US stocks again closed down on Tuesday as further panic selling gripped investors following poor manufacturing data from the US. The DOW plunged 470 points, the third biggest drop of the year.
In Asia this morning, slightly worse than expected GDP data from Australia (0.2% versus 0.4% expected) did not have the impact expected as major indices in the region are trading higher for the day.
Despite global concerns over growth, it could it be that stock indices are undergoing only a major correction. Interest rates in the US will inevitably rise sooner or later so perhaps investors are locking in profits therefore maximizing the cheap lending rate at this time.
In FX, we saw a slightly stronger USD against other majors although prices remain in a tight range.
Oil fell just as fast at it rose on Monday falling almost 8% and is currently trading below its intraday pivot of $47. RSI on the technical lacks upward momentum so we could see oil testing its support of $41,75 at some stage. Watch out for Oil inventories today at 14:30GMT.
Gold remains pretty static after an exciting past week or so. Currently trading just below 1140, the shiny metal seems to have been pushed to the side at least tempoarily as a safe haven.
Today we have a relatively quiet calendar news wise in the Eurozone. Construction PMI from the UK at 08:30GMT is the major highlight to watch out for. Later today from the US, we have Durable goods at 14:00GMT although ADP employment change at 12:30GMT will be the one to watch as could serve as a barometer for the big one on Friday, the NFP.
Trading quote of the day: “A great trader is like a great athlete . You have to have natural skills, but you have to train yourself how to use them.” – Marty Schwartz, Pit Bull
OIL
Pivot: 47
Likely scenario: Short positions below 47 with targets @ 41.75 & 40.55 in extension.
Alternative scenario: Above 47 look for further upside with 49.4 & 52 as targets.
Comment: The RSI lacks upward momentum.
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