2015/11/12 TrendView VIDEO: Global View (early)
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TrendView VIDEO ANALYSIS & OUTLOOK: Thursday, November 12, 2015 (early)
Global View: All Markets
While some weakness might have been expected at some point after Friday’s strong US Employment report, Monday’s drop from the opening after Friday’s December S&P 500 future holding action in the nearby 2,080-75 support. Some might say this is the natural ‘good news is bad news’ influence from the greater potential for and FOMC rate hike in December. While that is possibly the case, the question is why that did not have more of an impact Friday?
There was an entirely different indication Monday morning which may be more so the culprit in the equities slam, US dollar stalling and the govvies stabilization: the OECD (Organization for Economic Cooperation and Development) Economic Outlook and Interim Economic Outlook. And it was quite downbeat, mirroring the slippage into atypical negative outlooks in all of its recent monthly Composite Leading Indicators. If you have not done so already, it is worth a look.
While we will get back to that shortly, there are also central bank cross currents hitting the equities after December S&P 500 future tried to push back above 2,080-75 on Wednesday with no success. ECB’s Draghi was at the European Parliament noting more weakness there than previously acknowledged, yet Janet Yellen was sharing views on post-Crisis Fed monetary policy that left the impression the FOMC was likely ready to finally raise rates at its December meeting. Obviously the combination of worries about Europe and other economies while the Fed seems likely to raise rates is not positive for equities.
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Video Timeline: It begins with macro (i.e. fundamental influences) mention of the strength of the US Employment report coming in the wake of other not so strong data last week. That said, mixed views from central bankers noted above were reinforced by the weak data out of Asia into stronger than expected US Wholesale Sales Tuesday. And positive Employment figures have spread around through Canada, the UK and Australia as well. While that might be a sign that Q4 will be the recovery many have been anticipating, the next key indication is Friday’s US Retail Sales… a key sign of any real consumer recovery.
It moves on to S&P 500 FUTURE short-term at 03:30 and intermediate term view at 05:30, OTHER EQUITIES from 07:00, GOVVIES beginning at 10:30 (with the DECEMBER BUND FUTURE at 13:45) and SHORT MONEY FORWARDS from 15:15. FOREIGN EXCHANGE covers the US DOLLAR INDEX at 17:45, EUROPE at 19:00 and ASIA at 21:30, followed by the CROSS RATES at 24:45 and a return to S&P 500 FUTURE short term view at 29:00. We suggest using the timeline cursor to access analysis most relevant for you.
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Authorized Gold and Platinum Subscribers click ‘Read more…’ (below) to access the balance of the opening discussion and TrendView Video Analysis and General Update. Silver and Sterling Subscribers click ‘Read more…’ (below) to access the balance of the opening discussion.
▪ Especially of note in that OECD Semi-annual Economic Outlook is the slideshow (enlarge to full screen) and the video of the Economic Outlook presentation. Of particular interest in the press conference video discussion by Secretary General Angel Gurria and others is the focus form approximately 03:00 on the extreme weakness of global trade (we have noted previous), and (from 05:15) the fact that structural reform we have been so focused on all year is the only policy lever left after monetary and fiscal tools have been mostly exhausted. It is an interesting view and read; and distinct counterpoint to the euphoria from last Friday’s US Employment figures.
As we will be developing another extensive Commentary on the overall fundamental and market situation very soon, we are going to demure from any further background analysis at present. The basic diametric dynamic between the US Employment report economic ‘Ecstasy’ from Friday and Monday’s OECD Economic Outlook and Interim Economic Outlook ‘Agony’ remains a good metaphor for what is transpiring in the markets.
This will soon also be further convoluted by the approach of ‘Santa Claus Rally’ season, or more so Santa ‘portfolio manager’ investment proclivities that we always revisit at this time of year. And in consideration of that more extensive ‘macro’ fundamental economic perspective coming soon, a quick view of the key technical levels after the recent significant price shifts is more useful this morning.
▪ In the event after Friday’s US Employment report the December S&P 500 future slid back down to test telling support back into 2,080-75 after fading previous from the interim 2,100 area resistance. That looked pretty firm on what could have been a worse ‘good news is bad news’ reaction from the greater potential for and FOMC rate hike in December. Yet that being violated so quickly Monday morning seems to point to the influence of that OECD Economic Outlook. Next lower interim support is 2,060-58 (with a Tolerance to the 2,056 selloff low from right after the FOMC statement release) that is now also being violated, with more prominent congestion back into the 2,040-35 range.
▪ The govvies all broke DOWN below interesting supports in the wake of Friday’s US Employment report. Those include the December T-note future 127-00/126-24, with next interim support at 126-00 and especially telling major support into the 125-16 area. The December Gilt future failing below 117.50-.15 has dropped quickly to the next lower support in the 116.50-.00 area.
As important, the recently more mighty once again December Bund future failed all key areas from 157.50 to 156.50-.20 and even 155.50-.20. Yet without even needing to test lower support down into the 154.65-.30 area key Fibonacci level and congestion it held the 155.00 area significant weekly up channel (from the major lead contract 148.23 early June low set by the September contract shortly after becoming front month.) Now back above 155.20-.50 to challenge the 156.20-.50 area once again is very critical; it is also now last week’s major daily up channel DOWN Break (156.25.)
▪ The foreign exchange is also fraught right now, with the US Dollar Index above .9775 finally able to exceed the key .9850 Tolerance of that resistance. That leaves historic resistance into the 1.0039 April high of the current overall up trend, yet with weekly oscillator resistance above that as nearby as 1.0150 area above that. That fits right in with EUR/USD on a weekly channel DOWN Break down below 1.1000 also failing 1.0850-00 historic and recent congestion, with 1.0500 area next support below.
That also applies to the somewhat more aggressive GBP/USD selloff last week (impacted by both the BoE Thursday and US Employment Friday) triggering a similarly important weekly channel 1.5265 DOWN Break. Yet rather than drop too much further right away, it was only quietly trading below 1.5150-00 support, with next support as nearby as 1.5000 and 1.4850-00. Back above 1.5150-00 since yesterday in spite of Janet Yellen’s somewhat hawkish comments this morning looks good, yet still leaves the 1.5265 DOWN Break as the key higher resistance.
The TrendView VIDEO ANALYSIS & OUTLOOK is accessible below.
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