Britain

European Stocks Validate Bearish Bias, Break Past Key Support

Weekly Strategy

FTSE 100

Long-Term Technical Outlook

There are 2 levels that most likely produce a top.  The first level, 4751, has been reached and is where the rally from 4096 is equal to 61.8% of the 3461-4521 rally.  The next level is 5156, which is where the 2 bull legs would be equal.

Short-Term Technical Outlook

The FTSE has broken out of the Rising Wedge that we identified earlier this week, with prices now positioned to test the 38.2% Fibonacci retracement level at 4816.64. A break beyond that will target the 50% Fib at 4777.25.

DAX

Long-Term Technical Outlook

There are 2 levels that most likely produce a top.  The first level, 5506, has nearly been reached and is where the rally from 4524 is equal to 61.8% of the 3589-5176 rally.  The next level is 6113, which is where the 2 bull legs would be equal.

Short-Term Technical Outlook

The German benchmark index has sold off as expected and is now positioned above the 61.8% Fibonacci retracement level at 53198. A break lower targets the 76.4% level at 52587.

CAC 40

Long-Term Technical Outlook

There are 2 levels that most likely produce a top.  The first level, 3535, has been reached and is where the rally from 2958 is equal to 61.8% of the 2466-3400 rally.  The next level is 3892, which is where the 2 bull legs would be equal.

Short-Term Technical Outlook

Our bearish forecast for the French equities has been validated: prices fell through the bottom of a rising wedge formation and taken out the 38.2% Fibonacci retracement level at 3599.14. From here, the bears will look to take the index to the 50% Fib at 3560.47.

IBEX 35

Long-Term Technical Outlook

There are 2 levels that most likely produce a top.  The first level, 1124, has nearly been reached and is where the rally from 925 is equal to 61.8% of the 670-993 rally.  The next level is 1247, which is where the 2 bull legs would be equal.

Short-Term Technical Outlook

As with most other European exchanges, Spanish shares sold off to break beyond the Rising Wedge we identified at the beginning of the week. Prices now target the 38.2% Fibonacci retracement level at 1113.66.

FTSE MIB

Long-Term Technical Outlook

There are 2 levels that most likely produce a top and neither has been reached.  The first level, 22798, is where the rally from 17626 is equal to 61.8% of the 12332-20702 rally.  The next level is 25996, which is where the 2 bull legs would be equal.

Short-Term Technical Outlook

The FTSE/MIB looks essentially the same as other European benchmark indexes: prices validated our bearish scenario, breaking below Rising Wedge support to challenge resistance-turned-support at 21981.13. A move lower from here would target the 21947.83 – 21762.62 congestion region.

Britain

European Stock Exchanges Position to Reverse Lower

Weekly Strategy

FTSE 100

Long-Term Technical Outlook

There are 2 levels that most likely produce a top.  The first level, 4751, has been reached and is where the rally from 4096 is equal to 61.8% of the 3461-4521 rally.  The next level is 5156, which is where the 2 bull legs would be equal.

Short-Term Technical Outlook

The FTSE is setting up a Rising Wedge chart formation indicative of a bearish reversal ahead. Negative divergence on the RSI oscillator bolsters the downward bias. Near-term support is seen at 4888.90.

DAX

Long-Term Technical Outlook

There are 2 levels that most likely produce a top.  The first level, 5506, has nearly been reached and is where the rally from 4524 is equal to 61.8% of the 3589-5176 rally.  The next level is 6113, which is where the 2 bull legs would be equal.

Short-Term Technical Outlook

As with the FTSE, the German benchmark index is showing a bearish Rising Wedge with negative RSI divergence. A break of support at 55023 opens the door for a move to resistance-turned-support at 54420.

CAC 40

Long-Term Technical Outlook

There are 2 levels that most likely produce a top.  The first level, 3535, has been reached and is where the rally from 2958 is equal to 61.8% of the 2466-3400 rally.  The next level is 3892, which is where the 2 bull legs would be equal.

Short-Term Technical Outlook

Another rising wedge is seen on the CAC 40, again with negative RSI divergence. Near-term support is seen at 3668.40. A break below this will likely see a test of the psychologically significant 3600.00 handle.

IBEX 35

Long-Term Technical Outlook

There are 2 levels that most likely produce a top.  The first level, 1124, has nearly been reached and is where the rally from 925 is equal to 61.8% of the 670-993 rally.  The next level is 1247, which is where the 2 bull legs would be equal.

