While this caused some retracement attempts on well overbought Wall Street investors were far from panicked. Even the short term support lines on the S&P500 remained unchanged. The Japanese were less resilient, especially as the growth numbers in their economy (released today in the Asian trade) were below expectations (0,9% q/q vs. 1,1% q/q expected). The result is a long black candle on the weekly chart of Nikkei225, right after the market painted a hanging man candle formation at the end of the 5-weeks bull market. If the situation does not change rapidly, the signal would be very bearish. The only hope for the bulls is that Nikkei225 is not the S&P500 or the Dow and that the US investors will be more optimistic during the Monday’s trade.
The economic calendar does not favor the buying side either. This week bring about mostly second-tier reports like the regional activity indices (New York today and Philadelphia on Thursday), housing data (starts, permits and used home sales) and perhaps the most crucial Conference Board (on Thursday). The Germany’s ZEW and early PMIs from the euro zone do not change this picture. A lack of “fuel” may play against optimists especially as it is hard to positively surprise the market anymore – at least at the moment (a good example is a selloff after slightly better than expected the US output data). If the bears eventually got the voice we might see a test of 957 points on the contracts for the S&P500.
The bearish environment pushed major currency pairs lower. The EURUSD moved through the short term support of 1,4090 (at a second attempt) and is on its way to 1,40 (medium term support) and possible even lower as the market draws the third line of the simple correction started at this year’s high of 1,4446. The pound is also moving down with the support of 1,6340 being broken on Monday and the potential to slide as low as to 1,5980. The sharp movement down is present on the EURJPY as well and the market may eye the medium term support of 126,90 there, that is still more than 6 figures down.
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Przemysław Kwiecień  |
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