Market Commentary February 7

The Trading Daily Market Commentary features a summary of selected market segments as well as economic matters. Its content of interest is made available to all traders and investors at large

The market did come off Tuesday’s SOTU (State of the Union) address from President Trump, and some mediocre corporate earnings, US Treasury yields, equities, as well as Gold all finish the day slightly lower – while the crude oil and US Dollar rise.

Following an intense trading week, American indices started to weaken yesterday. The Nasdaq100 dipped minus 26 points or 0.37 percent, DJI closed minus slightly over 22 points or 0.08 percent, while the S&P500 finished with minus 6 points or 0.22 percent. 

The S&P500 Market

The market falls nearly 20 percent from late September through the end of December of the last year; currently, the S&P500 index has rallied more than 16 percent to date.

However, since the middle of January, we have been highlighting how the Inner Index Rally is a critical Near-Term advance movement for the S&P500. 

We are now at that moment where the second completed Inner Index Rally 2741 signifies a critical price level, and we wanted you to see two potential scenarios that our Trade Selector Signal (TSS) model are projecting.

The first scenario sees this current Index Rally ending at 2741 signifies potential declining down to the Mean Sup 2633 level we saw developed since January 22. 

Note that in this situation there is an additional risk of the market to move lower to re-test the January 17th Mean Sup 2582.

In the second scenario, the TSS model projects that the S&P500 pushes through this Inner Index Rally 2741 and breaks through to test the well-established Mean Res 2814. 

At that position, though we are looking for a move upward towards the next Inner Index Rally 2840 and then also a sizable correction to follow, not as extensive as the first scenario. However, in this second scenario, we see to test price at 2737. 

Please note that in both situations the projections are that these low levels would be the low prices for that movement and we would then be watching for the S&P500 index to enter a new Index Rally.

Other Markets

In Asia four major markets are closed for the New Year holiday in Hong Kong, China,  South Korea, and Singapore. The Chinese currency Yuan increased somewhat against the US Dollar even though the exchange remained closed. 

The Japanese market increased by meager 0.14 percent. Year-on-Year for the Nikkei225 is still negative, slipping to minus 3.56 percent. The same cannot be said for the Australian index as the ASX200 is up 2.54 percent Year-on-Year. 

The index rose positive 0.34 percent yesterday alone on the back of the RBA (Reserve Bank of Australia) holding the cash interest rate at the same  1.5 percent for the 30th consecutive month.

Holding the Japan Nikkei in Japanese Yen - as the Yen is flat versus the US Dollar may be the safer option at this time. That's why we emphasize the sense of understanding of the Forex for the global investing scheme.

The stock market(s) in Eurozone were slightly lumpy - The French CAC, German DAX, and U.K. FTSE indices lost yesterday. It was also clear that capital flows were leaving Europe as the Euro Dollar also declined against the US Dollar. 

The Swiss Franc and Sterling strengthened against the Greenback and subsequently versus the common currency as well.

As for other economic headlines in Eurozone, factory orders in Germany came in at quite a shock following a reduction of 1.6 percent while the estimations were a modest improvement of 0.3 percent. 

The rate of employment in Ireland continues to be at its lowest levels in 11 years ever since the financial crisis sprung out in 2008.  

Gold as well as Silver market declined somewhat to 1315 and closed to 15.80 respectively, further diverging the price relationship between the leading strategic metals.

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