June 2009
Stocks in Asia/Pacific Mixed, Bank of Japan Sees Improved Outlook for Future Growth in June
June 17, 2009 at 6:04 am by David Song · Leave a Comment
Asian Market Update, Last Updated 6/17/2009 6:04 AM EST (GMT = EDT +5:00)
Asia Session Key Developments
· China’s State Council sees tough times ahead
· BoJ raised the economic outlook for the second month in June
Stocks in Asia/Pacific Mixed, Bank of Japan Sees Improved Outlook for Future Growth in June
The Asian equities market were mixed on Wednesday, with the Nikkei advancing for the first time this week, while the Hang Seng slipped lower for the third day on the back of lower commodity prices. Meanwhile, the Bank of Japan raised its economic outlook for the second consecutive month in June, and expects to see clear signs for a recovery going forward. In addition, the central bank expects exports and factory outputs to improved throughout the second half of the year, but went onto say that the domestic economy remains weak as households face a weakening labor market paired with lower earnings. At the same time, China’s State Council said that they see ‘long-term difficulties’ ahead, and said that the foundations for an economic recovery are not yet solid.
NKY 225 9,840.85
The Nikkei ticked higher on Wednesday to end a two-day losing streak, with the index adding 87.97 points (0.90%) to end the session at 9,840.85, driven by a 3.3% jump in oil & gas. Sanyo Electronics, the largest maker of rechargeable batteries in Japan, advanced 14.3% and GS Yuasa Corp gained 12.5% after Nomura Holdings said it will offer a global fund which focuses on green-technology. At the same time, Kirin Holdings, the largest beverage maker in Japan, gained 4.4% after JPMorgan raised the stock to ‘overweight’ from ‘neutral,’ while Mitsubishi Materials Corp added 1.9% as the firm raised its outlook for future profits. Moreover, Kawasaki Heavy Industries and Fuji Heavy Industries advanced 9.5% and 3.0%, respectively, following a newspaper report that said Boeing Co plans to build a second factory in the U.S. during 2012.
HSI 18084.60
The Hang Seng index slipped 80.90 points (0.45%) to end the trading session at 18,084.60, led by a 2.97% drop in consumer goods. Li & Fung Ltd, the largest clothing and toy supplier to Wall-Mart and Target, fell 3.0%, while Foxconn International Holdings, the largest contract maker of cell phones, shed 2.3%. In addition, Cnooc Ltd lost 2.0%, with PetroChina falling 1.3% on the back of lower commodity prices. At the same time, shares of China Resources Gas Group Ltd slumped 8.5% to lead the overall market lower after Credit Sussie and Morgan Stanley said they are planning to sell their stake in the company.
ASX 200 3904.10
The Australian stock market tipped lower for the third day this week, with the ASX falling 58.40 points (1.47%) to close at 3,904.10, led by a 2.3% drop in consumer services. Asciano Group, the largest port and railroad operator in the nation, tumbled 15.0% to lead the market lower after the firm expanded its share sale by 18%, while shares of Gloucester Coal Ltd plunged 13.6% after Singapore’s Noble Group Ltd announced it took an 87.7% stake in the firm. At the same time, OZ Minerals Ltd advanced 6.0% after saying its cash balance will rise to more than $575M after selling mines to China Minmetals Group, while CSR Ltd gained 6.0% after the firm said it would slip its sugar and aluminum group to take advantage of the rise in sugar prices.
Notable Asian Session Event Risk / Economic Releases
European Stocks Extend Losses as Risk Appetite Abates
June 17, 2009 at 12:49 am by Ilya Spivak · Leave a Comment
FTSE 100
Long-Term Technical Outlook
The FTSE is at risk of at least a pullback if not an outright reversal as daily RSI has rolled over from overbought territory. The rally from 3461 is likely to extend much higher over the summer months. But, will the advance carry more or less in a straight shot from current levels or will a pullback occur before the next advance? Remaining above 4295 keeps the FTSE 100 on a path towards 5106-5495 (50% and 61.8% of previous decline). A drop below 4295 would lead to a deeper decline in what is probably a B wave.
