Futures and FX Report 7/09/2012

US Markets

My observations below should be viewed as general advice and may not be right for you. 

Sometimes being in the Asian timezone is of great value. In yesterday’s report I said:

“Today (06/09/2012) we have seen an unexpectedly strong bid in Asian markets and the Australian Dollar is holding in well. It would appear that shorts are covering ahead of tonight major ECB decision....The short term price action is indicating that we could actually breakout to the upside. Use the levels as your guide and place your orders accordingly. Simply a breakdown below 1395 would be bearish and a breakout above 1410/1415 should lead to a retest of the recent highs at 1425 and possibly beyond.” 

As stated, there was unusual strength in Australian equities and the Australian dollar. This fed through into the US session and when that 1410 technical level lifted, the market broke out with strength. Having a clear plan and levels to guide you is key for trading successfully. 

http://fpmarkets.blogspot.com.au/2012/09/audusd-and-employment-numbers.html.

The S&P500 surged off the open as the European Central Bank announced specifics of its bond-buying plan. Draghi said policy makers agreed to an unlimited bond-purchase program as they try to regain control of interest rates in the euro area. Indeed, he said the ECB will have a “fully effective backstop to avoid destructive scenarios” (Bloomberg).  The bond plan is the most ambitious yet in the central bank’s fight to save the euro after nearly three years of turmoil. Gains were broad based with Financials, Energy and Materials all outperforming whilst defensive sectors such as Utilities underperformed. The Nasdaq closed at a 12-year high while the S&P 500 settled at levels not seen since January 2008. The two indices finished higher by 2.2% and 2.0%, respectively.

From a technical point of view, price has clearly broken out of the recent consolidation range and above the previous highs. This opens up a move to 1450 and possibly beyond. There was genuine momentum behind last night’s move and thus traders should look to buy the first pullback targeting these higher zones.

Tonight we have the Non Farm Payrolls and the Unemployment rate which will be a major event.

S&P500 Daily:

Breakout above consolidation and the Double Top zone. This next technical level is 1350. The trend remains up and yesterdays candle was confirmation of a new kick off move higher. 

Emini S&P500 60mins:

The 1395 level held firm and the breakout above 1410 overnight led to a number of stop orders going off. The market should now be well supported at 1420 and traders should look for retracements back into this zone to join the trend higher. 

Emini Nasdaq 60mins:

2800 should now provide solid support.

S&P500 Emini Key Levels:

Support Levels: 1415/1420

Resistance Levels: 1450

Europe

Spanish bond yields plunged and European stock markets rallied on Thursday, after European Central Bank President Mario Draghi fulfilled market expectations and said the bank would launch an unlimited bond-buying program to ease pressure on sovereign borrowing costs. The ECB boss said the central bank would launch an "outright monetary transaction" program to buy bonds in the secondary market, as an "effective backstop" to remove tail risk in the euro zone.

National benchmark indexes climbed in all 18 western-European markets, and all 19 industry groups in the Stoxx 600advanced. Germany’s DAX rallied 2.9 percent and the U.K.’s FTSE 100 gained 2.1 percent. France’s CAC 40 jumped 3.1 percent. The volume of shares changing hands on the Stoxx 600 was 72percent higher than the average of the last 30 days, data compiled by Bloomberg show.

From a technical standpoint, I have shown significant resistance zones in both the DAX and Eurostoxx Daily charts. These were broken with genuine strength overnight. Clearly the 2400 level in the Eurostoxx was strongly defended and this opens up a move to the previous highs up at 2600. 

Tonight we have Portuguese GDP figures, German Industrial Production, and the UK PPI numbers.

Eurostoxx Daily:

Breakout above the recent consolidation pattern and the overhead resistance level. This opens up a move to 2600 first target and possibly beyond.

DAX 60mins:

Breakout above the consolidation pattern. Traders should now use pullbacks into 7100 to enter into the uptrend, risk on a break back down below 7000. 

Eurostoxx 60mins:

 FX Majors

Yesterday I put out a very timely blog post on the Australia Dollar looking for a bullish turn out of the 1.02 support zone: http://fpmarkets.blogspot.com.au/2012/09/audusd-and-employment-numbers.html. Overnight, the little battler built on gains due to strength across risk assets. The first targets for this bounce are up to 1.035/1.04 and possible beyond. However, one step at a time. Interestingly, EUR failed to follow through and is now coming into the 1.27 target zone. Looks like clear rotation back into the AUD after recent underperformance.

AUDUSD Daily:

A strong bounce out of the cited support zone.

AUDUSD 60mins:

The target for this bounce is firstly up to 1.0350/1.040

AUDJPY 60mins:

A very strong bounce out of my target zone. This move could rally right into the overhead resistance zone at 82.00

EUR 60mins:

Its seems that the EUR had priced in a positive outcome from the ECB meeting and is now right into the 1.27 target zone. I anticipate some consolidation and potential weakness out of here. 

Commodities

Gold Daily:

Gold spike to 1715 overnight but has subsequently pulled back. The trend remains up with strong support coming in at 1680 to 1690. I still think the targets for the yellow metal come in much higher thus traders should continue to buy dips back into the trend.

Copper Daily:

Dr Copper is now also testing the up end of the range and trying to breakout.