 Good morning and welcome to the weekly market update with me, David Madden Excuse me. Today's date is Monday the 2nd of November 2020 and the time has just gone 10.08 GMT and it's been a fairly decent start to the European session We've had a kind of a bit of volatility, but we've seen a fairly respectable bounce back in European equity markets. We obviously had a fairly negative week last week concerns about tougher restrictions most notably the announcement that Germany and France will be uptie restrictions We've had a number of various other European economies have tougher restrictions as well over the weekend It was announced that England will be heading into a national lockdown Which will kick which will kick in later on this week so All that that been said we have seen a bit of a rebound in your European stocks Sentiment is probably driven more of a case of by the fear factor has kind of petered out slightly not to say that the situation has improved far from that we're probably in for a period of Lower economic activity as restrictions come into play and Businesses you know wind down and people that most likely would end up spending less But it seems to me that a lot of that as a lot of what we're going to see in terms of weaker economic activity In the next few weeks and months seems to have been already kind of factored in with the move We saw the back end of last week or at the very least a certain portion of it has if we come out of lockdown on time as planned or if things if the health situation improves better than expected things could turn around but You know the movement we're seeing upwards in the stock markets today It seems to be more about a kind of a bit of a rebound from from last week's negative move In terms of economic indicators We've had broadly speaking positive manufacturing numbers from the major European economies today with the exception of the UK You know the Spanish the Italian the French the German numbers they all came in better expected and they'll come in slightly Showing slight improvements in the month in terms of manufacturing PMI the UK numbers were good They were ever so slightly down on the previous months reading, but they did actually manage to top expectations The Kaishin survey of Chinese manufacturing overnight showed a slight improvement on the month and it also came in better than expected We got a very busy week this week in terms of what to look out for as quickly jump on to the weekend article because this week is a busy one The weekend article can be found on a website cmcmarkets.com under now under insights latest news and analysis As I mentioned we've global manufacturing PMI numbers out today Associated British food actually in the post and that number is today even though they're planned for tomorrow It's a it's quite annoying. I know how companies just sometimes change the reporting dates Tomorrow what's going to be in focus is the US presidential election so far. It seems that In opinion polls point towards a Biden victory But as you saw in 2016 between the election of President Trump and the the the UK's Decision to leave the European Union opinion polls can get it wrong On Wednesday, we have the global services PMI reports. They'll be posted also Wednesday We are first our figures from M&S. We got a couple of industry decisions on Thursday But the Bank of England and the Federal Reserve the Bank of England Listen up for commentary in relation to negative interest rates. That's been kind of doing the rounds for some time So it's highly likely that I'll get mentioned in some shape or form on Thursday. The Federal Reserve update Well, obviously we hopefully hopefully we should know the results. We have nice clear Answer to the US presidential election by then on Thursday. We also have Q1 numbers coming out from Peloton We have first-app numbers coming out from Sainsbury's and we have Third-quarter numbers coming out from Uber on a Friday. We've the all-important US non-farm payrolls report So we've got a couple of big central bank meetings. We have a US presidential election and we have a non-farm payrolls Friday So it really is a big week this week Speaking of non-farm payrolls for those of you are interested We have my colleague Michael Houston will be hosting a live webinar on the day in question covering the payrolls You can sign up for an or on a website cmcmarkers.com under insights Under webinars and events and that will kick off at 1315 GMT on Friday the 6th of November As I mentioned, we've had a decent start to European stocks and for those of you who regularly watch this video I'll do the usual rundown whereby I cover a few of the big indices a few the big currency pairs and a few of the big commodities So starting off with the FTSE 100 This is a bit of a common theme across all the indices from the March lows rallied into June Bounce back post COVID and since then on the FTSE because SP fair has been the kind of underperformer of the big European and Big Western indices can be broadly been trending trading trending lower at the last few months In fact, the lows that we saw at the back end the last week and Friday were basically done at levels last seen in April so given the occasion of how how kind of how weak sentiment has been but This is the kind of a big looking at this across a number of markets This this candle here the shape of it has the potential to be a hammer formation And for those of you who regularly watch my videos the most recent video The most recent chart of the week video I've done is on the DAX the German market is talking about could we see a hammer formation? could we see a rebound on the next and Give you more details about that, but essentially the long wick on this candle here and notice how the body of it a Notice how the body of it The close that was notice that it closed near the high of the day Not quite at the high of the day, but near towards the high of the day And if and in fact the the close of this candle was even above Well above the both the open and the close of the previous day For to be hammer formation you'd want to have you want to take confirmation in that you wanted to the market to move on higher from here And we are seeing that we know we're off the the lows of today's session as well off well above the lows of Friday session Even the body of this candle looks Exceptional polish as well. So we'll see if that plays out This we could be so we could be in for a rebound on the foot to 100 and should that be the case We could head back toward this zone here 5700, you know, we saw a bit of we saw a bit of consolidation in that area if kind of they're there about active support on the way down and also They're there about kind of active at resistance as well on Before we had another leg lower on Wednesday So if you take off five thousand seven hundred we could potentially