Short-Term Technical Outlook
The FTSE has broken out of a rising channel and is now ranging above support / resistance at 4307.61. A break lower will target the 100-day moving average at 4096.06.
DAX 30
Long-term Technical Outlook
The DAX pattern is the same as that of the FTSE 100. Staying above 4653 keeps the index headed higher towards 5870-6409. These levels are defined by the 50% and 61.8% retracements of the decline from the 2007 high. The 100% extension of the first leg of the advance (wave A, from 3589-4980) is in this zone at 6045.
Short-Term Technical Outlook
German shares have surpassed support at the bottom of a rising channel and slipped below the psychologically significant 50000 level. Prices now target 48066, the 23.6% Fibonacci retracement level.
CAC 40
Long-term Technical Outlook
The decline from the 2007 high in the CAC 40 is in 5 waves and either wave 1 or 5 is extended. It seems more probably that wave 5 is the extended wave because if wave 1 were extended then wave 2 would be uncommonly small. Either way, the index is most likely headed significantly higher over the next several months. The target zone is the former 4th wave, which is 441-5142. The 61.8% is in the middle of this zone at 4754. Near term, staying above 3115 keeps the trend pointed up. Coming under there would lead to a deeper decline in what is probably a B wave.
Short-Term Technical Outlook
The French benchmark index has broken below the lower boundary of a rising channel. From here, prices are set to decline to support / resistance at 313490.
IBEX 35
Long-term Technical Outlook
Same story with the IBEX 35. The rally from the low (6703) is corrective but has more room to run. Staying above 8829 keeps wave C headed higher towards 1137-1247. This zone is defined by the 50%-61.8% retracements of the decline from the 2007 high. Wave C would equal wave A near the lower end of this zone at 1159.
Short-Term Technical Outlook
The IBEX 35 continues to show signs of a developing double top at 97240. Immediate support is marked by the lower boundary of a rising channel. A break beyond that will aim at the 23.6% Fibonacci retracement level.
FTSE MIB Index
Long-term Technical Outlook
The FTSE MIB (Milan) index took the same structure as the CAC 40 on the way down from its 2007 high. The index is currently testing the 200 day SMA, which should give way as the target zone for the index is not until 30062-34711 (former 4th wave….wave 5 is extended). Remaining above 18752 keeps the trend pointed higher. Coming below there would lead to a deeper decline (next support would be 17133) before the next leg up.
Short-Term Technical Outlook
Italian shares are firmly range-bound above the 14.6% Fibonacci retracement level. Negative divergence on the RSI oscillator favors a bearish bias, with a break of current support targeting the 23.6% Fib.
June 16, 2009 at 7:50 pm by John Kicklighter · Leave a Comment
Nikkei 225
Short-Term Technical Outlook
Has the Japanese market seen a critical reversal? It a not-so-subtle break of a three-month rising trendline, Tuesday’s drop not only broke its technical stride; but it further produced a significant, bearish gap and dropped below a long-term 38.2 percent Fib that created some trouble for the last week’s advance. A trend break of this magnitude may be good for some measure of follow through; but it is not immediate confirmation of a trend reversal. We will look to see whether the former range top (for October all the way up until May) around 9,475/500 will give pause to further decline. In the meantime, this is a bearish sign for the market.
S&P/ASX 200
Short-Term Technical Outlook
While the S&P/ASX 200’s reversal has been just as clear as its Japanese counterpart, the technical insight it provides us is far less valuable. A bearish gap cleared the short-term former range resistance developed at 4,020; but there was no meaningful trend to flip the switch on momentum. There is another, immediate congestion point at 3,925 that could stand in as significant support along with a Fib confluence should follow through lack. If this floor does not give way, it wouldn’t take long before the market is once again on developing its longer-term rally. Alternatively, taking out 3,925 doesn’t guarantee a change in trend either as the rising trend channel from April is generally defining pricing action two-and-a-half months later.
