Thursday November 11, 2010 - 03:32:53 GMT
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Stock Index Futures Confirm Daily Reversal Top
stock index futures traded sideways to lower on Wednesday after confirming
Tuesdayâ€™s closing price reversal tops. The topping pattern that may be
developing usually leads to a minimum 2 to 3 day break equal to 50% of the last
The December E-mini S&P 500 has a range of 1167.75 to
1224.75, setting up a possible break to 1196.25 to 1189.50. The December E-min
NASDAQ appears to be the most vulnerable market. Based on its near-term range
of 1961.00 to 2198.00, look for a possible correction into 2079.50 to
2051.50. The December E-mini Dow is the
toughest to decipher. The near-term range is 10970 to 11431 with a short-term
retracement target at 11201 to 11146.
The overall feeling is that equity traders are continuing to
shed risky assets. The strengthening Dollar has been the driving force behind
most of this weakness. With the start of the G-20 meeting, look for increased
volatility and a bias to the downside as traders are likely to continue to dump
risky assets until they can get clarity from the G-20 nations.
The British Pound rebounded against the Dollar after
recovering from a sharp sell-off on Tuesday into a key 50% price level at
1.5974. Additional support was provided by an uptrending Gann angle at 1.5950.
This angle moves up to 1.5970 on Thursday, making 1.5974 to
1.5970 a major support cluster. A break below this set-up is likely to attract
selling pressure that could fuel a decline into the Fibonacci level at 1.5987.
On the upside, the market rallied into the retracement zone
at 1.6125 to 1.6165 created by the short-term range of 1.6298 to 1.5951.
The catalyst behind todayâ€™s rally was the Bank of Englandâ€™s
assessment of the U.K.
inflation situation. The Sterling
began to rally early in the session after the Bank of England said inflation
may continue to accelerate above its 2 percent target, reducing the chances
that the central bank will reignite asset purchases.
Based on todayâ€™s trading action, it looks as if the
BoEâ€™s â€śwait and seeâ€ť monetary policy approach is not likely to change until the
central bank gets a chance to assess further economic releases. This may mean
continued strength in the Cable especially if the Euro remains under pressure
because of sovereign debt concerns and the U.S. economy continues to falter.
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