Equity markets picked up where they left off yesterday, declining moderately within established trading ranges. Data today appears to have been mixed, with Wal-Mart (NYSE: WMT, Stock Forum) reporting disappointing same store sales numbers and cutting its EPS guidance weighing on the market, but with selling perhaps tempered somewhat by a better than expected US jobless claims report. Last week, US jobless claims were 467,000, the second week in a row they were below 500,000, and also better than the 545,000 markets had been expecting. With the ADP report worse than expected and the jobless claims better than expected, its left for tomorrow’s employment reports from the US and Canada to break the deadlock and provide an indication of the current employment situation and also on the health of the overall North American economy.
Currently, support levels seem to be emerging near 8,600 for the Dow Industrials (US30 CFD), 900 for the S&P 500 (SPX500 CFD), 1,225 for the NASDAQ 100 (NDAQ100 CFD) and 540 for the S&P/TSX 60. Should these fail to hold, next support appears possible near 8,400 for the Dow, 875 for the S&P, 1,200 for the NASDAQ and 520-530 for the 60. Upside resistance appears possible initially near 8,800 or 9,000 for the Dow, 925-940 for the S&P, 1,250 or 1,280 for the NASDAQ and 565-575 for the 60.
Commodity trading has been mixed today, with energy sliding, precious metals climbing and grains and base metals holding. The decline in crude oil despite heightened tensions overnight appears particularly telling as it suggests that investors remain more concerned about oversupply in the market after yesterday’s US inventory data and comments out of Saudi Arabia about the potential for further demand declines, than the risk of supply disruptions or shortages at this point. On the other hand, the rebound in gold and silver today despite apparently benign inflationary conditions suggests that investors that are concerned about political risks may be looking more to precious metals as a haven rather than oil at this point in time.
Meanwhile, grains and base metals have been holding through most of the day just on either side of key technical levels such as $1.50/lb for copper, $6.00/bushel for wheat, $4.00/bushel for corn and $10.00/bushel for soybeans. This suggests that some investors may still be uncertain over the direction of global supply and demand trends.
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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.
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