Hang Seng
Short-Term Technical Outlook
While congestion has developed for many of the world’s benchmark equity indexes, no chop has been as pervasive as what has been seen in the Hang Seng Index. After setting a loose double top around 19,000 (which is also fortified by a long-term 38.2% Fibonacci retracement), we have seen a drop back to 17,700. However, this is not a unique pull back. Indeed, we had already confirmed this former resistance level as new support last week. Now, this figure comes with a nest of Fibs and holds the general pace of the rising trend of the market. A true break below this level could signal a much more definitive move for Hong Kong equities.
Written by: John Kicklighter, Strategist for CFDTrading.com
Questions? Comments? You can email them to John at jkicklighter@cfdtrading.com.
Treasuries Put in For a Bullish Reversal; But Momentum Lacking
June 16, 2009 at 7:48 pm by John Kicklighter · Leave a Comment
Treasury Note (10-Year)
Short-term Technical Outlook
Have we seen the end of bearish momentum for the benchmark T-note for a little while? After falling for six of the past eight weeks, the world’s safe haven finally found its footing in the vicinity of notable support. A notable 61.8 percent Fib retracement of the June 2007 to December 2008 rally helped to confirm a rising trend (there confirmed points are needed to verify a trendline); and finally curbed the multi-month long decline with a reversal at 114-16. We are still in a medium-term bear wave; so projecting upside potential is looking for a retracement rather than a reversal. The first zone of distinction comes in around 117-14/16 which is both the 50% retracement of the aforementioned wave and the 38.2 percent pullback of the May 11th to June 12th sell off. Upon review though, this is a relatively flimsy level.
UK Gilt (10-Year)
Short-term Technical Outlook
At one point, the 10-year Gilts’ drop last week seemed to usher in a break of 116.80. However, waiting for the weekly close, it was clear that investors’ convictions on direction were not set. The candle that comprised the entire week is a notable doji (a pattern that was present at the past three reversals in late December, early February and early March). Should this turn hold up, it would confirm the authority of the 50-week simple moving average and a double bottom formation with the February lows. However, the bearish trend from the March trend reversal still stands. A falling trend loosely defines the progression of lower highs since that top; but it is the pivot and 38.2% Fib at 118 that offers the solid level of resistance. We will look for either a break above 118 or below 116. The former could ultimately develop into a head-and-shoulders formation. The latter could simply spell out an aggressive trend change.
German Bund (10-Year)
Short-term Technical Outlook
The pace and direction of German government debt is not as clear as its US and UK counterparts. Following suit with the rest of the fixed income world, the 10-year bund was spurred on to an aggressive, bullish reversal last week. The 50 percent Fib pulled from the June 2008 to January 2009 rally provided a loose floor; which the market would have no qualms about temporarily breaking. However, after a tenuous test, the bulls would win out and produce a long lower wick. Looking ahead, the rebound for the Bund comes with few hard levels to work with. Immediate (but ultimately weak) resistance stands at 120, which doubles as the upper boundary to an ill-defined falling trend channel from March. The more technically-sound ceiling holds at 121.50. As a range bottom for nearly six months, this could prove a difficult boundary to run.
Japanese Government Bond (10-Year)
Short-term Technical Outlook
In an unusual turn for the Japanese Government Bond, we would see a clear and uninterrupted, three-day rally that tested the normal complacency of congestive price action. However, despite the 60-point advance, the market would not threaten to breech the boundaries of the 136.75 to 135.35 band that has developed over the past two-and-a-half months. We will have to watch for momentum across the government debt market; but unless there is a notable appreciation in treasuries the world over; the JGB’s advance is likely to fall victim to its range.