head back up towards this blue line here the fifth of the movie average And that comes into play at five thousand nine hundred and one Notice how we did see a bit of consolidation There's been a few occasions where the fifth of the movie average had or that general area has acted at resistance So to be fair on these areas here It always managed to trade above and trade through the 50 50 movie average But I never made massive ground going too far beyond it So this general area could act as a resistance should we have a move sharp move to the upside? Conversely if you do have a fairly decent sharp move to the downside and the market turns over on itself and continues in the broader wider negative trend if you take off the loads of last week at five thousand 488 that could take us back down towards this area here than around five thousand three hundred and thirty Taking a look now what's going on over in Germany in the Dax Simmer situation we've had a multi-month high in September the highest that were the last seen since Since February March since the pandemic was really kind of taking cold Since then we've had the lower low the lower high and the aggressive lower low And once again the lows that we saw back in the last week were levels last seen since May So you know multi-month low, but like I said, which I'm this has the potential to be a hammer formation here The long wick look at the body of this candle That it close almost near the highest session which kind of adds more weight to the argument that it is a hammer formation But we would want to see that confirmed We would want to see the market move higher from here and so far we are seeing that so it could be in for a rebound and a Continuation of a push higher on the Dax should that be the case? We could head back up towards the kind of twelve thousand mark or just beyond that this red line here 200 day movie average which comes into play at twelve thousand and eighty and notice how that particular metric Active niceties support back in late July and also ever so slightly active support in late October as well So keep an eye for twelve thousand twelve thousand and eighty to the upside if we turn turns Oh, it turns over on itself yet again. It takes out the recent lows of eleven thousand three hundred and thirty It could take us back down towards eleven thousand You know, it's a relative, you know, it'd be the next kind of big number to the downside And also we did see some consolidation in that area when the market was kind of moved was Back in May when the market was trying to kind of trying to press on higher Take a look now. What's going on over in the US? No, that's how does it kind of a clear pattern forming within the kind of indices or by we've had the kind of multi-month high highs that were achieved in say in Recently except in September. We've moved to the downside the lower low the lower high and the again another lower low on Friday We had multi-month lows similar situation appears to be a hammer formation here In fact, notice how the body of this this candle here Completely eclipses are engulfed the previous days body as well You know, we're seeing it. We're seeing a move to the upside post What we think could be a hammer formation adding weight to the argument that is we are going to see a bounce back In the air in the Dow Jones should that be the case? You can look at heading back towards this yellow line here the 100 movie average and that comes in the play at 27,289 Notice how that metric the one-day movie average acted as support back in late September and metric has been of importance in the past It makes it more likely it'll be of importance in the future. Although there are no guarantees Conversely, if the market does must turn over on itself and it takes out the recent lows of say a Friday Could be could then see, you know, and we have a decent break below 26,000 it could take us back down toward this area the lows of mid-July in around 25,400 and 18 And if you moved it and if you have a decent break beyond the 100 movie average It could take us back up toward this blue line here the 15th movie average Which on a few occasions acted nicely as support not that long ago So keep an eye out for twenty five twenty seven thousand nine hundred and twenty five Take a look at the S&P 500 Which has been the strongest of the bunch because the highs are achieved in September ration We're in fact all-time highs, but you know, what do we see since then we had the lower low We have a lower high another lower low decent rebound into mid-October, but the highs of October Failed to take out the highs of September. What happens there? The market has a lower low lower high similar situation falls down here It's well in fact, it was a multi-week lower or one month over there They're about to achieved on Friday and similar situation notice how even the shape of the candle on Friday the 30th October on the S&P 500 on the Dow Jones on the DAX and on the FTSE 100 all look reasonably similar the old kind of like a hammer formation We're all see follow up the next day What do you know we're seeing what appears to be a very good a bullish day so far on the on this candle We could look the press and hire from here on the S&P 500 should that be the case We could be looking at retesting this area here this line here in a 3341 a move beyond that could take us towards this blue line here at the fifth of the movie average notice how it acted nice these resistance On Tuesday the 27th the market traded briefly above but couldn't couldn't quite break beyond it So keep an eye for that area just just north of 3400 if the market though doesn't matter turn over on itself again and takes out the recent lows We could be heading back down toward this zone here down around 3200 Moving on now to currencies No, it is worth noting that the US dollar index in the last few weeks and months has been acted as a fairly decent flight to quality play for For for traders. So whatever you've seen uncertainty in equity markets recently We've often seen a move to the upside in the US dollar I think conversely there's been days when the stock markets have performed fairly well And you've seen a decline in the US dollar. So if you even if you just trade currencies It is worth your while keeping an eye on what's going on with stock markets in terms of risk attitude But you know, take a look at what's been happening the last few weeks In the end up and in Euro dollar hit its highest level in over two years in September We traded sideways for a bit then we can drift drift it back lower Which is not not uncommon, you know, we give a bit of a pullback after hitting multi-year highs We've had the higher high the higher low the highs of late October failed to retest the highs of early September We've moved below the fifth and moving average this blue line here We're now traded