 Good afternoon and welcome to this week's CMC market charting update, myself Jasper Lawler, market analyst here. We'll begin through some of the major charts of the products that we trade as well as some of the key events for the week. Any questions at all, feel free to fire them through to the chat box and then I'll address them at the time or closer to the end. We'll get through this risk warning screen. I'm sure we've all seen this first page. There we are. So this is the morning after the night before if you like because we had a stellar non-farm payrolls released last week. It was above 300,000, biggest number since 2012, the first above 300K number since January 2012. So pretty impressive all around and it wasn't just that headline number. There was wage growth as well. So that's been important because that's been something the Federal Reserve, the Central Bank and the US have been talking about is that wage growth has been a bit slow and so that's been a reason for them not to hike interest rates and it's this low interest rate environment for stocks that's been so beneficial and it's the prospect of a higher interest rate that's been causing a rally in the US dollar. So if we do just have a quick look at the Dow and how things progress there, the Dow was a bit more positive than the S&P if you read my notes on the US market open. We can see this is a four hour chart. If we get back to Friday was the fifth. Here was the initial reaction. You can't see it so well here. Let me zoom down to a one hour chart. What kind of happened is that we saw a strong kind of initial positive reaction whereby the markets did jump higher. Then initially kind of this was like the initial reaction here within the first hour. Higher but then a bit uncertain back down to this green line which you can see kind of perfectly worked to support and has again now and is what we're retesting. If you're wondering what that is while you may have it in your own chart simple enough, it's just the previous all-time high that was formed there and that's kind of characterized the top of the range. It's been tested three times for the underside, broke through, completely failed as a retest point but prices stabilized at these short-term moving averages, moved above, little retest there and down again. So it's been quite a few tests, quite a pivotal area, this sort of 17, 9, 10 sort of area and that's what we're bouncing off at the moment. But it wasn't the most immediate euphoric reaction by stocks but it did eventually follow through and we came just a whisker away from this 18,000 mark the round number and we're just pulling away from that round number as people kind of take profits around there or indeed enter some short positions at that round figure or just ahead of it rather. So the question then really is that really good data theoretically should just be great for stocks but because of the environment we're in, the great data means that actually potentially we'll be looking at is a sooner rate hike from the Fed and it's been in the low interest rates like I said that's been propping up these stock markets. More so I think it's easy to say than the strong fundamental data. So if we have a look back at the daily chart we can see what we're dealing with here. Strong old rally that started to peter out and then we've had some talk in Europe and in China of greater stimulus and we've kind of picked up on the rally again, we're still going, still well above the moving average but got a little bit closer to it, you can see that. We're going to pull closer to it and that was enough to cause the next leg higher, we're just correcting down now. So in terms of US markets, nothing too much to worry about at this point. If we have a look on the shorter term chart, again we can see where we were. This is the range, fail a little bit here, back down testing but you could probably say that we're in a kind of uptrending market while we're above this low here but below there we're kind of back into having made a high high but then also a lower low so more like a sideways market as we were in this little period here. Overall obviously a strong uptrend but just in the short term if we should see some prices lower than here. So that kind of puts us more in a kind of sideways range with the next logical support being this high and then retested low from here. I mean 18 pounds is a big round number and we could prod through it a bit further but you can imagine in this general zone it's a bit of an area to be cautious. If we just look comparatively at the S&P we can see that the reaction really wasn't quite as positive in the S&P. We barely saw an intraday close beyond the previous high from the 26th of November. We popped a bit higher. We got just under that 2,080 mark. I think we got to 79-ish. Yeah, 79.50 even. And now we've rolled off to the second moving average. So you can see these moving averages are kind of chopping around in each other now so it's not a kind of clean uptrend that we had for a while. It's losing a bit of momentum here. Prices dropped through both. I've got the 21 and 55 period moving averages by the way. So it's just happened in this particular trend I think defining the trend quite well. This was supportive here and then we got that breakthrough. So that was a sign of concern I highlighted I believe last week or at least on the chart forum I did. And then here you can see in the RSI typically what I look for is the RSI to be kind of trading between either 40 and 70 or 40 and just an overbore area defining a bull market. But then when you slip below 40 after having this kind of bull market