Home > Uncategorized > 2013/10/01: TrendView VIDEO Analysis: Equities

2013/10/01: TrendView VIDEO Analysis: Equities

© 2013 ROHR International, Inc. All International rights reserved.

VIDEO ANALYSIS & OUTLOOK: After Market Analysis for Tuesday, October 1, 2013.

131001_SPZ60_30VID_1530EQUITIES

The timeline of the video begins as always with the S&P 500 future with mention of key macro factors which may affect the durability of the current rally at 02:20, followed by the intermediate-term view of the S&P 500 price activity as 03:40, with other equities and asset classes price activity at 06:20.

General Market Observations

The discussion of the December S&P 500 future being the key for the trend of the other equities is fitting once again in spite of the whipsaw engendered by the FOMC surprise two weeks ago and the somewhat surprising initially constructive response to today’s US government shutdown. The net effect of a US equities surge today (not accompanied by the other developed economy equities) was to put December S&P 500 future back up into some key decision levels in the upper-1,680 to mid-1,690 area for a further decision. The importance of that decision not just for equities but other asset classes as well is covered in our video analysis.  

We suggest review of that view on the December S&P 500 future even if your interest is more specifically in other equities or asset classes, which we mention later on in the video.

EXTENDED TREND IMPLICATIONS

The bottom line is that the December S&P 500 future acted well on a day when many might have expected a further drop on the US government shutdown. Yet it is still only up into the resistance set up by last week’s failure back below the Summers’ withdrawal Runaway Gap higher back on September 16th. And that classically evolves that 1,288.60-1,295.00 jump higher into an Exhaustion Gap Top.

That’s just what happens technically when UP Runaway Gaps are fully overrun (i.e. not just simply closed off on a retest) with a Close back below the gap. And it is important in the current context due to the degree to which today’s US equities rally may be based on specious assumptions as the brevity of the current US government shutdown, or the idea it will foment a more constructive approach to the looming US Debt Ceiling negotiation. More on all that in the Macro-Technical Trend Perspective in this week’s Summary Perspective, with the links to other analysis as well.

The strength of the govvies against the weakness of equities has been back since just after the mutual FOMC No Taper Surprise surge two weeks ago. That is the classical tendency, and December T-note future that had dropped so much further than the Gilt and especially the Bund in mid-June, has traded back up above key failed congestion and Fibonacci support in the 126-00 area. Next resistance is the low-mid 127-00 area.

Similarly the previously stronger December Bund future that had played downside ‘catch up’ in the wake of the (typically early) September contract expiration early last month managed to rally back above its 138.41 violated major lead contract low from September 2012. Once it was above it again, the weakness of the equities also encouraged it to exceed extended resistance 139.60 and 140.10-.30 areas; with extended resistance up into 141.00-.30 area.

That is the case as well for weak sister December Gilt future that has been suffering under the perspective from the upbeat last set of BoE minutes and discount in December future (lead contract after September expired last Thursday.) Even with the extended influence of the continued US QE, initially it just rallied back to the 119.15 violated major Fibonacci and congestion support. Yet after escaping that and further resistance in the upper-109.00 to low-110.00 area (congestion and violated Fibonacci supports), its next resistance is up into the hefty recent and historic congestion in the 111.30-.75 range.  

Foreign exchange remains more of a muddle, yet where the weakness of equities has weighed on the US Dollar Index in a manner that only occurs for the most part when the US is the source of the problem… like now!! After a ‘dead cat’ bounce from our long-anticipated US Dollar Index test of the .8000 area in the wake of the FOMC Surprise, it is right back down retesting it today. That neither makes it a runaway bear nor gives any signal of a trend reversal. As we noted previous, it is reasonable to believe other currencies might continue to strengthen as long as the US budgetary problems are a stressor.

And that may be for quite a while, because it seems that the right wing Republicans are in a ‘right-makes-might’ trance in their populist echo chamber. Especially note the EUR/USD slippage held well into the 1.3500-1.4350 area (next support 1.3350-00), and the GBP/USD temporary easing back into 1.6000-1.5950 (next support 1.5750-00) has yielded to strength that indicates a test of the more major 1.6300 area is very possible.

AUD/USD was also back down slightly below violated resistance in the .9350-00 area after testing .9500 resistance on FOMC Surprise US dollar weakness, yet held very well at the top of the more critical .9280-40 Fibonacci and UP Break support. The Japanese yen signaled strength on USD/JPY below rallying to no better than 98.80 once again (even if that is very much a trading range affair of late.) There is much more discussion of the dynamic of the equities, fixed income and foreign exchange that includes review of the cross rates and specific technical indications in the end of week videos from last week already available in previous posts.

Thanks for your interest.

p.s. As we are just back to blogging after a lengthy hiatus, some of the information on the blog is a bit dated. We will be clearing that up soon, and all of the current critical information (Calendar, Perspective, Technical Projections) is up to date.

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