down on the one already moving average. We're just ever so slightly below it We're pretty near the lows of late September. So we're talking making a dear kind of one month lows What's going to happen next? Are we going to take off the lows of September and then open potentially head back down towards this zone here in round 114 or are we going to continue in the wider upper trend? So if you can if you hold above the September lows in around one spot 16 12 It's a possibility that we could just head back up toward the fifthly moving average In at one spot 1782 a movie on that could take us back up toward this area in it It's one spot 1880 the highs of late October But if you take out the if you take out the lows here We then be looking at new multi-month lows back at levels last seen in late July And there isn't really a whole lot of areas in terms of consolidation or support zones In this region here So we could a decent move to the downside at below the September lows the late September lows could put us on course back down towards 114 I'm taking a look now pound dollar Obviously keep in mind the us dollar index the dollar the dollar is the its common component The highs that we saw in september on pound dollar were the highs were about eight and a half nearly nine month highs What do we see then we had a lower low we had a lower high Lower low we hit a six week high here multi-week high was achieved in late October But we noticed how we've been drifting lower ever so slightly to be fair It's you know the uk e you trade talks are going on For the time being there's a bit of cause optimism That the uk and the european union will come to some sort of an agreement by the middle of november But obviously there are no guarantees and that's why that hasn't been a huge amount of volatility In in in palestering recently this year this positive move is a kind of anticipation of other hopes That something will be achieved in november. We've been drifting lower, but notice how The pound isn't tanking, you know, there's there's there's a bit of a kind of a view that Even if the traders aren't exceptionally bullish and sterling that they're not Doesn't seem to me that they're overly willing to go and take aggressive short position And that's why we've only been drifting lower the last few sessions And we're still holding above the water to move the average in a one spot 28 78 and While we hold above that metric It's like at the kind of wider trend of the last few months could continue If you press on higher from here and we looked we could really get retesting the highs of late late october In a one spot 31 76 beyond that head towards one spot 32 or one spot 32 69 If you do have a move below The water to move the average it could take us back down toward this zone where this red line here is The tourney will be average and just below that is the lows of latest september So the zone of one spot 2709 Down towards the lows of of of late september in a one spot 20 one spot 26 75 Coming on now to commodities head towards the end of the video starting off with gold gold like I said as because of the Strong strongish inverse relationship between gold and the US dollar There's been times where by traders have been a risk-off mode And we've seen aggressive moves lower in stocks Historically gold is often benefited from that but because it seems that US dollar has become a fairly popular play In terms of flints in terms of safe haven moves We any we ever see Stocks tumble the obviously the dollar rise and sometimes a strong dollar impacts the gold market And if you look at the price action goal the last few months an all-time high was achieved in august So it's clearly in a very bullish trend We had a sharp move to the downside afterwards. It's not not uncommon Trading in a range bound for a while the levels that we dropped down to in late september were like, you know Multi-month lows ever since then we've been trying to pull back But we sort of kind of you know trading in a bit of a range The lows of last week were once again, you know multi-week lows It's the broader trend seems to be in play But but there isn't doesn't appear to be much appetite They really drive gold too much higher much too too much higher. So if you do hold above the recent lows in it 1848, you know the wider trend could continue We nearly need to be taking out this blue line here at the fifth of the movie average in 1915 notice how it the market tried to Make break beyond it in late october, which but it's a bit of fails to a move beyond that level Beyond the 15th movie average could then bring this this area into play in a 1973 the highs of mid september And if you go beyond that 2000 would be the next big number to keep an eye on If on the other hand though the market fails to it runs into potentially runs into resistance again At the 15th movie average and if it turns lower if you take out the recent lows of late of only last week We could be looking heading back down towards 1848 and a move below that could take us down to where this zone here in at 1800 and lastly I come on to the oil market brain crude oil looking at the january contract So the oil market the energy market is very sensitive to perceptions about what's going on with the global economy essentially if There are contingency a lot of concerns that the lockdowns are going to have Have negative impacts on the various different economies and and in turn demand is likely to be here Hence why even in today's session We saw brain crude oil fall back to its lowest level since mid-may Granted there's very there's very a long wick on this channel which denotes a decision And if remember when I was talking about the long wicks that we saw What could be a hammer formation on the likes of the dachs and the dow Jones and the smb 500 and the fussy 100 This could potentially be the to not to be the case on the on the oil on brain crude oil potentially We would need to see it close higher though by the time being it's the candle Is still we're still seeing is the red candle in that for the time being the market is trading below Where it opened but we would need to see we need to close above where we opened and have a positive candle and we could We could so we could potentially see a hammer formation on this camp on this on the oil market But just don't forget the market has been an aggressive downtrend recently If we do break below the recent lows and then at the bullish the negative the bearish trend continues We could then be like heading back toward this zone here down at 30 33 spot 44 If you do have a rebound we could see support or resistance rather coming to play in this area 40 you know the exact the next big number up, but also we did see a bit of consolidation in that zone before That's all from this video. Thank you for listening. Have a good trading week and good luck