Despite disappointing Retail Sales data yesterday, Wall Street indices closed last night around half a per cent higher as the market rebound continued. Asian markets were mixed overnight, with Chinese inflation data slightly higher than expected to boost stocks in Shanghai, but the strength of the yen pulled the Nikkei around 1.8% lower to a one week low.
Investors in the Eurozone appear to be brushing off news of another change in the Italian Prime Minister. Italian bond yields continue to fall, while the Euro remains buoyant. Focus instead is on the Eurozone GDP figures will be a big feature of European trading this morning. France has got the region off to a good start, coming in above estimates with an annualised run rate of 0.8%. Germany has also come in with a very small beat of expectations too. This is helping to bolster the Euro in early trading.
The only major piece of US data this afternoon comes at 14:55GMT with the University of Michigan Consumer Sentiment number which is expected to show a decline to 80.2.
The S&P 500 is shaping up for a retest of the highs once more. An bullish outside day yesterday where the index initially looked to sell-off but then a complete turnaround saw a close at the day high and a two and a half week high. The next resistance is in site which is the 1850.84 all-time high. Daily momentum indicators suggest there is plenty of upside potential with which to make the move. The hourly chart shows support in the band 1822/1826 , also back at the reaction low at 1809 and the key 1800 level. The bullish hourly momentum suggests there is little reason to prevent the retest of the highs once more.
Yesterday’s strong rebound took the Euro back above the high at $1.3683 and suggests that the downtrend channel in place for over a month has now been broken. With momentum indicators on the daily chart also improving, this now also suggests that there will be a test of the $1.3739 key reaction high. The intraday chart shows a minor bout of consolidation overnight and there may be a pullback to the support band around $1.3650. However the strong reaction to the positive Eurozone GDP data so far from France and Germany suggests that the upside impetus will be maintained. Watch for the announcement of Italian GDP at 09:00GMT and the Eurozone composite data at 10:00GMT.
Although Cable yesterday managed to break out to its highest level since April 2011, the move has not yet been a convincing one. Despite this, daily technical indicators all remain in bullish configuration and there is little reason to suggest that the move will not continue. The intraday chart shows the rate just rolling over into a consolidation overnight and this may induce a slight drift lower. However there is support in the band $1.6600/$1.6645 to contain a small correction. Once more as with the daily signals the hourly chart shows little reason why Cable should not be pushing higher in the coming days.
The outlook has deteriorated once more for Dollar/Yen in the past day. A correction below the key intraday support at 101.97 has completed a top pattern that implies a move back towards the support at 101.20. A pullback rally failed around the 89 hour moving average which had become the basis of support through the recent dollar rally, but has now become resistance, currently at 102.27. The hourly momentum indicators such as RSI and MACD have taken on a bearish configuration and it looks like rallies are now a chance to sell. A move above the reaction high at 102.40 would now be needed to abort the corrective phase. There is interim support at 101.41.
The run higher on gold continues. Now with the price decisively above the falling 144 day moving average the medium term picture has turned decisively bullish. With the base pattern firmly in place, the final key technical obstacle before the $1350 implied target has been removed. Daily momentum indicators remain in bullish configuration but also with strong momentum. The only real caveat could be the 50% Fibonacci retracement of the $1433 to $1184 sell-off which is at $1308.91. Intraday indicators also look bullish and any pullback to the support band now at $1300 should be seen as a chance to buy.