Written by: John Kicklighter, Strategist for CFDTrading.com
Questions? Comments? You can send them to jkicklighter@cfdtrading.com
U.S. Stocks Have Largest Two-Day Loss Since April
June 16, 2009 at 7:40 pm by Ilya Spivak · Leave a Comment
US Session Key Developments
- S&P 500 Has Largest Two-Day Loss Since April
- Producer Prices Plummet Through May
- Housing Starts Beat Forecasts
U.S. Stocks Have Largest Two-Day Loss Since April
Stocks suffered a second straight loss today, which makes it the largest two-day loss the S&P 500 has suffered since April after Producer Prices in the 12 months through May signaled that an economic recovery may be further away than originally anticipated. Indeed, the figure which estimates the cost of materials that business use to produce their goods plummeted by -5.0% in the 12 months through May. Housing Starts data revealed an optimistic building-sector eager to anticipate the recovery. Indeed, the figure grew more than anticipated for May, 532,000 versus 485,000. An over expansion of new homes could force the broader mean price of existing dwellings to decline as the supply increases. Such a development may have sent a signal to Wall Street saying that property values could be further depressed.
Dow 30 8504.67 -107.46 -1.25%
Price action in the blue-chip index remained in positive territory for nearly the entire first half of the trading session before fading in the red. Every sector in the Dow closed below water with Financials slipping -2.14%
SPX 500 911.97 -11.75 -1.27%
Only one sector, Health Care, managed to advance today after Amgest saw its stock recommendation boosted by an equity analyst.
NAS 100 1796.18 -20.20 -1.11%
Tech stocks too suffered, in a similar fashion with those of the S&P 500. Of those who lost, Telecommunications was the least affected, declining -.97%.
Commodities Daily Fundamentals: Safe-Havens Rebound, Dollar Weakness Likely To Continue
June 16, 2009 at 4:34 pm by CFDTrading Analyst · Leave a Comment
Commodities – Energy
Crude Falls Back As Dollar Continues Gains
Crude Oil (WTI) $70.640 +$0.020 +0.03%
Crude prices ended flat for the day as US dollar declined along with global equities. Dollar declines are likely to continue for some time. Deficits will remain at record levels unless drastic efforts are employed to reverse them. Such actions that would help cover the deficit would have an adverse impact on the economy however and will be avoided for this reason. As such, the conditions for extended dollar weakness will likely continue and provide support for crude prices. On the other hand, global economic activity is likely to remain subdued and by extension so too will crude demand. Due to the size of existing stockpiles, ongoing crude production from major suppliers like OPEC, and weakened global demand, this should place downward pressure on crude prices. As a result, the push and pull between these two factors will push crude prices to range trade between major resistance levels of $65 and $75 for some time.
Commodities – Metals
Safe-haven Metals Decline As Dollar Continues Gains
Gold $934.900 +$7.4000 +0.80%
Gold prices rebounded somewhat for the day. Despite the downward trend, dollar weakness and expectation for greater inflation will likely continue to stand in favor of gold strength for some time. At the moment, the dollar continues to show instability in movement and such gyrations could again lead to withdrawl from the greenback as a safe-haven.While gold will benefit from this in the near-term, it will also gain on expected inflationary risks for longer-term investors. While presently muted, capital injections are large enough to make inflation a substantial risk for the future. Longer-term investors are likely hedging against this risk with gold. Gold prices can be expected to gain for the medium-term.
Silver $14.1800 +$0.1500 +1.07%
Silver prices gained modestly as equity markets continued to decline. If the economy continues signs of further contraction, silver prices will likely only gain modestly if safe-havens rise. On the other hand, if expectations turn such that rallies will continue, silver has the potential to gain at a much faster pace than gold due to the combined effects of its safe-haven status and its industrial applications. Expect modest gains for the near to medium-term.
