Equity indices have turned in a relatively strong performance today. It appeared early in the day that equities had every reason to drop heading into the weekend, with a disappointing Canadian employment report (-43.2K vs. Street +10K), and the U.S. unemployment rate breaking through the 10.0% level to 10.2%, and yesterday’s rally creating profit-taking opportunities. Instead, after a brief downdraft, indices quickly bounced back, indicating strong underlying support apparently based on long-term recovery anticipation.
For example, the Dow Industrials (US30 CFD) fell to test 9,900 support in early trading, but quickly back toward the 10,000 level where it continued to consolidate yesterday’s gains. Next key resistance appears in the 10,100-10,150 area. Similarly, the S&P 500 (SPX500 CFD) held well above 1,025 support this morning and has been trading near 1,070 resistance with next resistance near 1,100. The Canadian market has also rebounded with the S&P/TMX 60 (Toronto60 CFD) taking a run at 670 resistance followed by 700 with 650 support holding.
Magna International (MGa) has been the leading advancer among Canadian Share CFDs today, rising 14.9% after the auto parts maker’s earnings came in well above expectations ($0.45 vs. Street ($0.42)) on better-than-expected revenues and increasing content per vehicle. The shares also continue to respond favourably to the failure of the Opel deal, and the removal of the associated integration, operating, political and customer risks that appear to have been overhanging the shares. Other Canadian shares moving off earnings today include: Thompson Creek (TCM) up 8.5% and Telus (T) down 0.9% after it beat on earnings but cut guidance.
In the U.S., Sunoco (SUN) has been selling off after posting a disappointing earnings report overnight (($0.29) vs. Street $0.03). Along with Sunoco’s own 10.2% slide, other refiners have been falling in sympathy, with Tesoro (TSO) down 3.6% and Valero (VLO) down 2.0%. U.S. shares responding favourably to earnings reports include: Nvidia (NVDA) up 7.2% and Starbucks (SBUX) up 6.4%.
Commodities update: Opposite directions for energy and metals
It has been a tough day for the energy commodity group, which fell in the morning and stayed down. Crude oil has been leading the group lower, breaking down through $77.50 support and holding near the $77/bbl level with additional support possible near $76.60 then $75/bbl. Resistance remains in place near the $80/bbl level. Natural gas has also been trading lower although it has rebounded back above $4.60/mmbtu after successfully testing $4.50 support. Resistance remains near the $4.75/mmbtu level. Gasoline has also been soft falling toward the $1.90 level, while heating oil has dipped below the $2 level.
Precious metals, on the other hand, have been holding steady or rising, suggesting continues USD weakness. Gold continues to test resistance at the $1,100/oz level with next resistance possible in the $1,125-$1,040/oz area. Silver, meanwhile, continues to trade in the $17.25-$17.50/oz range.
For more information on CMC Markets visit www.cmcmarkets.ca
This commentary is based upon technical analysis. Technical analysis is the study of price and volume and the interpretation of trading patterns associated with such studies in an attempt to project future price movements. Technical analysis does not consider any of the fundamentals of an underlying company, and as such is inherently uncertain and should not be the only factor considered by an investor in making an investment decision.
Source: Stockhouse
