Global equities continue to flow downward today with Nikkei futures having the worst day of the equity markets thus far, showing a -2.7% performance. The DEC12 E-mini S&P 500 is slightly down at -2pts. Many of the soft commodities are having trouble as well, with cocoa getting crushed (-2.33%), OJ getting squeezed down (-1.46%), and sugar holding below the $19 level.
It looks as though many risk market investors are showing concern about another four years of Obama economic and tax policies. Obviously, the fiscal cliff is the elephant in the room right now. The U.S. dollar actually continues to rally as the NZ dollar and the euro lead the way down in the forex futures markets. With higher taxes on the horizon, we see investors scrambling to find solutions on where and how to employ capital. The DEC12 E-mini S&P 500 is significantly below our key pivot of 1420, and we expect more volatility into the New Year.
What area of the commodities markets is doing well today? Precious metals. Silver futures are up more than 1% and gold has quickly found buyers below 1700. The gold bull train could start to pick up some steam once again…
We focus our technical analysis on the Nikkei futures today. Worse-than-expected domestic machinery orders figures increased concerns that Japan’s economy was slipping into recession. The Nikkei’s key pivot in our view is 9050. This has been a good resistance level recently and the market is currently trading below that level. We believe if the Nikkei stays below this key pivot, it could head to our first downside target/level at 8600. At this point, this is the bottom range of the current upward channel. If the Nikkei holds above 8600 and breaks through the pivot, our upside target level is 9600.
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