Wednesday November 17, 2010 - 13:04:44 GMT
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E-mini S&P 500 Stable as Global Worries Abate
The December E-mini S&P
500 is trading in a narrow range overnight after Irish debt worries dragged
down the market on Tuesday. Traders seem to be waiting for news from Brussels where officials
from the European Union, International Monetary Fund and European Central Bank
are meeting to come up with a solution for the countryâ€™s continuing banking
Tuesdayâ€™s sell-off stopped
short of taking out the October 27 main bottom at 1167.75. This index also took
out last monthâ€™s close at 1179.75, putting it lower for the month and setting
up a potentially bearish monthly closing
price reversal top.
A weaker trade today could push
the market into a retracement zone at 1171.00 to 1158.50.
The following scenario may
develop today if yesterdayâ€™s low holds. If 1171.00 holds as support, the look
for a 50% correction of the 1224.75 to 1171.00 range at 1197.75 to 1204.25.
Downtrending Gann angle resistance is at 1176.75 and 1200.75.
Currently the E-mini S&P
500 is camped on 1176.75. If it can sustain itself in this area, it could start
a short-covering rally and thus cross to the weakside of the downtrending Gann
The December Australian
Dollar is trading in a tight range overnight. Volume has been light and the
market is trading inside of Tuesdayâ€™s range. Unless this pair continues to
break lower, a tight trading range usually suggests impending volatility which
may mean the start of a short-covering rally.
The big story driving the
Aussie lower continues to be the shedding of risky assets by investors. Worries
about the Irish debt problem and its possible impact on the global economy
continue to be the catalyst behind the weakness in the commodity and equity
Irish authorities are
scheduled to meet with officials from the European Union, International
Monetary Fund and European
Central Bank to decide how to fix the countryâ€™s continuing banking sector
The heavy hitters have been
brought in because Irelandâ€™s
efforts to resolve its banking crisis havenâ€™t helped stabilize the economy.
The experts from the EU, IMF
and ECB are expected to suggest further reforms and stabilization measures to
help market conditions normalize.
Technically, the weekly
chart suggests that the key number to watch is .9651. A break through this
level will turn the main trend down on the weekly chart.
Two scenarios are taking
place and both indicate retracements are imminent. Based on the weekly main
range of .8770 to 1.1082, .9476 and .9309 form a retracement zone. The other
possible downside target is the retracement range at .9124 to .8875. This is
formed by the .8067 to 1.1082 range.
On the daily chart, a downtrending
Gann angle from the 1.0182 top comes in at .9862. Currently this market is
walking down this resistance angle.
The developing scenario
indicates the following: If .9724 holds as a low, then look for the start of a
short-covering rally back to 50%/.618 of the break from 1.0182. This makes
.9953 to 1.0007 the next likely upside target and potential sell zone. If the trend
is indeed turning on both the daily and weekly charts then a secondary lower
top has to be formed.
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