Short-Term Technical Outlook

Spanish shares fit in with positioning noted on other key exchanges: a Rising Wedge points to a bearish bias, and negative RSI divergence offers confirmation. A break below the wedge bottom at 1141.81 opens the door for a move to the 23.6% Fibonacci retracement level (1128.42).

FTSE MIB

Long-Term Technical Outlook

There are 2 levels that most likely produce a top and neither has been reached.  The first level, 22798, is where the rally from 17626 is equal to 61.8% of the 12332-20702 rally.  The next level is 25996, which is where the 2 bull legs would be equal.

Short-Term Technical Outlook

The FTSE/MIB looks essentially the same as other European benchmarks, with a Rising Wedge and negative RSI divergence clearly in place. A move below the wedge bottom at 22609.38 will aim below the 22500.00 handle.

Britain

Daily Commodities Fundamentals: Commodities Open Week on a High Note

North American Commodity Update, Last Updated 8/3/2009 4:06 PM EST (GMT = EDT +5:00)

Commodities – Energy

Crude Prices Gain due to Chinese Consumption, European PMI Figures

Crude Oil (WTI)   $71.420                         +$1.970                             +2.84%
Crude Oil future prices shot up above $72-per-barrel during intraday trading, starting the new week by gaining an additional 3%. Crude prices begin climbing early on in Asian trading, as new reports emerged that Chinese consumption of Crude, which accounts for nearly 45% of all Asian consumption, had increased. Many analysts expect China to be the first country to successfully escape the global recession, so the country’s improved figure may be perceived as an indicator for near-term global growth. The European PMI figures exceeded expectations today, led by the UK number that reached 50.8. A reading above 50 actually indicates expansion as opposed to contraction; the reading had been below 50 since late last year. The PMI reports heightened risk appetite in the futures market, as any signal of near-term economic expansion will likely increase demand for Crude. However, recall that just last week, US Crude inventories were largely disappointing, leading to a substantial 6.5% decline in Crude future prices. If Wednesday’s new stockpile report reveals heightened demand for Crude, the market could see significant upside.

Department of Energy Inventories

Commodities – Metals

Precious Metals Push Forward Hit Recent Highs

Gold                   $959.300                          +$3.500                           +0.37%
Gold future prices reached a 2-month high today after closing up around $4 to $960. Prices increased marginally by 0.3%, significantly less than the gains realized by Crude and Silver. Widespread dollar weakness was most responsible for Gold’s increase today, as the greenback fell across the board (excluding the Japanese Yen). The Dollar Index appeared to experience a breakout during today’s trading, as numerous currencies (including the commodity-correlated Australian and Canadian dollars) hit new yearly highs. Recall that Gold and the greenback tend to trade inversely as investors use the metal to hedge against dollar weakness. Fundamental data does not seem to be supportive of Gold’s increase of late, as inflation remains subdued and physical demand remains low. Regardless, as long as risk appetite remains, investors could choose to ignore the facts and extend the rally. If they become satisfied with the price increase, supports could falter leading to a significant retracement.

Silver                 $14.250                           +$0.310                            +2.22%
Although prices retraced slightly since reaching 7-week highs during intraday trading, Silver futures traded upwards of $14-per-ounce after adding nearly $0.300. Like Gold, the dollar’s weakness contributed to Silver’s gain, but other factors played in that led to the metal’s significantly more notable price increase (about 2.5% compared to Gold’s 0.3%). In addition to serving as a precious metal, Silver also possesses an industrial application that makes it more sensitive to positive industrial reports. As mentioned, the European PMI figures exceeded expectations and heightened risk appetite. The US ISM Manufacturing report also came in better-than-expected, which further advanced Silver future prices. Tomorrow may be another volatile day for commodities; The RBA’s rate decision is due overnight, along with Swiss CPI. At 8:30 AM EST, the US Personal Income and Personal Expenditure reports could be market-moving.

-Written by Jay Steinberg, CFDTrading Research
Questions/Comments about this article? Send them to JSteinberg@fxcm.com

Britain

Global Macro Weekly: Treasury Price Action More Reflective of Underlying Fundamentals

With the exception of the 10-Year, all other markets are pushing to fresh 2009 highs as investor risk appetite improves following the release of much better Q2 earning results and a more solid outlook for the global economy. However, we continue to remain suspicious of any rallies in risk appetite as reflected in the global macro markets. While we have seen some impressive buying back into risk, we still hang onto the idea that market participants will once again look to pare back risk, as the reality of uncertainty within the global economy persists. As such, we contend that price action in the 10-Year is more reflective of the underlying fundamentals.

