US Stocks Notch Best Week Since July 1. |September 19, 2011


The Australian Equity market is set to open slightly higher after another positive night on Wall Street. The US equity markets posted its fifth straight day of gains and notched its best weekly performance since the first week of July.

The Dow (see above chart) gained 75.91 points or 0.66% to close the session at 11509.09, finishing 69 points short of break even for the year. Telecommunication, utility and consumer discretionary stock led the gains, however the financials were down over the ongoing concerns about how Europe’s problems will affect the banks.

The Treasury Secretary Timothy Geithner was urging the European Finance ministers to overcome their divisions and remove the catastrophic risk from the markets. The European ministers were meeting in Poland trying to find common ground and solutions to end the tensions being experienced by the markets.
The EURUSD had fallen on Friday as no resolution had been found in Poland. To add to this the Euro has opened up weaker in early trade today as no significant announcement had been made over the weekend. The EURUSD last traded at 1.3690.

Gold moved higher on Friday and investors saw the drop on the previous day as a buying opportunity. The uncertainty in Europe has been providing support to the gold price and as long as Europe has no implemented plan in place and pull back in gold will be supported by investors looking for the safe haven asset.

WTI crude retreated as the price could not be sustained above the $90/barrel market. The price fell 1.60%.
INDICES

Last Traded

SPI 200 future 4163
S&P500 Index 1216.01
Dow Jones 11509.09
FTSE 100 Index 5368.41

COMMODITIES
Last Traded
Gold 1823.00
Oil (Nymex) 87.13

CURRENCIES
Last Traded
AUDUSD 1.0267
EURUSD 1.3686
GBPUSD 1.5712
USDJPY 76.90

Source
Bloomberg, Dow Jones News

Wall Street opened the trading week in the red zone, but the last-half-hour rally left a positive taste in the investors’ mouth. Indices opened almost 2% below Friday’s closing levels, but started rising after setting the daily low. It was possible to use the gap-system, in which the trader tries to take an instrument towards the gaps’ closing levels.
USD/CAD
Last week we analyzed the Canadian dollar and demonstrated the double-bottom pattern in the weekly chart. We mentioned then that if the USD broke-through 1.0, it might rise to 1.05, and 0.97 seemed to be an important support in order to keep this pattern. The USD failed in breaking the resistance of the round number and sharply crashed. It was stopped by the support of the 200 SMA at 0.978. No it is a test for this pair- a break-down of the 200 SMA will be the final proof for the downtrend, but if the USD successfully breaks-through 1.0, it will increase the probability for a significant bullish move.
CAD/JPY
The JPY is still locked up between 76.5 and 77.0 against the USD. However, The CAD is showing possible sign of weakness against the American dollar, and that means that CAD/JPY has larger probability to go down. It is now supported at 77.0, and the weekly chart shows a “bear-flag” pattern. A break-down of this pattern might fall to 75.0, though stochastic levels are indicating for a possible up-correction. This pair’s future is mainly depended on the USD/CAD, since it does not look like the JPY is about to get any weaker against the USD.
GOLD
The gold’s double-top pattern in the daily chart seems to influence the investors that keep selling this precious metal. The gold has been sliding in a narrow channel since the beginning of the month and the next support might be around 1750$/oz. In order get back to risings again, the gold has to go through the 20 EMA in the daily chart, around 1830$/oz. However, if the current bearish momentum continues, it might slide to 1700/oz.

It will be true that Wall Street opened the trading week in the red zone, but the last-half-hour rally left a positive taste in the investors’ mouth.