Jobs or Uncertainty – Which is the Bigger Factor?
Spread betting markets has an interesting and volatile week as prices in the SPDR S&P 500 Trust ETF (SPY) and the SPDR Dow Jones Industrial Average ETF (DIA) have started to pull back after trading at their historically elevated levels. Overall, the S&P 500 has had its worst week since 2012 and this has caught many spread betting traders off guard given the fact that no directly negative financial stories have been released in the last few sessions. On the more encouraging side, the major event risk of the week was the monthly Non Farm Payrolls number out of the US and this showed that the world’s largest economic continues to put forward strong numbers in the labor market. Looking ahead, traders will need to assess the relative importance of economic data and global uncertainties as these are the two prevailing factors that have the potential to influence markets next week. We are still trading near significant records for most of the major stock indices (particularly in the DAX and in the S&P 500), so we will need to see more of a focus on corporate earnings in order to make new runs higher in these areas. Technical Chart Perspective
Last week S&P 500 was at historical maximum (1991,4) but this week we had a correction to the last upward movement, this decline could continue further. SP500 is now trading around a demanding area, take a look on the chart and you’ll see the price movement. The price hit the channel support today, maybe this will be a false broke and the price will grow again but we must take into account a further decline. We can find a stronger support at 1900,7 and lower at 1849,3 where the price could meet the ascending channel support. Resistance is at 1952,6. SP500 is still bullish on medium and long term.
We have high volatility on this index, we have a bearish divergence on weekly chart after the price has reached historical highs. On daily chart FTSE100 is trading below a previous resistance from 2007.10.01. Today the price made a spike down, this could be a false breakout of uptrend support. Next week we can see this index at lower levels if will succeed to break this support. On downside we have support at 6498,5 and lower at 6388,6. The price is below MA 200, this is a bearish signal. If this ascending trendline will hold then the price will come to test the resistance.
The end of this week brings an aggressive fall on DAX, the index is very close to reach the first support. Till yesterday the price was above the former support (9588,6), but there was a downward movement that pushed the index to lower levels. Is important how will react when will touch the support, bounce back or break below it.
About Richard Cox
University Teacher in International Trade and Finance. Specialty in technical/fundamental analysis of the commodities and currencies markets.