Nasdaq closed 2,255.88 for the week ended 5th Sep 08, down 111.64 points or 4.72% from previous week.
S&P500 closed 1,242.31 for the week ended 5th Sep 08, down 40.52 points or 3.16% from previous week.
Crude oil price finished the week at US$106.70/barrel as compared with previous week of US$115.46/barrel.
A recap of last week economic data/event is as followed.
- 2nd Sep 08, Construction Spending reported -0.6%, market consensus -0.3% and previous value of -0.4%.
- 2nd Sep 08, ISM Mfg Index came in 49.9, previous value of 50.0 and inline with market expectation of 49.9.
- 4th Sep 08, BOE and ECB maintained rate at 5.0% and 4.25% respectively.
- 4th Sep 08, Jobless Claims reported 444K, market consensus 420K, previous value of 425K.
- 4th Sep 08, Nonfarm productivity was 4.3%, market expecting 3.3% with previous value of 2.2%. Unit labor costs was -0.5%, market consensus -0.3% and previous value of 1.3%.
- 4th Sep 08, ISM Non-Mfg Survey came in 50.6, previous value of 49.5 and market expecting 50.0.
- 5th Sep 08, Nonfarm Payrolls reported -84,000, market expectation -75,000 and previous value was -51,000. Unemployment Rate was 6.1% with previous value of 5.5% and market expectation of 5.8%.
- 8th Sep 08, Consumer Credit
- 9th Sep 08, Pending Home Sales
- 11th Sep 08, Import/Export Prices, International Trade, Jobless Claims
- 12th Sep 08, PPI, Retail Sales, Consumer Sentiment
It was a short trading week for the US markets due to 1st Sep 08 being its Labour Days. Even though the impact on Hurricane Gustav was not as serious as it was initially thought and coupled with contiunation of falling crude oil price, the sentiment on US markets were never bullish since the start of the week. Commodity stocks were facing great selling pressure due to the commodity bubble burst and also a number of worse than expected economic data like Jobless Claims and Employment Situation never really improve the overall market sentiment.
Technically, DJI has broken down from the ascending triangle formation and with an immediate support at around the 10,800 level. In ADX chart, DI+ has cut down from DI- ending any possible sign of a breakout from the ascending triangle formation. The ADX line is still flat at sub-20 level indicating the selling down is not of anything more than moderate strength. MACD signal diverged and the MACD histogram dropped into the negative region. RSI retreated from 50% to near 30% level, still not reaching the oversold region. Stochastic signal diverged and heading towards the 20% level. Any rebound from oversold position will probably require another 2-3 trading sessions. The resistance a rebound faced will be at the 50d EMA level of around the 11,600 level. Downside at the moment appears to be restricted to the 10,800 level as none of the indicators reveal a possible sharp drop.
Nasdaq suffered the heaviest fall among the other indices for the week, breakdown from a potential cup-handle formation. Initially, the DI+/DI- pair was very close to each other and now they are widely spread out indicating the sharp drop for the week. It would take sometimes before the DI+ could recover to cut up to the DI-. MACD signal has never able to converge and the MACD histogram moved further deep down in the negative region. RSI hit below the 30% level but yet to move into deep oversold region. Stochastic signal appears to try to cut up and head towards the 20% level from an oversold position and hence Nasdaq might try to rebound slightly from the heavy fall last week in the coming 1 or 2 days with an upside probably cap at the 2,300 level. A stronger rebound strength might see it moving back to the 50d EMA level of around 2,355. Downside is potentially dropping to 2,160 level to re-test the recent intra-day low.
S&P500 also breakdown from a potentially V-shaped recovery and ended very near to the 1,200 level for the week. The DI- has cut up the DI+ indicating the big drop for the week. However, the ADX is below the 20 level mark indicating the drop might have run out of strength. MACD signal diverged and MACD histogram dropped into the negative region. RSI now at slightly above the 30% level might suggest further downside is limited. Stochastic touched the 20% level and appearred to be reversing up. The indicators are signaling downside could be limited to 1,200 level. Any rebound from oversold position might be capped at the 50d EMA level of around 1,280 level.
For the coming week, US markets might be able to rebound from the oversold position. Crude oil price and economic data should be dictating the direction of the indices.