being in this bull zone then that's a sign of potential weakness and we may be even, you know, that's the first sign that perhaps we've moved into a bearish range which would be below 60 down into the oversold area. So we haven't really made it above 60 yet. So it's a bit of, you know, the RSI, you know, it's an early indicator so it's not to say we can't make new highs first but there are some signs that there's a real sticking point around this to a 2018. Now in the UK we had a busy one last week. So in terms of looking at the UK 100 we had a busy week last week whereby we saw some good PMI data that despite the problems in Europe we're still seeing some good strength in the UK and growth in the manufacturing and service sector. But we also had the Bank of England and they again kept rates steady at 0.5% just because we're still seeing low levels of inflation because of these lower oil prices and wages have been low all year round and it looks like the Bank of England don't feel like any particular need to move high on rates while inflation and wages are still low despite the improving employment situation that we're seeing. So in terms of the chart you can see that this area we've been banging into here you can see just having this particular spike low was where we reacted to here. It could have been this one. I had that on the chart originally. You can see on a closing basis that's worked quite well but we did see some pops higher. But generally this was the kind of breakdown area here. That caused that massive 10% odd sell-off. Right back we're really kind of bumping into it in this particular candlestick within a kind of trading range like this not necessarily of too much concern because there was a big bullish engulfing candlestick we bounced off the bottom of the breakout area highlighted this green area. We got up to the highs again but now we're falling back to it. So it doesn't bode well this candlestick. Definitely bearish but we haven't closed the day yet and we are still in this kind of sideways area so it may end up just kind of pushing us towards the bottom of the range only to go higher again. As you can see that was kind of the highlighted area that we got a bounce from but only made it up to the previous high and we've seen this kind of big sell-off today. Not necessarily UK related the sell-off today. We had some difficult data from Asia overnight and not always necessary to know what happened in Asia but on this particular occasion we've seen even worse growth from Japan than expected there in recession and there's some panacea uncertainty over there just because they've called SNAP elections to try and keep going this avianomics policy that has simultaneously pushed the dolly yen to seven-year highs pushed the Nikkei to the highest since 2007 not far off the highs made in 2000 but nevertheless the Japanese economy is in recession so an interesting example of quantitative easing at play there. So that's troublesome for global growth and equally some data from China where we've seen a drop in imports again largely because of the decline in oil prices just overall costs are down on the imports but exports is the major point of concern there they've had a lot slower growth in exports just because there's a slowing global demand and there isn't the demand out there for Chinese exports and that's going to be troublesome for the Chinese economy but again we're seeing the Chinese index making five plus percent gains today which you may think are slightly odds to the disappointing data yes the data could be interpreted as positively because there's a bigger trade surplus and the lower oil prices could certainly be a boon for the Chinese economy because their net import is of oil but I think it's the chance of further rate cuts in China which are the large explanation for this move and when you're trading these indices you've got to kind of look at the economic data but in the current environment we live in it's really only, fundamental data is really only so useful as how much it can tell you about the next round of stimulus coming it really is about this level of rate cuts level of money printing and how that affects each market involved so quick look at in terms of an upcoming stimulus let's move on to the Germany 30 so this is what we can see this is the general scheme of things had disappointing German data today still growth in industrial production but not nearly as much as the previous month and slightly below expectations so we're seeing a bit of a pullback here also related to this international data and not altogether unsurprisingly after the strong day we had on Friday you can see that these were the prior all-time highs and we pushed above those and again we're above that 10,000 round number mark which has proved a bit problematic since we first got there but we've had a big kind of this candle engulfed the prior day in terms of its body there's strong candles we're seeing a slight pullback here but you could expect maybe this candle's breakout area or maybe you can see these two highs kind of fell in about the same area if we drop to a lower time frame something along the lines of here and obviously corresponds with the 21 day moving average could be initial layer of support then perhaps these lows here as the next layer so just seeing a pullback here again similar to the Dow Jones nothing to be major concern that potential buying opportunity on this dip it's only once we break the lows that we should be more concerned okay I'm getting a note from Andy that there's no sound I'm seeing sound on my end Andy can you confirm is that still the case? obviously