 Hello and welcome to CMC Markets on Tuesday the 6th of May and the weekly market update. Now if like me you've been struggling to make sense of the economic data that's been coming out, not only the US but also Europe and the UK and the direction of equity markets, you're not alone. It's been very very difficult to really establish where we go to next from here. When we look at the S&P 500 we've once again looked to try and retest the highs of earlier this year but there doesn't appear to be really any conviction behind the rally. Having said that it's not dipping that far either. When we then look at the NASDAQ 100 for example we found that even though the S&P is still near its record highs the NASDAQ actually appears to be forming some form of top and I'll illustrate that a little bit more clearly when we look at the chart later in this video. Also the economic data in the UK continues to improve much better than I think a lot of people had been expected. I think after the Q1 growth number that we saw last week I think there had been an expectation that maybe Q2 would probably not be that much better but some of the preliminary data that we've seen thus far would seem to suggest that actually we could actually exceed the numbers that we saw in Q1. If we look at the US economic data we're similarly conflicted. Q1 GDP the likelihood is that the next adjustment in that could actually be a revision downwards into a contraction and yet the non-farm payrolls data that we saw on Friday would seem to suggest that jobs growth is actually ticking along nicely but when you actually look at the internals for that number the participation rate has once again dropped quite sharply and in the process drags the unemployment rate down as well and obviously that is a concern 62.8 it's at a 36 year low for the participation rate the unemployment rate is now at 6.3% so I think when you're looking at the prospects for what equity markets are going to do going forward you've got concerns about Ukraine you've got concerns about earnings growth on the back of the fact that the OECD has downgraded its global growth forecast so when you look at the gains in equity markets and then you look at those particular pieces of economic data you may start to come to the conclusion that really to drive equity markets an awful lot higher from where we are now we really need to see earnings start to beat expectations particularly given the fact that the Fed looks likely to continue its tapering program certainly if its comments after the FOMC meeting last week are any guide let's start our look at the charts with the S&P 500 and what I'm going to do is I'm going to show you this chart and you can see that it's quite near the all-time highs that we saw in April it's a daily chart we've got good support around about 18, 13, 18, 15 which is around about the April lows and we can see quite clearly that we're near the all-time highs but when we now look at the NASDAQ 100 you can see that the picture is somewhat different once again this is a daily chart but once again I think there's a clear direction of travel with respect to lower highs since the beginning of March we've seen progressively lower highs as the market continues to run out of steam and the focus remains more on valuations on NASDAQ 100 stocks than on say for example your more blue chip stocks and I think the key level here is the December lows, the 2014 lows and the 200 day moving average around about 3,425 and there's one other thing here and I think this could be quite important particularly if the 3,400 level goes there's a good chance that this could be the formation of a potential head and shoulders top with the left shoulder around the January highs in 2014 and the right shoulder currently being formed right now now the only thing that would negate this potential head and shoulders would be a break above that trend line that I've drawn through the highs at the beginning of March so having looked at those two different US equity markets you can see why I'm a little bit conflicted when it comes to the direction of US equities on the other hand probably not so conflicted when it comes to the direction of the pound and the euro particularly against the dollar the euros looking to test that really key 140 level and we've got the European Central Bank rate meeting later this week and I think there is probably a very small there's a small chance that maybe the ECB will cut rates at this week's meeting I really don't think that will happen and as such I think given the improvement that we've seen in European economic data we could well see a good test of that 140 level also UK and the pound against the dollar if we look at this daily chart here it looks like the market really wants to test that 170, 45, 170, 50 area and that really is the key level for the pound against the dollar if we look at this monthly chart we can see how important that level is because if we look at this monthly chart over the last 16 to 17 years we can see that the last time we were trading at these sorts of levels was in August 2009 if we close the month above 170, 50 then there is a significantly good chance we could actually see a move towards 178 so this month I think is going to be a very key month for the pound against the dollar I'm going to finish off with Apple shares and it looks like the market may be falling back in love with Apple again certainly if the price action of this particular chart is any guide now we broke higher in the wake of the earnings announcements that we saw last month and I've basically done a price projection here from the triangle breakout that we saw at the end of April now if we work on the basis of a minimum price objective I think there's a good chance if we stay above the $590 area that we could well head towards $625 and that would be the highest levels that it's been for over a year so certainly keep an eye on Apple shares certainly think there's potential for further gains there as long as we don't fall below the $590 mark okay so that's pretty much it for this week ladies and gentlemen once again I'd like to thank you very much for listening this is Michael Houston talking to you from CMC Markets