Market Brief – Monday 11th November 2013

This market brief is an overview of the week ahead and some of the events we see as being important to the markets.

Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.

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We may take multiple trades throughout the week. Currently Trade View is Light Net Long.

AUSTRALASIA

ASX – 5449

The ASX continued its sideways move last week, and we continue to hold our views that we outlayed in last week’s weekly market brief.

For the up trend to continue, we would like to see an early move past 5481. If the upward momentum is strong, then 5549 could be reached. If 5549 is broken with long up bars, then the 5578 – 5581 area could be reached which would complete the range. This time the ASX would be near the top of the channel and a revision will need to be made once reached.

If the ASX cannot get past 5458 and the down move restarts, we would like to see a solid break back down past 5416 which could lead the ASX down to 5348. If the momentum is still strong, then we could see 5275. For any further down moves we need to see a break with solid down bars past 5275 and once broken then we could see support forming near the 5229 – 01 area.

EUROPE

FTSE – 6728

The FTSE had a strong start but was unable to hold its pace, and a move down followed for the rest of the week. Again we saw a bounce back up with an overextended 140+ point down move on Thursday reaching 6643, which was a 14 points below our FICM level at 6657. The important thing to note this week is that the close was below one of FICM’s potential support levels of 6740, and this will play an important role moving forward.

For the upmove to restart, we would like to see a solid break past 6740 followed by a break past 6784 before seeing 6817. If this level is broken, then 6876 will provide the first potential resistance point. As mentioned last week, once 6876 is broken and becomes support then the full range that was set back in April – May can be achieved by reaching 6972.

If 6740 plays a new role of resistance, then we could see a move back down to 6657 again. If this level is broken with solid long down bars then the area between 6574 – 63 will be watched closely. If the downward move continues past this area, then we could see 6450 – 32 reached, which would complete the range set in August.

DAX – 9087

The DAX got to a high point of 9189 which completed the full range mentioned in our previous week’s market brief (9167 – 90) before settling back down 100 points lower. Trade View will be monitoring the DAX very closely for early signs of a down move.

With a new all time high for the DAX, we will be sticking with last week’s projection. We would like to see the area between 9167 – 90 broken with strong long up bars before we revise any upper targets.

If the DAX cannot push higher and the down move starts, then we would like to see solid break past 9070 early in the week. Once this occurs we could see the 8951 level reached. If the downward momentum is strong, we could see 8915 in the same move. If this is broken with long solid down bars then 8865 will be the next level to watch.

US

S&P – 1768

The moves on the S&P appear to be conflicted. In the past when the Fed was pumping money into the system, all news was good news, and the markets went up. Last week we saw better than expected GDP numbers which is technically good news, but it was bad for the markets as there was the possibility that early Fed tapering could occur. But then on Friday we saw better than expected jobs numbers which is also technically good news, and this time it was good for the markets, but the Fed said they will look to taper when jobs numbers and growth improves.

Our comments remain the same from last week’s report. If the up move is to continue higher and complete the new range, then 1777 needs to be broken early the week with long solid up bars. This could then push the S&P towards 1797. Once this is achieved then we will look at the strength of the momentum and reases.

If the highs are in for the year and the S&P starts a new leg lower, then a move past 1752 could be the start. If this level is broken with long down bars then 1736 – 25 could be next. If this area is broken with strong momentum then 1712 – 1707 could be the next possible support, but it will be tested.

NASDAQ – 3363

The NASDAQ followed the S&P last week with a sideways move. One thing to note about the NASDAQ is that some of its star performing constituents like Tesla Motors (TSLA) have taken a beating down, and in the case of Tesla it was from a high of 194.50 to a close of 137.95.

If an upmove is to restart then we would like to see 3393 broken early in the week with long solid up bars. Once this is achieved then 3422 – 3443 could be reached which would complete the full range.

If this is the start of a NASDAQ slowdown, then we will monitor to see if the rest of the markets do the same. If they do, then once 3326 is broken we could see 3312 being reached. But if this level doesn’t hold and is broken with long down bars then we could see the NASDAQ come back down near 3273.

FOREX

AUD.USD – 9384

The AUD tried to rally early in the week but then continued lower on the last day. The USD strength helped push the AUD lower.

For the upmove to restart we would like to see a solid break past the 9439 – 58 area before seeing 9523. If 9523 is also broken then 9575 and 9599 will be the next tested level.

A possible restart of a new down move may have already started, and if this is to continue this week, then we would like to see 9309 broken early with strong downward momentum. Once this break is complete we could see some short term support between 9210 – 9189. If this is broken then 9083 could be tested next.

EUR.USD – 13359

The EUR continued lower as the USD Index strengthened with the “shock announcement” from Mario Draghi to reduce rates.

If the EUR begins to strengthen again, then a break past 13397 could start a move towards 13432. If this level is also broken then the next level we will be watching is 13514. If 13514 is broken with long solid up bars then 13697 could be reached.

If the USD continues its strength then a break down past 13337 could lead the way to 13223. If the momentum is strong and the USD Index continues to move higher (EUR is the heaviest weighted in the Index http://en.wikipedia.org/wiki/U.S._Dollar_Index) then the EUR will struggle and the 13176 – 65 area could be the next test on the way down.

GBP.USD – 16009

The GBP gained some strength early in the week only to give most of it back on Friday. With the USD strengthening across the board and divergence evident in some secondary indicators this will be an interesting pair to watch.

If the GBP does buck the trend and finds strength, then as per last week’s brief, we would like to see a solid move past 16075 before reaching 16122. Once this occurs, and if we see a break with long up bars, then the 16223 – 60 area will be its next test.

For the down leg to continue and take another leg lower, then 15911 needs to be broken with solid long down bars before reaching 15841. If this is then broken it could start the move towards the 15786 – 22 area which would complete the range.

USD.JPY – 99.00

With the European central bank lowering rates last week which helped to lower its currency, for the JPY it will be harder as they have no where to go.

As the USD is now above 98.81against the JPY, for the USD to continue its strength we would like to see the 99.34 – 56 area broken early in the week followed by a strong break past 99.99 with long up bars leading towards 100.52. The level 100.52 needs to hold as solid support before the next leg up can occur.

If we see another move down then we would like 98.81 – 64 area broken early in the week followed by a move down towards 98.20. If this is broken then 97.56 could be reached.

COMMODITIES

GOLD – 1287

The Bears took control of GOLD last week.

For GOLD to start a new uptrend we would like to see 1306 broken early in the week followed by a move past 1342. If the move is strong then 1380 will need to be broken before 1391 is achieved. This will then complete the new range set in October.

If the down move continues then a solid break past 1282 early in the week could lead the way to 1269. Once this level is broken then 1247 and 1223 could be tested next. As mentioned last week if 1223 does not provide support GOLD could dip below 1200 once again.

US LIGHT CRUDE OIL – 94.58

OIL continued its move lower but has now potentially settled between two of FICM’s levels (93.44 – 94.55). These will play important roles this week.

For OIL to move higher we would like to see 94.55 broken early in the week with long solid up bars reaching 95.43. If this level is then broken then we would look for 96.79 and 97.40 to be broken before reaching 98.25. For a new uptrend to start we would like to see 99.45 broken and hold as solid support.

If 93.44 cannot hold the bears back then a solid break down with long bars could lead to 91.46. If this level cannot hold the down move then 90.19 could be tested next. As mentioned in last week’s report, if the momentum is strong then 85.69 is the next level we will be watching.

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