Indices/Commodities Outlook

 

INDICES/COMMODITIES
S&P Futures 2121 No change. The S+P retains a bid tone (range: 2116/2125) after a relatively stable day’s trade, but as before, the dailies still point higher so a test of the 2133 all time high again appears possible/probable. Support now should be strong at 2100. As we said previously, the indices have been choppy and have been extremely difficult and there are easier things to trade at present but I would rather be long than short. That said, if the dollar gets increasingly excited by the thought of a rate hike, the S+P could see another downside reverse. Sidelined.
DJI 17992 Ditto S+P. The DJI finished unchanged at just below 18000, after a 17980/18055 range. The dailies still point higher though, and thus we might expect a more sustained run towards the 18100/250 consolidation area. A failure here at 18000 would see a run back towards 17850, 17760/80 and possibly to the 200 DMA at 17680. As with the S+P, while the dailies point higher, the short term charts suggest the need for some consolidation and the hourlies continue to hint at some bearish divergence. Sidelined
ASX SPI 5649 The SPI made it up to 5659 today, pulling up just short of the 5665 target, though with the chance of reaching it still fairly realistic, beyond which would open the way to 5700 and eventually, maybe to 5745. The hourlies are showing some mild bearish divergence, and thus the upside momentum may wane a little today and I would not be surprised to see the SPI drift a little lower towards 5620/25 and possibly to the rising trend support, currently at 5590 but rising fast.
GOLD 1097 It was all about Gold today, and really it traded beautifully in line with our outlook from Friday/Monday, when we suggested a break of 1130 would see a quick move to 1085. It did even better than that, in reaching 1069 before a bounce to currently sit at 1096. Things do not look good though, and further losses, not helped by a strengthening dollar/ hawkish Fed, would see Gold head back to 1070, beyond which there is not too much to hold it up ahead of 1045 (Feb 2010 low), and 965 (Oct 2009 low), with an eventual target being at 888 (61.8% of 254/1921). Back above 1100, the topside will run into strong selling interest on the approach back towards 1130, with 1115/20 likely to be toppish on an intraday basis. Selling rallies seems to be the plan.
SILVER 14.70 Silver had a very choppy session, initially following Gold lower, in reaching 14.54 before a sharp, brief rally to 15.02. The strength did not last long and we are now back at 14.70 and looking soft.  Below the session low would open the way to the 1 Dec ’14 low at 14.41 and then head towards the 200 MMA (14.15) and eventually to major rising trend support at 13.00. The longer term target would seem to be somewhere around 8.40 (Oct 2008 low) albeit a long way off at this stage. Back above 15.00, the topside will find sellers at 15.25, 15.40 and again at 15.75/85 ahead of 16.00. Selling into strength is again favoured, on the back of a view of a strengthening dollar, but with a tight SL placed above 16.00.
OIL(WTI) 50.20 No change in view at this stage after WTI traded a 50.13/51.55 range today, down about 1.7% but still currently holding on above the important area of support around 50.00. We could be in for further consolidation today within the 50/52 area,  although I suspect that sooner or later (possibly sooner if the dollar starts to accelerate higher, which looks likely) a more sustained test of 50.00, now close by, may lie ahead. Given that the dailies appear to be picking up some increasing downside momentum and it is looking increasingly as though WTI is building a bearish flag formation, we could eventually be in for a run towards an eventual target of around 40/41. That remains to be seen and in the meantime WTI will again run into buyers at 50.00 /49.85 (61.8% of 42.02/62.55) a break of which would trigger stops, hinting at a steeper decline towards 47.85 and possibly to 46.80 (76.4% of 42.02/62.55).The topside looks capped at  51.50/52.00, but a break of which would head on to 53.00/50 beyond which would head towards the 100 DMA at 54.90, although looking increasingly unlikely

 

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