Stock Markets Higher | Spread Betting Review
The S&P 500 was higher along with most of the major global stock indices as investor confidence continues to be supported by central bank policies in the US, Europe and Japan. The fact that the optimism continues is somewhat surprising, given the fact that
we are seeing some discouraging economic in many central regions of the world. In Australia this week, we had very disappointing economic figures, with monthly employment data showing a drop of 36,000 for the month. This was a massive miss after the 74,000 jobs increase seen during the previous month, so we are starting to see a pickup in volatility in economic data.
This is generally a negative for stock markets but with widespread central bank support seen around the world, investors have been able to shrug off most of these negatives and push prices higher for the most important indices, like the S&P and the Dow Jones. The DAX, CAC, and FTSE 100 are also holding at elevated levels, so it is becoming clear that investors are ignoring most of the systemic issues seen holding back progress in the region and pushing stock values to new highs for the year.
The S&P 500 closed higher after passing its November 2007 highs, to rise into the 1590 region. Prices saw increased volatility into the end of the week, however, but the index is finding support at the upper ends of its recent range. The next important level to the downside can be found at 1560, which is the 38.2% Fib retracement of the latest rally as well as a level of historical support. A downside break here would be a very bearish event and signal that a near term top is in place in the region of the new all time highs (1590). In order change the bearish bias, we would need to see a break of resistance in the 1590 region.
The FTSE 100 followed the S&P 500 higher into the end of the week, but still remains lower on a comparative basis (relative to its yearly highs). Support in the 61400 region is unlikely to be taken out very easily, and this area can be used for medium term buy positions. Initial moving average support comes in at 6160 so we will need to see a drop to this area before the index is likely to begin attempting to bounce. But from a technical perspective, the index is looking top heavy and we can start to look at rallies as new selling opportunities.
The DAX actually is continuing to hold inside its monthly downtrend channel, and support at the 61.8% Fib retracement of its more recent rally has already been removed. This makes the index highly vulnerable to further declines next week. Next level of support can be found at 7630.
About Richard Cox
University Teacher in International Trade and Finance. Specialty in technical/fundamental analysis of the commodities and currencies markets.