-Written by Stefan Tifigiu, CFDTrading Research
Questions/Comments about this article? Send them to Stifigiu@fxcm.com
European Daily Fundamentals: Shares End Modestly Lower On Mixed Data From The Euro-zone And The US
June 16, 2009 at 2:41 pm by CFDTrading Analyst · Leave a Comment
Europe Session Key Developments
- European Shares Fluctuate After Positive US Housing Data Release
- Weaker Economic Releases Ultimately Pull Equities Lower
- Looking Ahead, Little to Substantiate Equity Strength, Declines Likely
European shares ended the volatile session with modest gains as positive housing releases in the US collided with negative data from the Euro-zone. The muted response to the spike in housing data from the US could be further sign of exhaustion in equity markets. Bulls are having trouble building enough momentum for gains beyond major resistance levels. Fundamentally speaking this makes sense since the economy remains very weak and fueled most of the rallies. Today’s deteriorating economic data further substantiates this. About the only evidence for improvement comes from recovery in the ZEW surveys for economic sentiment, which though better, remain at negative levels. Looking ahead, there is little to support a drastic change in conditions. Financial Institutions remain weakened and still exposed to a number of securities that will show higher losses due to the extended recession. Other sectors have shown continued contraction as well. Currencies depreciated against the Euro from major trade partners like the US and Switzerland, placing further strain on exports. As such, a forecast from the ECB for weakness to continue for the rest of 2009 seems to be more likely. Going forward, even in the face of rising confidence and optimism, this will likely mean declines for equities.
FTSE 100 4328.57 +2.56 +0.06%
UK Equities closed off flat for the day as a -0.9% decline in Basic Materials and a 0.53% decline in Oil&Gas were offset by a Telecom sector gain of 2.19%. Basic materials were pushed down by a 2.45% decline in Rio Tinto after it announced its trade outlook for balance of 2009 was uncertain. Telecoms were boosted by an 8.01% gain in BT Group after it announced a deal with Nestlé in which it would connect all of its global offices via its next-generation high-end video conference services.
CAC40 3213.95 -5.63 -0.17%
The French index declined modestly as Financials declined 2.32% as Soc Générale declined 3.34% continuing on yesterday’s announcement that French banks were unlikely to repay state loans until 2010. Basic materials sectors gained 1.02% as Arcelor Mittal continued gains after a number of banks upgraded the company. Health care also gained 1.0% as Sanofi Aventis gained 1.02% following talk of a possible big takeover looming for the company.
DAX 4890.72 +0.78 +0.02%
German equities were flat for the day as weakness in the Health Care sector (declining 0.91%) and the Consumer Goods sector (declining 0.82%) was offset by consumer service sector (a gain of 0.82%.) Merck KGAA declined 4.19% following a cut to neutral by Bank of America. Consumer Goods fell as Volkswagen AG declined 1.32% along with other carmakers following the new car sales release that showed a decline of 4.9% for the month. Metro AG gained 1.46% after being raised to outperform by Credit Suisse.
IBEX35 9497.90 -20.80 -0.22%
The Spanish Index declined modestly following weakness in the Health Care and Technology sectors (the two declined 1.77% and 0.72% respectively). The two were pushed down by a 1.77% decline in Grifols SA, and a 0.72% in Indra Sistemas. A gain of 2.25% in the Basic Materials sector offset Weakness however was following a 1.52% gain in Aceronix and a 1.05% gain in Arcelor Mittal.
FTSE MIB 19589.63 -180.86 -0.91%
The Italian Index declined the most of the European Indexes led down by declines in the Financial, Consumer Goods, and Consumer Services Sectors. The three declined 1.73%, 1.42%, and 1.12% respectively. Fiat SPA declined following the new car sales release but was offset somewhat by announcement of a €400 million loan from the European Investment Bank which will be used to fund research of new clean-air technologies. Unicredit Spa declined 2.36% following a reduction in their price estimate by Goldman Sachs. Autogrill SPA declined 3.52% for similar reasons why other autos declined.
