Equity markets in North America continue to encounter resistance near the upper boundaries of recent trading ranges. Although there had appeared to be some optimism on the open, early gains have been slipping away since the release of a round of mixed economic data points from the U.S. The December ISM Non-Manufacturing Index came in at 40.6, well above the 36.5 reading expected and last month’s 37.3. On the other hand, November Pending Home Sales fell by 4.0%, worse than the 1.0% decline expected, and factory orders fell by 4.6%, worse than the 2.3% fall expected. Based on this, it appears that indices may face some resistance near 9,025 for the Dow Industrials (US30 CFD), 950 for the S&P 500 (SPX500 CFD), and 565 for the S&P/TSX Composite (Toronto60 CFD), with support near 8,800 for the Dow, 920 for the S&P and 540 for the 60.
With the exception of gold, which has slipped back under the $850/oz level, commodities have attracted significant new interest today with a number of major breakouts apparently underway. For example, UK crude oil has broken through $50/bbl with U.S. crude testing that key level. In addition, copper has broken through $1.50/lb and soybeans have broken through $10/bushel. Meanwhile, corn and wheat continue to trend higher as well, putting more distance behind them from support levels near $4/bushel and $6/bushel, respectively. While down slightly today, silver has been holding above $11/oz, which it broke through yesterday. Overall, this broad-based interest in commodities suggest that investors may be starting to anticipate that moves by governments and central banks to stimulate the global economy may bear some fruit down the road.
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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.
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