15/02/2008

Futures analysis

The futures dropped again today as yesterday's declines in U.S. stock markets forced a global retreat. If we look at the daily chart first, the price found and confirmed resistance at 38,2% Fibonacci retracement of the whole downtrend. This indicates weakness as the market does not even manage to pull back to the declining 50-day moving average. Though, as long as the price remains above 3000 area, short term uptrend will not shift to the downside again (moving averages also provide support). Macroeconomical data is still going against the bulls, as today consumer confidence level dropped to 16-year low along with industrial production (0.1%).

Today's session opened with just a little downside gap (no more than 10 points) and did not exceed 3090 level as I expected. Next, the futures posted a bull trap at 3125 and began to fall down from there, breaking through 3090 and reaching back 3025 support, which is just 5 points away from my yesterday's forecast. If this area is broken, the next downside target would probably be 2985. I expected this to be more intermediate term target (as for intraday traders), but it appears, that in the wake of declining global markets, this level might be tested just in the beginning of the next week. Upcoming announcements start from wednesday and will cover CPI along with housing starts and building permits, to further gauge recession probability.