U.S. investors returned to trading today in a much better mood than they finished off with last week. Today’s earnings slate helped to boost sentiment with no major negative surprises out of the banking sector, as Citigroup’s (C) TARP losses came in even with expectations, and First Horizon (FHN) reported an improvement in its loan loss provision. Industrial manufacturer Parker-Hannafin (PHN) posted strong earnings (62 cents vs. Street 34 cents) and guidance. The health care sector has also been rallying, led by Coventry Health (CVH) and Eli Lilly (LLY) ahead of a key Massachusetts senate by-election, which may have a major impact on pending health care legislation.
On the back of these developments and on anticipation of results from IBM (IBM) due after the close, U.S. indices have been taking a run at key resistance levels, which include 10,725 for the Dow Industrials (US30 CFD), 1,155 for the S&P 500 (SPX500 CFD) and 1,900 for the NASDAQ 100 (NDAQ100 CFD) from support near 10,580 for the Dow, 1,130 for the S&P and 1,850 for the NASDAQ. If they can break out of these ranges, next resistance may appear near 10,800 or 11,000 for the Dow, 1,200 for the S&P, and 2,000 for the NASDAQ. The S&P/TMX 60 (Toronto60 CFD), meanwhile, continues to trade in the 670-700 range.
European markets have bounced up off their lows as the FTSE (UK100 CFD) has regained 5,500 with resistance at 5,600, while the DAX (German30 CFD) continues to encounter resistance at the 6,000 level, weighed down be disappointing German and Eurozone ZEW economic sentiment survey results.
Last night, Asia Pacific markets failed to capitalize on Monday’s rallies in Canada and Europe. With the U.S. back and setting direction, they may get another chance this evening. Next resistance levels appear near 22,000 for the Hang Seng (HongKong33CFD), 10,900-11,000 for the Nikkei (Japan225 CFD) and 4,900-5,000 for the S&P/ASX 200 (Aussie200 CFD). .
Commodities update: Resource recovery
After starting out soft, most commodities have gained in strength as the day has progressed, which suggests that based on the earnings reports released so far, investors seem optimistic about the prospects for the global economy.
Copper has been leading the way higher, advancing from $3.35/lb to $3.45 with key resistance in place near $3.50. Precious metals have been gaining even with a stronger USD today. Gold has advanced from $1,125/oz support to test $1,140/oz with next resistance in the $1,155-$1,165/oz range. Silver has jumped from $18.40/oz to test resistance in the $18.80-$19/oz area.
The energy group has been mixed today. U.S. crude has shrugged off some early weakness to hold well above $77.50/bbl support, but also remains well short of $80/bbl resistance. Natural gas, meanwhile, has been under pressure with temperatures moderating in consuming regions and the end of home heating season looming on the horizon.
This commentary is based upon technical analysis. Technical analysis is the study of price and volume and the interpretation of trading patterns associated with such studies in an attempt to project future price movements. Technical analysis does not consider any of the fundamentals of an underlying company, and as such is inherently uncertain and should not be the only factor considered by an investor in making an investment decision.