UK equities are still under pressure in the wake of the Scottish referendum’s ‘No’ vote, according to Ron William of RW Advisory. In an interview with IG Index TV, William discusses the technical background for FTSE and GBPUSD and explains how next year’s general election and the prospect of an EU ‘In/Out’ referendum are weighing down on the UK.
Sentiment and breadth measures suggest the short-term outlook for the S&P is negative presenting good buying opportunities, says Ari Wald at Oppenheimer. The longer-term outlook remains bullish however but buying signals include a fall in the % of S&P1550 stocks above their 200-day MA falling below 40%.
This week the 200-day MA of the BAML US High Yield Master II Option-Adjusted Spread turned higher for the first time in two and half years, a bearish sign for stocks according to Mike Sacchitello at Stone & McCarthy. Since 1997 there has been a close but negative correlation between the two indices.
European bond yields continued to fall last week although the outlook for individual markets remains uncertain, says Chris Williams at Soc Gen. Some RSI readings, such as Germany 30 yr, suggest some yield charts may be oversold although the 10yr may be subject to more downside.
Despite strong resistance at 1228/29 gold has touched 1235 before reversing again and now needs to hold 1220/19 in the short-term to avoid a continuing decline says Jason Sen at DayTradeSignals. Should this break the metal should target 1215/4 and below this 1212 and 1208.
EUR/USD is now testing the March 2013 lows and should decline further targeting 1.20 in Q4, say analysts at 4CAST. Meanwhile, USD/JPY is expected to rally further into Q4 after completing a prolonged consolidation phase.
The MSCI Emerging Markets stock index has topped out at 45 on the long-term chart and is set to reverse targeting 36-37 over the next couple of years, say Nikolas Baptiste at the Technical Analysis Group. However, in the meantime the recent decline will correct over the next few days reaching a max of 45.75.
A possible reversal on the weekly chart needs to break above key resistance at 1.6275-1.6300 to confirm the move upwards, say analysts at ADS Securities.
Negative divergence between the Nasdaq and the % distance from its 200-day moving average is replicating the pattern seen in 2007 before 25% fall in the index, says Riccardo Ronco at Aviate Global. 4300 remains the key support level for the Nasdaq in the face of falling market breadth.
Long-term currency cycles is lending strength to the US dollar which in turn is pushing prices of Brent crude oil. The dollar’s 8 year cycle is due to top in 2016 and, as such, further declines in the oil price are to be expected. The longer-term target stands at 70.698.