-Written by Stefan Tifigiu, CFDTrading Research
Please send any comments about this report to Stifigiu@fxcm.com
Dow May See More Losses With Break Below 200-Day SMA
June 16, 2009 at 8:44 am by John Rivera · 1 Comment
Staying above 8227 keeps the near term trend pointed up. The rally from 6470 to 8588 was in 3 waves (wave W) and the decline to 8221 was a small expanded flat. The break above 8588 confirms that wave C is underway. A likely target area is where wave C would equal wave A; which is near the 50% retracement of the decline from the 2007 high; at 10334.
The Dow finally broke from recent consolidation dropping below the 200-Day SMA, which may make it susceptible for more losses. We could see momentum slowed at psychological support at 8,500. However, longer-term upside remains and although we could see a test of support at 8,250 losses below that are unlikely.
The S&P count is the same as the Dow count. A B wave is complete at 879. A target is 1142 (100% extension) and the index should remain above 879 now.
The S&P 500 finally traded lower after several days of bumping up against resistance at 943-the yearly high. We could see a retrace back to the 200-Day SMA at 905 if bearish momentum continues today with potential to test 880. 
The Nasdaq is in the same position as the other US indexes. The index should remain above 1664 on its way to a test of the 50% to 61.8% retracement area of the decline from 2862. This zone is 2063 to 2251. The 100% extension of the rally from 1264-1773 is in this zone at 2172.
The Nasdaq has traded lower after failing to break above resistance at the 50.0% Fibo level of 2,474 – 1,265 at 1,868. Therefore, we could see a retrace back to the June 9th low of 1,806 with 1.780 as the new ultimate support level.
Stocks in Asia/Pacific Tumble Lower as Risk Appetite Falters, BoJ Holds Rate Steady at 0.10%
June 16, 2009 at 5:38 am by David Song · Leave a Comment
Asian Market Update, Last Updated 6/16/2009 5:38 AM EST (GMT = EDT +5:00)
Asia Session Key Developments
· Bank of Japan holds benchmark interest rate steady at 0.10%
· Governor Shirakawa sees risk for inflation to fall more than expected
Stocks in Asia/Pacific Tumble Lower as Risk Appetite Falters, BoJ Holds Rate Steady at 0.10%
Asian equities tumbled lower for the second day this week following the slump on Wall Street, with the major benchmark indices parings gains from the previous week as market participants curbed their appetite for high risk/reward investments. At the same time, the Bank of Japan held the benchmark interest rate steady and said that the extraordinary efforts taken on by the government has helped mitigate the downside risks for growth and inflation. However, Governor Masaaki Shirakawa noted that the outlook for future growth remains highly uncertain, and went onto say that he expects capital spending and private consumption to remain subdued over the medium-term.
NKY 225 10039.67
The Nikkei 225 plunged 268.79 points (2.86%) to close at 9,752.88 in Tokyo, with all of the 10 components falling lower. The decline was led by a 6.0% drop in financials, with Nomura Holdings leading the market lower after falling 8.8%, while oil & gas slumped 4.7% on the back of lower crude prices. At the same time, Mitsubishi Corp, which generates more than half of its profits from commodities, fell 5.1%, while Nissan Motor Co tumbled 6.0% after the Japanese yen strengthened against the greenback for the second consecutive day. Meanwhile, BoJ Governor Masaaki Shirakawa said that the unprecedented measures taken on by the government has helped to stabilize economic activity and decided to hold the benchmark interest rate steady at 0.10% as expected, but went onto say that he sees no guarantee for a sustainable recovery at a news conference in Tokyo.
HSI 18165.50
The Hong Kong benchmark index slipped 333.46 points (1.80%) to end the day at a one-week low of 18,165.50, driven by a 3.7% drop in industrials. Cnooc Ltd, the largest offshore oil producer in China, fell 5.5% as crude prices dipped lower, while Aluminum Corp of China lost 3.5% on the back of falling metal prices. Meanwhile, Ping An Insurance slumped 5.1% after Citigroup lowered the firms rating to ‘hold’ from ‘buy’, while shares of China Life Insurance Co slipped 1.7% after the firm reported a drop in its premium income during the five months through May from the previous year.
