 Hello and welcome to CMC Markets on Tuesday the 3rd of March and the weekly market update and welcome to a new month, a new week and new record highs for US markets, German markets and UK markets. What can possibly go wrong? We've continued to push the new highs on the DAX, on the S&P 500, on the Dow Jones and now the FTSE 100, the UK 100 has also joined the party. However, as is always the case when we talk about new highs, these highs have to be tempered I think with a certain amount of caution because there was a report out earlier this week that suggested that despite the fact that we're making these new highs an awful lot of the momentum around these new highs has been as a result of stock buybacks. Over the course of the last month 123 S&P 500 companies announced buybacks of their own stock, total of $103.4 billion against a backdrop of declining profit expectations. So you have to put the rise in equity markets into some form of context and certainly if you look at the valuations of US markets I think you have to be a little bit cautious even at these levels. So I'm going to start with looking at the S&P 500 and looking at the key support and resistance levels in that particular index. I'm also going to have another look at the cable chart that we looked at last week and I'm also going to have a look at the Aussie dollar as well in the context of the surprise decision by the Reserve Bank of Australia to hold interest rates this month and I think that was largely as a result of the fact that the Chinese central bank actually reduced their headline rate over the weekend and also the fact that the RBA cut rates last month so I think they're probably playing a monitoring brief on the Aussie dollar, the strength of the Aussie dollar, giving it time to filter down into the Australian economy and also I think assessing whether or not the Chinese rate cut that we saw over the weekend also has some form of trickle down effect. So it's a big week for economic data this week and I think more than anything particularly in the US that could have a significant effect not only on the US dollar but also on the S&P 500. We do have the the Fed's page book on Wednesday we have US ADP payrolls and we end the week with US non-farm payrolls and you know given the revisions that we saw to the numbers last month the expectation is fairly high that we'll continue to post plus 200,000 job gains but it's really not about the number of jobs that are being added. I think what we're now looking for is evidence of at least some form of inflation in the US economy and I still think there's very limited evidence that that is actually starting to take hold. Let's face it we're still seeing rate cutting happening across the board in central banks around the world and I think it's unlikely the US economy is going to be immune to that irrespective of that spike in average earnings that we saw in last month's figures. So focus particularly on average earnings this Friday. Join me and my colleague Colin for the non-farm payrolls webinar on Friday starts at 1.15 the link is here if you want to sign up for that but in the interim let's have a look at the S&P 500 chart and look at the key support and resistance levels on this particular on this particular market. So this is the four hour chart that we're currently looking at and we're looking at it pretty much from the beginning of February and I've drawn a series of horizontal support and resistance lines through what I consider to be the most important highs and lows. Now we can see that currently we're trading above the support at 2100 give or take the odd pip and that also coincides with the highs that we saw in mid-February we broke above that we've traded above that and we found support above that particular level at 2100 for the last couple of weeks. We're continuing to struggle below the 2120 level as we can see from that from that very spiky candle that we've seen in the week of the 23rd of February and we really need to get back above that 2120 area to kick on towards 2140. Now we need to push below the 2100 to suggest that maybe a short-term top is in place and in that case if we do drop below the 2100 level then we could well drop back towards around the next support level which currently comes in around about the 2084 level. So let's move on to the cable chart now we covered this last week and I suggested in last week's video that we could go back to 156th. In any event we fell short of that we only went as far as 155 52 and now we've started to slide back and this does worry me a little bit certainly given the makeup of this particular chart that we're looking at right now. Now we pushed above 15480 which was a significant resistance level and we've traded back to the bottom of the neckline that I've drawn in from the week of the 16th of February the lows through there. Now the current the current breakout point or the current support level through those lows currently comes in between 15330 and 15350 and if we get a significant break below that level then there's certainly potential for us to move quite a bit lower. Now why do I say that? Well I think it becomes an awful lot clearer if we look at the daily chart. So when we look at the daily chart we can see why I'm a little bit cautious about the fact that the rally that we've seen since the lows of earlier this year is starting to run out of steam. Now last week a couple of days after I did last week's video we got a very strong down move of 15550 and that marks what we call a key reversal day but it also is a bearish engulfing day and that is potentially a very bearish signal but what it needs is it needs confirmation. Now the confirmation is required by a move below 15330, why 15330 because essentially that is the neckline of the potential head and shoulders reversal that is that looks like it's starting to form on the four hour chart. It's not as clear on the daily chart but it's I think it's certainly relevant in the context of this particular up move. If we move back to the four hour chart you can sort of see what I'm talking about. So we move back to the four hour chart we can see the horizontal line that I've drawn through the lows around about 15330 and 15350 and we can we can identify that as a key support level. So if we break below that level and push below it quite aggressively then there's potential for at least a 200 point move lower. So let's finish up with the Australian dollar and the rebound that we got earlier today is a result of the fact that the Reserve Bank of Australia didn't cut interest rates as expected from 2.25% to 2%. Now that being said just because they didn't cut rates this month doesn't mean that they may not cut rates next month and I think the probability is that economic data out of Australia is likely to continue to put the Australian dollar under pressure particularly as long as it stays below the long term down trend line which I've drawn in this four hour chart from the September 2014 highs around about 9150. Now you can see where that trend line comes in. I've marked it with some text to give you some sense of perspective and we've also we're also trading below that long term moving average. So I think we've got to rebound on the Australian dollar but to reverse the underlying down trend that we've been in since September we need to conclusively push back above that and until we do so the down trend is likely to remain intact. So we could well squeeze higher the oscillator seems to suggest that there's certainly room to do that but it's certainly going to take very weak set of US numbers to suggest that we could get that further push higher in the Australian dollar. Okay so that's it for this week just serves me to remind you that we've got a whole host of important economic announcements out later this week. Obviously it culminates in non-farm payrolls on Friday and as I say we will be reviewing that Colin Zizinski and myself on Friday so if you want to listen in please feel free to do so but also be aware that events out of Greece the ECB rate meeting later this week the Bank of England meeting as well which is probably going to be a complete non-event is likely to it's likely to continue to cause volatility in financial markets over the next few days so until Friday or until next week depending on which event you want to sign up for this is Michael Houston talking to you from CMC