EUR/USD
EUR/USD – Price action remains extremely choppy with the market whipsawing between 1.4000 and 1.4340 in recent trade. However, at this point it appears as though bulls are winning out, with any pullbacks easily met by intense buying. A closer look at the weekly suggests that we are on the verge of another major upside break following consolidation since May, which if broken, would project gains towards 1.5000. Look for a break above 1.4340 and close above the 100-Week SMA to confirm. Strategy: STAND ASIDE

S&P 500 INDEX

S&P 500 Index – The market is now trading back to some consolidation highs from October and November of 2008, and with daily studies trading into overbought territory, the greater risks from here are for a significant corrective pullback over the coming days/weeks. The broader trend is still bearish and a medium-term lower top is now sought out ahead of the next drop. At a minimum, more consolidation is to be expected which should result in a sell-off towards 850-900. Strategy: LOOK TO SELL

CRUDE OIL

Crude Oil – A minor sell-off in the previous week has now been fully negated with the market intent on retesting the 2009 highs above $73 from late June. At this point, daily studies still show room to run and we would expect to see a break back above $73 to fresh 2009 highs in the $75 area over the coming sessions. However, once $75 is reached, we would recommend looking for opportunities to fade and additional rallies. A break back below $63 is now required to take pressure off of the topside. Strategy: LOOK TO SELL

10-YEAR TREASURY

10-Year Treasury – While a compelling argument can be made for some bearish consolidation here ahead of the next major drop below the 2009 lows at 114-08, we continue to favor the bullish side, arguing for the formation of a major base. However, the market will need to break back above 119 to confirm our constructive outlook with the break to trigger a double bottom that will project fresh upside back towards the 124 area over the coming weeks. Below 114-08 negates. Strategy: LOOK TO BUY

Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
If you wish to receive Joel’s reports in a more timely fashion, e-mail jskruger@fxcm.com and you will be added to the “distribution” list.

Joel Kruger publishes 6 daily pieces:

“Tech Talk” – A Daily Video Highlighting Technical Developments in the Overnight Session of Trade.
Monday-Friday (between 5:30am-6:30am EST)

“Morning Slices” – Morning Overview using Fundamental, Technical, Flow, and Quantitative Analysis (Includes “Trade of the Day”).
Monday-Friday (between 6:30am-7:30am EST)

“Indicator of the Day” – A Feature Report that Highlights our Most Significant Technical Indicator of the Day.
Monday-Friday (between 8:00am-9:00am EST)

“Midday Snapshot” – A Midday Fundamental Update, along with Technical Analysis of Selected Rates.
Monday-Friday (between 10:30am-11:30am EST)

“Scandi Daily” – A Specialized Daily Fundamental and Technical Overview of the Nordic Currencies. (This report is only distributed through email. Please contact Nordic@fxcm.com if you would like to be added to distribution.)
Monday-Friday (between 11:30am-12:30pm EST)

“Daily Classical” – A Daily Technical Overview of the Major Currencies.
Monday-Friday (published between 2:00pm-3:00pm EST)

Britain

Daily Commodities Fundamentals: Crude and Silver Finish Strong; Gold Breaks Even

North American Commodity Update, Last Updated 7/17/2009 4:15 PM EST (GMT = EDT +5:00)

Commodities – Energy

Crude Futures Cap Off An Impressive Week

Crude Oil (WTI)   $63.420                         +$1.400                             +2.26%
Crude future prices finished the week strong today, rebounding from last week’s heavy losses. After hitting 3% gains during intraday trading, Crude has stalled out around $63.50-per-barrel, a 2.5% increase. Today’s US Housing Starts report was the likely driver of Crude, as the report indicated a greater-than-expected number of new houses built in the United States. The US Building Permits figure was also larger-than-expected .Newfound optimism in the global marketplace was this week’s theme, as investors are becoming slowly convinced that the worst of the recession has passed. Demand for Crude has been exceptionally week this summer, but the Department of Inventories latest figures were encouraging. Investors will pay close attention as corporate earnings season continues, looking for any signal that the recession is finally coming to a close. In the meantime, expect Crude prices to push forward, potentially testing the psychological $65-per-barrel mark sometime next week.

