- 4th Aug 08, Personal Income reported 0.1% with previous reading of 1.9% and market consensus of -0.2%. Consumer Spending came in as 0.6% beating market expectation of 0.5% but below previous value of 0.8%.
- 4th Aug 08, Factory Orders reported 1.7% as compared with previous value of 0.6% and exceed market expectation of 0.7%.
- 5th Aug 08, ISM Non-Mfg Survey came in as 49.5, with market consensus of 49.0 and previous value of 48.2.
- 5th Aug 08, US Federal Reserve maintained its Fed Fund rate at 2%.
- 7th Aug 08, BOE and ECB maintained their interest rate at 5% and 4.25% respectively.
- 7th Aug 08, Jobless Claims reported 455K as compared with previous value of 448K and market expectation of 430K.
- 8th Aug 08, Nonfarm Productivity reported 2.2% below market expectation of 2.7% and previous value of 2.6%. Unit labor costs came in as 1.3% meeting market consensus but was below previous value of 2.2%.
- 12th Aug 08, International Trade
- 13th Aug 08, Retail Sales
- 14th Aug 08, CPI, Jobless Claims
- 15th Aug 08, Industrial Production, Consumer Sentiment
It was another week of great volatility for the US markets with financial news, economic data and events, crude oil price and corporate earnings that saw DJI moved between 11,000 to 11,800 levels within the week. US markets rallied on US Federal Reserve holding interest rate and crude oil price drop to below US$120/barrel. Another moment, US markets retreated fiercely also when attentions were turned to cautious on slow growth ( when inflation pressure eased due to falling of oil price ), weaker than expected corporate earnings and rebound of crude oil price to US$120/barrel. Current market is very sensitive to news and events and will be expecting more volatility from days to days. For the coming week, the markets will be driven again by crude oil price, inflation, financial news and corporate earnings. Currently, there are 2 views on crude oil price. 1 camp cited crude oil price breaking down of neckline of head-shoulder formation and eventual target will be US$97/barrel. The other camp believes crude oil price is due to rebound and upside target at US$133/barrel. The USD/JPY is another thing worth looking into also. It has gone up to 110 level and what is the actual underlying that cause it to move up at such level ? The strengthening of the USD or due to the weakening of the Yen ? Japan has announced lately its economy could probably ended the longest post-war expansion and this definitely will drive the Yen to be weak. The global markets could react differently to a weakening Yen that indirectly cause the USD to strengthen or a really strengthening of the USD.
Technically, DJI is ranging within an ascending triangle formation ( source stibreadth ) with the upside capped at the 11,800 level. If there is no breakdown of the ascending triangle formation, potentially, DJI will breakout and rally to the 100d and 200d EMA levels at 12,000 and 12,400 respectively. However, a breakdown of the ascending triangle formation will see it re-testing the low of around 10,700 level. MACD signal is slowly moving towards the zero line. RSI though hovering around the 50% level but show some sign of cutting down, probably indicating a short-term pull back. Stochastic on the other hand showing some upside strength as it poses to move towards the 80% level and no sign of it cutting down. At Friday closing, DJI was at the resistance line of 11,800; the top line of the ascending triangle and if it is able to clear with strength and volume, a breakout of the ascending triangle formation should be able to materialize.
Nasdaq technically fared much better and stronger than DJI. Nasdaq managed to close above the psychological level of 2400 for the week with an immediate resistance now is the 200d EMA level at 2420 level. MACD histogram has moved into positive region while MACD signal is very close to the zero line. RSI though flat but stay above the 50% level throughout the week indicating limited downside for Nasdaq. Stochastic moved up to 80% level and has yet to show sign of cutting down, indicating potentially more upside to come. If Nasdaq is able to clear the 200d EMA level with strength and volume, it next target will be testing the resistance level at around 2480 which it failed to clear on 17th Jun 08. A potential cup with handle formation could form if Nasdaq hit the 2480 level and do a pull back to probably the 50d EMA level. The resultant of a cup with handle formation is a rally to a height equivalent to the depth of the cup; that is a potential target of 2760 ( 2480 + (2480 - 2200) ). The downside for Nasdaq is the 2300 level. If this level could not hold, Nasdaq will be falling to re-test the recent low of around 2170 level.
S&P500 is the weakest among the 3 US indices, mainly because it houses all the financial stocks and any bad news to the finance sector will see it experiences greater selling pressure than the rest. As of 8th Aug 08 performance, it has managed to close above the 50d EMA level but still under the 1300 psychological level. MACD is moving up towards the zero line. RSI though managed to stay above 50% throughout the week but it has appear to showing sign of cutting down hence could experience some short-term selling probably due to profit taking. Stochastic has moving towards the 80% level and yet to show sign of cutting down. This should indicate if any pulling back, the downside should be limited. Ability to clear the 1300 level with strength and volume will see S&P500 moving up to test the 100d EMA level at 1350. Downside for the moment will be the 1250 level. Failing to hold at this level will probably seeing S&P500 moving down to re-test the low in mid-Jul near the 1200 level.
