 Hello and welcome to CMC Markets on Tuesday the 4th of November and the weekly market update and what a last few days it's been coming off some of the strongest weekly gains this year 2014 and this despite the Fed actually tapering this bond buying program pretty much as expected they would when I was talking to you last week. What was a surprise was the Bank of Japan pretty much caught everyone on the hop by extending their asset purchase program by around 20 trillion yen and that has sent the Nikkei to its highest levels since 2007 it's propelled the S&P 500 back towards its all-time highs just above 2020 and it's also pushed equity markets broadly higher across the board. So where do we go to next I think that's the key question I think because what the Bank of Japan did last week was a significant surprise and what was more significant was the fact that the Japanese pension fund was given the green light to go and buy overseas equities and diversify away from their own domestic bond holdings but what in essence does that mean going forward because I think there had been an awful lot of uncertainty leading up to last week's Fed decision and the overall rhetoric was actually probably more hawkish than dovish. Okay the Fed kept in the considerable amount of time but there was slightly more upbeat on the labour market and I think we could get some evidence of how accurate that optimism is later this week when we get the ADP numbers on Wednesday and we get the non-farm payrolls data on Friday and just a quick reminder non-farm payrolls webinar on Friday 1.15 you can sign up along the bottom here there's a link there join me and Colin Zizinski for that. So we'll get a snapshot of the US labour market and that will determine whether or not the Fed's optimism with respect to the US recovery is justified but the Bank of Japan decision let's go back to that because I think we're going to have a look at the S&P 500 we're going to have a look at the Nikkei and see whether or not we can see or whether there's any sort of what I would call mileage in further gains there and also going to have a quick look at the German DAX to see whether or not we can actually make any further gains higher there in expectation of Thursday's ECB rate meeting. We'll finish off with crude oil and the prospective targets for further declines there as well. So let's start with the S&P 500 chart now last week surprise extra stimulus from the Bank of Japan has obviously pushed or helped push equity markets to new highs the S&P to new all-time highs just around 2020-2024 but I think it's important to look at this new stimulus from the Bank of Japan in the context of what it is and what is it essentially it's only an extra 10 to 15 billion dollars a month so essentially what the Bank of Japan is doing is offsetting the reduction in the Fed's final taper so what's what's essentially happening here is that the Bank of Japan has basically increased its stimulus program by 10 to 15 billion dollars a month and that's by the exact same amount that the Fed has pulled back so despite the pop that we've seen higher in equity markets what's really changed from now and two weeks ago not that much yet we've seen equity markets make new all-time highs in the US we've seen the Nikkei hit its highest levels since 2007 so in that context I think we really need to look at the previous highs in the previous lows and some significantly important resistance levels so for me the S&P 2020 we need to close and hold above there to push higher and that's that's the key level that I'm particularly targeting otherwise we remain at risk of a bit of a pullback towards the 1990 area so let's move on to the German DAX now we did pop higher on Thursday on the back of that surprise Bank of Japan stimulus and we've gapped higher and you can see the gap quite clearly from the three candles which are just below the 50 day moving average now it's a general rule of thumb that generally gaps tend to get filled now the gap comes in around about just above the highs at 9,160 that we saw prior to the move higher last week what is also quite interesting in this particular chart here is we've managed to just about hold below the 50 day moving average as well as the 61.8 Fibonacci retracement level from the down move from the September highs to the October lows so for the DAX to move higher for the Germany 30 to move higher we really need to gain traction above the 50 day moving average and above the 61.8 Fibonacci retracement level of that down move that I identified earlier let's let's round off this look at the indices with a look at the Japan 225 or the Nikkei 225 now you can see quite clearly on this daily chart that we've we've broken that significant resistance level around about the 16,320 level we've traded above 17,000 quite aggressively but today's daily candle has seen a significant pullback now that looks to me if we close where we are at the moment like a bearish engulfing day or a key reversal day and that for me could well be a significant warning that maybe the upside momentum that we've seen in the past few days could be at risk of at least the sideways consolidation and could actually prompt a pullback to the initial breakout point around about the 16,320 level so that daily candlestick chart is going to be a key indicator of whether or not we push up to the highs that we saw in 2007 around about 18,000 or whether or not we've we've entered a new trading range the bottom of which needs to really hold around about 16,300 myths have a look at oil prices US oil prices are trading at the lowest levels since 2011 Brent prices are pretty much trading in the same direction it appears to me that the Saudis are quite happy to put the squeeze on the US shale producers and you're seeing that played out in these two weekly charts that I'm going to put up in front of you we're going to start with the WTI contract and we look as if we could well retest the 2011 lows for WTI around about $74 a barrel that's going to be a really key support level for me it was a double tap low in 2011 and it's also a key Fibonacci retracement level from the lows that we saw in 2008 to the peaks that we saw in 2011 so we can see from that chart in front of you there there's a good area of support coming in round about 50% retracement of that entire up move around about the $74 area it's a similar sort of story for Brent the only difference is we're right on that support area at the moment and there is actually a good chance that we could actually push quite a bit lower but for the time being I think the psychologically important level on Brent remains around about $80 a barrel okay so to conclude just keep an eye on those two key support levels on Brent and WTI prices $80 a barrel on Brent around about $74 on WTI so that's pretty much it for this week's weekly market update just to remind you about Friday's non-farm payrolls webinar as I said you can sign up along the bottom here starts at $115 and we'll be covering live the US non-farm payrolls data otherwise in the meantime until next week this is Michael Houston talking to you from CMC Markets