Upcoming Department of Energy Inventories

Commodities – Metals

Gold Trades Sideways, Silver Holds on to Minor Gains

Gold                   $936.000                           +$0.600                           +0.06%
Gold traded mostly sideways during today’s session on conflicting fundamental data. The US dollar, which has recently been a good contrarian indicator for Gold future price direction, was up against all majors. Though not necessarily permanent, investors ended the week favoring risk aversion. Encouraging corporate earnings releases next week could weaken the dollar as investors favor higher yielding (riskier) assets. Usually a stronger dollar leads to a decline in Gold prices, but this was not the case today. The prospect of a global economic recovery has sparked inflationary fear, propping up Gold prices despite the greenback’s strength. Australian and German PPI reports come out early Monday; any indication of inflation will drive Gold. Also, if corporate earnings continue to impress, Gold could re-test the $950-per-ounce level this month.

Silver                 $13.365                    +$0.130                          +0.98%
After falling to recent lows just last week, Silver is looking to close today’s trading with a noticeable recovery. As is usually the case with Silver, economic optimism leads to significant gains in future prices. Like Gold, inflationary fear resulting from this week’s CPI reports has helped Silver move higher, back above the $13-per-ounce level. Impressive fundamental data (corporate earnings, unemployment figures, industrial production reports) also pushed Silver higher despite the dollar’s strength today. Continued upward movement in Silver future prices would not be surprising, especially if the good news continues to flow in.

-Written by Jay Steinberg, CFDTrading Research
Questions/Comments about this article? Send them to JSteinberg@fxcm.com

Britain

Daily Commodities Fundamentals: Dollar Weakness and Economic Optimism Drive Commodities

North American Commodity Update, Last Updated 7/15/2009 3:29 PM EST (GMT = EDT +5:00)

Commodities – Energy

Crude Futures Increase After Today’s DOE Inventory Report

Crude Oil (WTI)   $61.870                         +$2.350                             +3.95%
Crude Oil future prices shot up almost 4% during today’s session, propped up by equity performance and DOE figures. Yesterday, both Goldman Sachs and Intel reported better-than-expected earnings reports, which added newfound optimism that a global economic turnaround may be on the horizon. European market indices were also higher on the day, supporting Crude greenshoots. As a result, traders are investing in higher yielding (but riskier) assets, driving the US dollar down against its major competitors. However, the big story of the day came at 10:30 AM EST when the Department of Inventory reported its weekly stockpile figures (see below). US Crude Inventories, were particularly surprising, falling by approximately 700K more than expected (they still greatly exceed last year’s inventory at this time). The decline in inventory may indicate new demand in the market for Crude, a signal that the global recession may finally be reaching its close. In the United States, the Refinery Utilization Rate improved by 1.1%, beating analyst expectations and adding to the increase in Crude future prices today.

Upcoming Department of Energy Inventories

Commodities – Metals

Precious Metals Score Big On Risk Appetite, Inflation Fears

Gold                   $940.500                           +$17.700                           +1.92%
Corporate earnings season has been friendly to Gold future prices thus far, adding another 2% during today’s trading. As mentioned, better-than-expected earnings reports have encouraged the prospect of an economic rebound, leading investors to riskier assets. However, economic growth carries with it an increase of inflationary fear, which has driven Gold prices higher today. The US Consumer Price Index, one of the leading measures of inflation, grew by 0.7%, its fastest pace in seven months. The dollar has lost across the board today (excluding the Japanese Yen), slipping by more than 1% on the US Dollar Index. Gold has seen big gains today as investors use the metal to hedge against both dollar weakness and inflation.

Silver                 $13.260                                 +$0.405                          +3.15%
Silver future prices have seen even larger gains than Gold, benefitting from both the weaker dollar and encouraging fundamental data reports. Recall that yesterday’s wrap-up ended with the prediction that “if optimism in the marketplace remains present, expect Silver to continue to climb.” With Intel’s surprising earnings report yesterday and the US Industrial Output showing its slowest decline in eight months, Silver has gained over 3% today. A better-than-expected US Empire Manufacturing Report (July) also added to Silver’s impressive performance; the report serves as a leading indicator for the more important ISM Manufacturing Survey, which is a significant market mover for Silver.

-Written by Jay Steinberg, CFDTrading Research
Questions/Comments about this article? Send them to JSteinberg@fxcm.com

Britain

European Stocks Rebound Tentatively Higher – Where to From Here?

Weekly Strategy

FTSE 100

Long-Term Technical Outlook

The FTSE rally from 3461 most likely completed wave 4 within a 5 wave decline from the 2007 high.  Expectations are for wave 5 to drawn the index to a new low (below 3461).

