 Hello and welcome to CMC Markets on Tuesday the 10th of November and the weekly market update. Now this week I'm going to be looking at the S&P 500, I'm going to be looking at the UK 100, I'm going to be looking at Euro-Dollar and I'm going to be looking at the performance of crude oil after the last 12 months. And all of these assets are particularly important in light of the economic data that's come out of the US in particular over the course of the past fortnight. Prior to the previous FOMC meeting at the end of October markets hadn't really priced in the prospect that the US would raise rates this year. That prospect now looks completely different after the FOMC meeting at the end of last month and last Friday's payrolls report. And now the market is pricing in the distinct likelihood that the US Federal Reserve will raise rates at its December rate meeting in around about four or five weeks time. So what does that mean for equity markets in general? Well you know is a US rate rise a done deal? Well there is no such thing as a done deal until the US Federal Reserve actually pulls the trigger. And while the prospect of a rate rise is much more likely now until such times as those Fed officials pull the trigger I'm still of the opinion that there is a remote chance that the Fed might hold off and it is a remote chance but nonetheless it remains there. So what's giving me pause? Well two factors lack of inflation and the biggest elephant in the room China and the slow down there. We're still seeing very weak economic data out of China despite the fact that we've seen Chinese authorities ease monetary policy six times already in the past 12 months. Furthermore I think the markets are looking slightly beyond the December meeting and a potential rate rise and looking at when the rate rise after that will come. Certainly I think we're seeing that manifested itself in terms of the performance of the dollar but I also think it's manifesting itself in a little bit of a selloff in equity markets and I'm going to start my analysis of equity markets by looking at the S&P 500. So I'm going to make a start by looking at the daily S&P 500 chart. Now as we can see since we bottomed out around about the end of September we've gone on a very strong run higher. Six successive weekly rises. Now we've seen a bit of a pullback we were unable to break above the August highs around about 2112, 2115 and we've come back to test the 200 day moving average. Now there can be any number of reasons as to why we've pulled back on this particular chart but given the fact that we've come off six weekly rises I think we were well overdue a little bit of a pullback. I think concerns about the US dollar pushing increasingly higher on the back of potentially one and probably even two or three rate rises in the next 12 months has caused investors to actually start to look at valuations on the S&P and push the market lower. The big test will be is how it reacts around 2060, 2065. If we break below that key support level then we're really looking back down towards around about the 2035, the 2025 area which were those horizontal lines that I put in the chart further down below the 200 day moving average. Moving on to the UK 100 we haven't had the type of rally that we've had on the S&P and that's not really surprising given how top-heavy the FTSE 100 is in the context of commodity stocks. Nonetheless we've still had a fairly decent rally but we've struggled at that 50% retracement level that I have identified in previous weeks at around about 6450. Now we're finding a little bit of support around about the October lows around about 6250 and that could well potentially complete a little bit of a double top formation. If we conclusively break below 6250 then we could well see a further move lower back down towards around about 6150 in the short to medium term and a test of that trend line that I've drawn in from the lows that we saw in August. So why has the UK 100 lagged to such an extent to all the other benchmark indices? Well it can be summed up I think fairly neatly by this comparison chart here to my right. What I've done is I've taken the prices of gasoline, Brent crude, WTI and natural gas over the past 12 months. Now as you can see from this chart these are all priced in dollars and all of these assets are more than 40% lower from where they were on the first of October 2014. Given that given the fact that US CPI is out next week and given the fact that US CPI is currently zero then we could have a situation over the course of the next couple of months where the Fed is potentially hiking rates and headline CPI is negative. Can anyone tell me when that has ever happened in the past? Well I can tell you the Fed had probably never hiked rates when CPI is negative and I think that for me along with concerns about China could cause the Fed to think long and hard about the prospects of a December rate rise and potentially defer it to January. It is a remote possibility but it's something that does need to be considered and this chart potentially can support that argument. So let's finish up with this Eurodollar 4 hour chart. Now one of the most difficult things a trader is sometimes faced with is changing his mindset. When I'm looking at a market I'm looking at it in terms of buying the dip or selling the rally. With respect to Eurodollar it's been predominantly buying the dip because it's in the past or certainly over the course of the last few weeks and months it's usually found fairly good buyers around 108, 109, 110, found a steady stream of sellers around 112, 113, 114. When do you change that mindset? Well it's all about the price action and the price action of this particular 4 hour chart I think is fairly instructive in that context. Let's have a look at this chart and in particular let's have a look at the trend lines that I've drawn on it. Starting with the key support lines that have broken in the past couple of weeks. Now at the end of October we bounced off the long-term trend line support from the March lows at 104.65 and rallied back to around about 110.80 before then tracking lower. We can see straight away that the highs are getting lower and the lows are also getting lower which is indicative of a slowly establishing new downtrend. The remaining barrier to further downside on this particular market was the May and June lows between 108.20, 108.40. That support level has also given way. So that now targets the lows that we saw at the beginning of this year around about 104.65, 105. The big question is how do we go from buying the dip mindset into sell the rally mindset? Well now what we're looking to do is find an area where we can look to go short this particular market. The first area of resistance is the previous lows and that was 108.20, 108.40 or the previous support to give it a much more accurate description. If we do squeeze back through that 108.20, 40 level on a short squeeze then again we've also got that trend line resistance from these highs that we saw in October just above 114, around about 114.50 and that currently comes in around about the 109.80 area. So now we've gone from a scenario where we're looking to buy dips to a scenario where we're now looking to sell rallies and in that context that's why price is important irrespective of what you think central banks might do in one month's time, two months time or three months time. So that's it from me once again if you have any questions about anything that we've covered in this particular video feel free to tweet me at mhueson underscore cmc otherwise I'll speak to you all again same time same place next week.