15/11/2007

Futures analysis

Another day of decline in the futures. This time, the price fell over 2% in relation to yesterday's close. Weak pullback suggested, that this market is not stopping yet and current sharp decline will extend probably to reach august lows, as plotted on the daily chart. Though, short term support levels, which I outlined yesterday, remain the same - mid-term price target changed. The global markets are declining, because of weak macroeconomical data coming from the United States indicating slowing economy and that is basically what are we going to see in the upcoming weeks. It is actually a delayed reaction of stock markets for rallying commodity prices, that create inflationary pressures.

5-minute timeframe tells, that previous important geometrical level was broken - 76,4% retracement. Now, that there is no significant support, the market is on the way down to reach the initial rally point of 3440. The only barrier to break is the intraday low of 3477. As Dow futures went -1% today, it is questionable whether the market is going to surpass 3440 tommorrow, because of large chunk of today's american decline has already been priced. Notice, that the open interest is still falling, which means money is coming out of the market, so we have not actually witnessed opening of new short positions yet. The declining prices are fueled by quitting of the long side.