you're not going to hear me saying that if you don't have sound I'm going to send you a message can anyone else confirm that they can hear me okay? Andy looks like it's your sound my friend everyone else seems to be okay on the sound front okay so moving swiftly on I've got a question from Richard here just pertaining to the ending of QE and upcoming rising interest rate cycle well it's certainly that rising interest rate cycle has to come eventually Richard but it's still sort of on the back burner and it's not been sort of fully priced in if you like because if you look at the nature of the bond market that you're referring to let's have a look at actually this was a note that in the last six months UK bonds actually have been some of the I believe the best performing bonds in the G7 so bond prices moving higher that means yields moving lower so in terms of the UK they're really not pricing in a rate hike too imminently and again it kind of goes back to this Bank of England are kind of focusing more on the lower oil prices and the problems in Europe and the risks that their minimal growth pose for the UK rather than the improving employment situation so for that region general consensus is out there is that we're probably not going to see a rate hike before this side of the general election and possibly not till the final quarter of 2015 so we've still got a few months left of low interest rates and then the idea is that the pace of rate hikes is going to be slower than normal and the eventual destination will be lower than normal and that's what the bank is projecting whether that's actually what turns out is altogether a different perspective but based on the kind of low levels of inflation right now they should in theory be able to do that without overheating the economy and so for that reason there's not too much risk, too guilt at the moment but obviously eventually should rates increase to a level that's kind of more historically normal that's when this rally in bonds is going to start getting threatened but I think up until that point we're still kind of trending higher and the US, they do seem to be it's why we've seen the British pound collapsing against the US dollar it's because the US do seem to now be in a slightly later stage of the rate hike cycle than the UK is namely they're probably going to raise rates quicker in the US at the Federal Reserve than they are in the UK and the Bank of England and you see T bonds and then we've got the US 10 year here I need to close that one first so there's not been so much movement in the US and that is reflective of the fact that they are just that much closer to hiking rates than we are in the UK we seem to be moving a little bit further away from it if anything at the moment but nonetheless the Fed is being uber cautious and we're still trading in a kind of low yield low and high bonds type environment and when it comes to global markets at the moment while these rates do remain low there isn't the impetus to look for yield outside of the US and you can have the relative safety of the US another example when it comes to the currency play if we look at Dolly N this has been quite the mad trend and again this sort of data seen today is not really doing much to undo the trend we're seeing here and again I talk about different phases of the rate hike cycle across the globe JJBs are being almost exclusively bought up by the Japanese government at the moment and the yen is being forced down and we're seeing the dollar because of its own closeness in rate hike cycle rallying higher and so that's why we're getting these near on 7 year highs in Dolly N you'd imagine there's going to be some sort of resistance coming in from this kind of 124 area which was the peaks made in 2007 but there wasn't too much coming in at these peaks here or even this breakdown area that I'd highlighted we're sort of dipping below it a little bit here maybe we won't get it closed but we did just about close to a week above it so we're in a kind of sell area here technically for the Dolly N but still the fundamentals in terms of the cycle of interest rate hikes are certainly against it now I think it's important to note when you are trading these extreme trends you've got to just appreciate that the dips in this trend have been fairly minimal if you're looking for almost a 200 pip dip it's almost not happened in this whole rally I think it's been sort of 150 pips it's been almost the max you see in terms of a dip from one to the next which is not a small amount but still given that how far this market's come but the higher it goes obviously the greater the risk of a bigger pullback but if you keep expecting that larger pullback and it doesn't come you're missing out on these small dips each time we've come close to 122 saw some resistance there but we're back at 121 based on historical evidence here we hit 119 we're dropped to 117.50 there about found support there so we've hit 122 you'd expect prices based on these kind of evidence of these sized dips not to go too much further below 120.50 maybe that round figure 120 but I'd be surprised if it even gets there and then once we get into that 124 area maybe that's when we start running into a bit more trouble but the Japan economy is in recession and in the US they're seeing plus 300,000 jobs growth so it's definitely a different circumstance between the two I don't know if I've fully addressed what you were after there on the yields which had let me know if there's something else you're specifically looking into on that I mean I guess it really is the ultimate question for the bond market is