30/mmbtu, followed by $6-$6.25 on trend.
U.S. crude, on the other hand, continues to struggle near the $70 level. Should this level fail to hold, crude could be vulnerable to a test of its 200-day average near $65.25. Also note that a common 38.2% retracement of the recovery trend that started in February could open the door to a test of the $63.50/bbl level. Upside resistance appears near $71.50 and then the 100-day average near $73.
Metals have been stabilizing today with gold settling near the $1,125/oz level and silver holding above $17/oz support. Copper has slipped back a bit, but remains above key support at $3 with initial resistance near $3.10 then $3.20.
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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