25/10/2007

Futures analysis

The market goes up on reversal candles once again. We had similar situation just before breakout, that led to historical highs - reversal candles making higher lows above rising 10-day moving average. Moreover, the open interest is in an uptrend again, so we have this new flow of money into the market, which I was talking about in my previous posts, so it is a good chance to retest the all-time peak and even to make a breakthrough. American indexes are now finishing their short term pullbacks, which is confirmed by doji and hammer candles near previous resistance levels, that have become support. Factors that will work against this market are: Subprime losses, which are yet to be announced during ongoing earnings reports season Recent concerns about China being 'overheated', that could influence the whole emerging markets sector

In the 5-minute timeframe the market has been rising in a channel. As long as it stays in this sequence of higher lows, eventual breakout above the all-time highs will be stronger, because it will indicate more aggressive buying. Basically, staying above the gap level (3860) will mean that this market is in accumulation stage and about to move higher. Tommorow's open will probably more depend on asian stocks, because of CPI news being released. Movement in the Yen is always a good indicator for the global stock markets (measures the risk aversion).