ASX 200 3962.50
The ASX 200 fell 69.20 points (1.72%) to end the trading session at 3,962.50, led by a 3.8% drop in oil & gas. Basic materials slumped 2.6% following the drop in global commodity prices, with BHP Billiton and Rio Tinto declining 1.5% and 3.0%, respectively. At the same time, Goodman Group led the market lower as the company’s shares plunged 15.3% after the firm announced it will borrow A$200M from a sovereign wealth fund in China, while Woodside Petroleum shed 3.2% following the drop in oil prices. Meanwhile, Macquarie Communications Infrastructure Group advanced 26.3% after Canada Pension Plan Investment Board raised its bid for the group by 20%.
Notable Asian Session Event Risk / Economic Releases
German Stocks Break Support, Other European Exchanges to Follow
June 16, 2009 at 12:46 am by Ilya Spivak · Leave a Comment
Long-term Technical Outlook
The FTSE is at risk of at least a pullback if not an outright reversal as daily RSI has rolled over from overbought territory. The rally from 3461 is likely to extend much higher over the summer months. But, will the advance carry more or less in a straight shot from current levels or will a pullback occur before the next advance? Remaining above 4295 keeps the FTSE 100 on a path towards 5106-5495 (50% and 61.8% of previous decline). A drop below 4295 would lead to a deeper decline in what is probably a B wave.
Short-Term Technical Outlook
The FTSE has broken out of a rising channel and is now ranging above support / resistance at 4307.61. A break lower will target the 100-day moving average at 4096.06.
DAX
Long-term Technical Outlook
The DAX pattern is the same as that of the FTSE 100. Staying above 4653 keeps the index headed higher towards 5870-6409. These levels are defined by the 50% and 61.8% retracements of the decline from the 2007 high. The 100% extension of the first leg of the advance (wave A, from 3589-4980) is in this zone at 6045.
Short-Term Technical Outlook
German shares have surpassed support at the bottom of a rising channel and slipped below the psychologically significant 50000 level. Prices now target 48066, the 23.6% Fibonacci retracement level.
CAC 40
Long-term Technical Outlook
The decline from the 2007 high in the CAC 40 is in 5 waves and either wave 1 or 5 is extended. It seems more probably that wave 5 is the extended wave because if wave 1 were extended then wave 2 would be uncommonly small. Either way, the index is most likely headed significantly higher over the next several months. The target zone is the former 4th wave, which is 441-5142. The 61.8% is in the middle of this zone at 4754. Near term, staying above 3115 keeps the trend pointed up. Coming under there would lead to a deeper decline in what is probably a B wave.
Short-Term Technical Outlook
The French benchmark index has broken below the lower boundary of a rising channel. From here, prices are set to decline to support / resistance at 313490.
IBEX 35
Long-term Technical Outlook
Same story with the IBEX 35. The rally from the low (6703) is corrective but has more room to run. Staying above 8829 keeps wave C headed higher towards 1137-1247. This zone is defined by the 50%-61.8% retracements of the decline from the 2007 high. Wave C would equal wave A near the lower end of this zone at 1159.
Short-Term Technical Outlook
The IBEX 35 continues to show signs of a developing double top at 97240. Immediate support is marked by the lower boundary of a rising channel. A break beyond that will aim at the 23.6% Fibonacci retracement level.
S&P/MIB
Long-term Technical Outlook
The FTSE MIB (Milan) index took the same structure as the CAC 40 on the way down from its 2007 high. The index is currently testing the 200 day SMA, which should give way as the target zone for the index is not until 30062-34711 (former 4th wave….wave 5 is extended). Remaining above 18752 keeps the trend pointed higher. Coming below there would lead to a deeper decline (next support would be 17133) before the next leg up.
Short-Term Technical Outlook
Italian shares are firmly range-bound above the 14.6% Fibonacci retracement level. Negative divergence on the RSI oscillator favors a bearish bias, with a break of current support targeting the 23.6% Fib.
