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The S&P 500 had a tough week, initially trying to rally, but then broke apart. At this point, it looks like the S&P 500 is trying to test the 4200 region, an area that also is backed up by the 50-Week EMA. All things being equal, this is a market that I think continues to see a lot of noise, but this is an area where you would also anticipate seeing a little bit of a bounce. Currently, we are in the midst of the Q3 earnings season, so that in and of itself will cause quite a bit of noise.
If we do break down below the 4200 level, that is possible that we go to the 4100 level rather quickly. On the other hand, if we do rally, there’s probably a short-term ceiling closer to the 4400 level. Either way, it’s going to be very noisy.
The euro initially tried to break down a bit, but then turned around to show signs of life. Nonetheless, we are still very much in a consolidation region, and the 1.05 level underneath continues to be a major support level. It’s a large, round, psychologically significant figure as well, and therefore I think it will attract a lot of attention if we do break down below there. On that breakdown, I anticipate that the euro goes looking to the 1.0250 level. On the other hand, if we break above the 1.0650 level, we may go looking toward 1.0750 region.
The US dollar has been slightly positive against the Canadian dollar during the week, but we still see a lot of resistance near the 1.38 level. The 1.38 level of course is an area that has caused a significant amount of resistance, and at this point, I think we’ve got a situation where the market breaking above that level could open up a move to the 1.40 level, but if we pull back at this point, you have to look at the 1.35 level as a potential support level. Keep in mind that oil does have an influence on the Canadian dollar as well.
Copper markets have steadily declined over the last couple of weeks, and it looks now that we are testing the $3.50 level for support. It’s an area that a lot of people will be paying attention to, because if we break down below there it opens up a move down to the $3.25 level. Keep in mind that copper is crucial when it comes to the global economy, so therefore it’s worth paying close attention to the idea of this being a proxy for global growth.
On the other hand, if we break above the $3.65 level, we may have a little bit of a relief rally, but the $4.00 level should be very difficult to break above and therefore I think you should think of it as a bit of a market ceiling at the moment.
The Australian dollar initially tried to rally during the course of the week but continues to find a lot of trouble near the 0.64 level. The 0.64 level has been important more than once, and therefore it’s not a huge surprise that it has come into the picture again. Ultimately, we ended up forming a bit of an inverted hammer, which could lead to further negativity, or if we turn around a break above the top of the candles for the last couple of weeks, it could lead to a bit of a relief rally. Keep in mind that the Aussie is highly sensitive to global growth, so you need to be aware of how the economy is rolling globally. It certainly looks at this point that rallies continue to be sold into.
The British pound has been relatively choppy for the week, as we are trying to sort out whether or not we can continue to go lower. At this point, the most important level on the chart is the 1.2350 level, because it looks as if it is offering a bit of the ceiling. Underneath, the 1.1850 level could be a significant support level, as it is previous support from several months ago. At this point, the market is obviously very negative, so short-term rallies will probably continue to attract a lot of selling pressure.
The NASDAQ 100 initially tried to rally for the week but found enough trouble at the 15,250 level to turn around and show signs of negativity. At this point, the 14,600 level is a significant support level, but breaking down below there could kick off even more selling pressure. If we turn around and take out the 15,250 level, then it would be a very bullish sign and could send this market much higher. At that point, I think that the 16,000 level would get targeted. Keep in mind that we are in the midst of Q3 earnings, so there will be a lot of volatility regardless.
The US dollar continues to grind sideways around the 10.98 SEK level but looks as if it is going to try to take out the 11 Swedish krona region. If you can, then the market is likely to go much higher. On the other hand, if we break down below 10.80, then the market goes looking toward the 50-Day EMA near the 10.63 level. Either way, the US dollar continues to look as if it is going to strengthen over the longer term.