just when does the bond market roll over but I guess the question for now is does it look like it's happening just yet at some point it's going to be a time to sell bonds but there's still a good rally in bonds taking place at the moment so I don't know if you want to fight that if you do we know the fundamental scenario is that we need higher interest rates to threaten bond markets and we're just not seeing those yet and we're not seeing too much technical evidence of a roll over in the gilts or the German bonds at the record low yields Italian 10 year equivalents so I believe it was a 10 year drop below 2% for the first time on record so they're still even in more troubled European economies there's still this move towards buying bonds and that's largely because there is still this ongoing threat out there of QE within Europe and in the UK and the US they're still holding back on high income rates so we're going to look at the euro here since we did just mention I think in terms of the euro and potentially European stock markets this week the big event is going to be the results of the TRO program what we basically heard in this latest ECB meeting was that they obviously didn't do anything in this meeting what they're doing is they're in wait-and-see mode to see how the current programs are playing out and one of the programs is the ABS and covered bond purchases so purchases of private assets that's not been making too much of a dent in the intended 1 trillion euro balance sheet that the ECB wants to build towards so that's not going to be too good so far but they have said that that's mainly because it's the close to the start of the program and it's in the year end so that program could still pick up but the other program we want to look at is these TLTROs after these bank stress tests that we saw in October have the banks now started to be a bit more aggressive in lending and making use of this program and lending out to the wider economy if they are then there's some signs of this program working and there may not be need for buying government bonds if there's signs that it's not working within the ECB is going to say well our current programs don't seem to be doing the job we need to step it up a notch to increase expectations of inflation and increase our balance sheet towards this target of 1 trillion and that might be the point which they start buying government bonds but this week's results are going to give us a good clue about whether QE is happening and that will give us a good clue as to whether yields deserve to be as low as they are in Europe or whether the euro deserves to be as low as it is but the trend is certainly down you can see we held on to this declining trend line pretty well throughout the euro never quite made it there on the last occasion just big fall off almost dark cloud cover just on small correction not really at the end of the trend but still the pattern is kind of there and fell below the moving averages just kind of dipped below and you've got to assume that probably I don't have to assume but it does seem like quite likely at the moment that we're heading towards this this 120-40 level which pretty much defined the worst point of the European financial crisis we're not in a financial crisis in Europe necessarily this time around so you might think that Draghi might be as equally concerned about the euro being this low this time around as he was last time coming in and trying to defend the euro this time around there isn't the threat of the euro falling apart last time there was this is the euro falling purposely you might say because of monetary policy so this should act as some kind of interim support I would imagine but I can equally see prices continuing to move lower beyond that just because I don't see the central bank intervention coming in if anything it's coming in to push prices even further lower skipped around a bit there probably worth quickly mentioning is that Brent crude prices are making new multi-year lows just going up Brent quickly there we are that was the previous low so this 6775 we saw quarter bounce that we put out the chart a bit that was based on this two longer term low formed in May of 2010 but got a bit of a bounce at the end of the week but we're right back below there so still a side down trend in oil and the new president of OPEC lady from Nigeria the all minister of Nigeria she's unlikely to be able to change policy OPEC dominated by Saudi Arabia and they want to let prices of oil fall until the shell producers in the US got knocked out of business and overall supply drops and hopefully in that same period of time global demand eventually picks up and demand dynamic will be more in favor of high prices but for now OPEC don't produce most of the world's oil anymore and they have to sit back and bear it unless there's any other questions I think what I'm going to do is call it a day there thank you very much all for attending I hope that was of some use and I will talk to you all I guess one thing to note is I will of course see you same time next week but we do have our Analyst Debates Webinar in which I will be discussing the nature of the markets with our Canadian colleague Colin Cizinski and that will be a wide-ranging discussion on all the various markets and it's certainly open to Q&A from all those who joined so there should be some different perspectives on what's happening and both of us are those who are interested in the charting and technical analysis and things we can dig a bit deeper on that occasion okay thanks again all have a great day and weeks trading Jasper Lawler signing off thank you