Short-Term Technical Outlook

The FTSE has rebounded from significant support at the intersection of the 100-day moving average and the 38.2% Fibonacci retracement level. Near-term resistance is seen at 4279.63, a falling channel top.

DAX

Long-Term Technical Outlook

The DAX pattern is the same as that of the FTSE 100.  The rally from the March low counts well as wave 4 within the 5 wave decline from the 2007 high.  Moreover, the decline from 5178 (on short term charts) unfolded as an impulse (5 waves).

Short-Term Technical Outlook

German shares have rebounded from near-term support at the intersection of the 38.2% Fibonacci retracement level and the lower boundary of a falling channel. Initial resistance is seen at 48497, the channel top.

CAC 40

Long-Term Technical Outlook

I’ve made a change to the labeling for the CAC 40. The change brings the count in line with that of the DAX and FTSE counts.  The rally from 2465 was wave 4 of (3).  Wave 5 of (3) is considered underway towards a new low as long as 3400 remains intact.

Short-Term Technical Outlook

The French benchmark index has rebounded from the lower boundary of a falling channel to meet support-turned-resistance at the 38.2% Fibonacci retracement level. A break higher will aim to challenge the channel top, now at 3134.

IBEX 35

Long-Term Technical Outlook

The IBEX 35 appears to have already completed 5 waves down from its 2007 high.  However, the decline could extend (like the CAC 40 appears to be doing).  The continued divergence with RSI at the recent high also favors weakness going forward.

Short-Term Technical Outlook

Spanish shares are positioned above support at the 23.6% Fibonacci retracement level (91848), with negative divergence on the RSI oscillator hinting at a bearish bias. Near-term resistance is seen at 99294, the 07/01 high.

FTSE MIB

Long-Term Technical Outlook

The rally from the March low in the FTSE / MIB index was a 4th wave.  In line with other European indexes, the Milan index is expected to drop to a new low (below 12343).

Short-Term Technical Outlook

Italian shares have found support at the 100-daysimple moving average. Initial resistance is seen in the 18459.31 – 18752.00 congestion region, an area that previously served as support.

Britain

European Stock Exchanges Continue to Edge Lower

FTSE 100

Long-Term Technical Outlook

The FTSE rally from 3461 most likely completed wave 4 within a 5 wave decline from the 2007 high.  Expectations are for wave 5 to drawn the index to a new low (below 3461).

Short-Term Technical Outlook

The FTSE has broken below support at 4225.52, the 61.8% Fibonacci retracement level. Prices are now challenging the 100-day moving average, with a break lower aiming at the 50% Fib level.

DAX

Long-Term Technical Outlook

The DAX pattern is the same as that of the FTSE 100.  The rally from the March low counts well as wave 4 within the 5 wave decline from the 2007 high.  Moreover, the decline from 5178 (on short term charts) unfolded as an impulse (5 waves).

Short-Term Technical Outlook

German shares have extended lower after breaking support at a rising trend line, meeting near-term support at the 38.2% Fibonacci retracement level (45803). A break lower will target 43957, the 50% Fib.

CAC 40

Long-Term Technical Outlook

I’ve made a change to the labeling for the CAC 40. The change brings the count in line with that of the DAX and FTSE counts.  The rally from 2465 was wave 4 of (3).  Wave 5 of (3) is considered underway towards a new low as long as 3400 remains intact.

Short-Term Technical Outlook

The French benchmark index has broken below support at the 38.2% Fibonacci retracement and the 100-day moving average. From here prices target the intersection of the lower boundary of a falling channel and the 50% Fib at 293252.

IBEX 35

Long-Term Technical Outlook

The IBEX 35 appears to have already completed 5 waves down from its 2007 high.  However, the decline could extend (like the CAC 40 appears to be doing).  The continued divergence with RSI at the recent high also favors weakness going forward.

Short-Term Technical Outlook

Spanish shares stand at the bottom of a rising channel, with bearish divergence on the RSI oscillator favoring a break lower. Initial support is seen at 91678, the 23.6% Fibonacci retracement level.

FTSE MIB

Long-Term Technical Outlook

The rally from the March low in the FTSE / MIB index was a 4th wave.  In line with other European indexes, the Milan index is expected to drop to a new low (below 12343).

Short-Term Technical Outlook

Italian shares have overcome support in the 18442.00-18752.00 congestion region, the next level support at the 100-day simple moving average (now at 17792.95). This juncture is reinforced by the 38.2% Fibonacci retracement level at 17504.66.

Britain

European Stocks to Accelerate Lower as Prices Breach Key Support Levels

FTSE 100

Long-Term Technical Outlook

The FTSE rally from 3461 most likely completed wave 4 within a 5 wave decline from the 2007 high.  Expectations are for wave 5 to drawn the index to a new low (below 3461).

Short-Term Technical Outlook

The FTSE has broken below support at 4225.52, the 61.8% Fibonacci retracement level. From here, prices aim to challenge 100-day moving average, now at 4117.47.

DAX

Long-Term Technical Outlook

The DAX pattern is the same as that of the FTSE 100.  The rally from the March low counts well as wave 4 within the 5 wave decline from the 2007 high.  Moreover, the decline from 5178 (on short term charts) unfolded as an impulse (5 waves). 

Short-Term Technical Outlook

German shares have extended lower after breaking support at a rising trend line, meeting near-term support at the 38.2% Fibonacci retracement level (45803). A break lower will target 43957, the 50% Fib.

CAC 40

Long-Term Technical Outlook

I’ve made a change to the labeling for the CAC 40. The change brings the count in line with that of the DAX and FTSE counts.  The rally from 2465 was wave 4 of (3).  Wave 5 of (3) is considered underway towards a new low as long as 3400 remains intact.

Short-Term Technical Outlook

The French benchmark index has been confined to a narrow falling channel after breaking below support at a rising trend line that had guided the CAC since early March. The next leg of the down move sees initial support at the 100-day moving average.

IBEX 35

Long-Term Technical Outlook

The IBEX 35 appears to have already completed 5 waves down from its 2007 high.  However, the decline could extend (like the CAC 40 appears to be doing).  The continued divergence with RSI at the recent high also favors weakness going forward.    

Short-Term Technical Outlook

The breakout above double top resistance at 97447 looks to have been a head-fake, with prices reversing sharply lower to close below this juncture. From here, price aim to challenge support at 91678, the 23.6% Fibonacci retracement level.

FTSE MIB

Long-Term Technical Outlook

The rally from the March low in the FTSE / MIB index was a 4th wave.  In line with other European indexes, the Milan index is expected to drop to a new low (below 12343).

Short-Term Technical Outlook

Italian shares have overcome support in the 18442.00-18752.00 congestion region, the next level support at the 100-day simple moving average (now at 17792.95). This juncture is reinforced by the 38.2% Fibonacci retracement level at 17504.66.

Britain

European Stocks Cling to Familiar Levels, Bearish Bias Favored

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.  At best for bulls, the FTSE decline will be a B wave.  At worst, the drop will be the next leg of the longer term bear.  The rally from the low is not clearly impulsive, so the latter certainly is possible.

Short-Term Technical Outlook

The FTSE has broken below support at 4270.63, the 23.6% Fibonacci retracement level. The UK benchmark index now targets the intersection of the 38.2% Fib and the 100-day moving average (4115.00).

DAX

Long-Term Technical Outlook

The DAX pattern is the same as that of the FTSE 100.  The rally does look more like an impulse (5 waves) though, so the decline underway may be a B wave.

Short-Term Technical Outlook

German shares found near-term support at 46885, a familiar pivot level, and rebounded above the 23.6% Fibonacci retracement level. The door is now open for a return to the 14.6% Fib at 49495.

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 higher over the next several months but not before a sizeable correction of the gains from March.

Short-Term Technical Outlook

The French benchmark index has been trending lower in a narrow falling channel since breaking below support at a rising trend line that had guided the CAC since early March. A Hanging Man candlestick at the upper boundary of the channel suggests the next leg of the down move may be near, with initial support at the 100-day moving average.

IBEX 35

Long-Term Technical Outlook

Same story with the IBEX 35.  The rally from the low (6703) is corrective but is probably just the first leg of a larger correction.  The next several months should lead to a choppy B wave decline.

Short-Term Technical Outlook

The IBEX found near-term support at the 14.6% Fibonacci retracement level and has rebounded to re-test triple top resistance at 97240, a level now also bolstered the lower boundary of a previously broken rising channel. A Hammer candlestick at this juncture hunts at a move lower from here.

FTSE 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 200 day SMA has held as resistance and the index is headed lower in what is probable a B wave.

Short-Term Technical Outlook

Italian shares continue to try to resolve a favored directional bias around 18726.68, the 23.6% Fibonacci retracement level. A break lower would see near-term support at the 100-day simple moving average while a move higher will meet resistance at the psychologically significant 20000 level.

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