 Hello, welcome to CMC Markets on Tuesday the 20th of October and the weekly market update And it's been a pretty quiet start to trading this week Markets are predominantly preoccupied with events in China or the economic data coming out of China headline GDP came in at 6.9% much better than expected and I think there's a widespread Acknowledgement that that number has been massaged higher the internals have come in an awful lot weaker and certainly in that context what I'm going to be looking at is the current declining commodity prices where the key resistance levels are there because Certainly think what we've seen over the course of the past week is a rather schizophrenic market Certainly that's no better borne out in the FTSE 100 the UK 100 which I'm going to look at and To which the key resistance level remains at the level that I talked about last week around about six and a half thousand Going to be looking at the mining sector specifically BHP and Rio Tinto because I think if we're going to be looking for a recovery in the commodity sector Then I think those two stocks in particular are probably going to be what I would call leading indicators To whether or not we get a significant rebound also going to be looking at commodity copper copper prices rather and also look at the interrelationship between gasoline prices and US crude oil prices Now last week I looked at the UK 100 I looked at the DAX and I looked at the S&P 500 and I looked at the variants. I looked at the varying strengths of the rebounds of those particular Benchmarks this week. I'm particularly interested in the UK 100 simply because of its high correlation to commodity prices and Last week's resistance level which identified at six thousand four hundred and fifty is no less relevant than it was a week ago Certainly in the context of the price action over the past few days It's still a significant resistance level since we peaked there earlier this month. We struggled to get through it We've had one really strong update in the last eight and that suggests to me that markets that are investors in particular are very concerned about being aggressively longer stocks and I think that's largely as a result of the weakness in commodity prices and I think in that context We really need to have a look at copper as a leading indicator for what could happen to not only the FTSE 100 But also mining stocks in general So when we look at copper and this is a daily chart daily candle chart We can get a we get a we can get a sense I think of the overall sentiment and the key resistance levels that I'm looking at If we're going to get a significant rebound in the red metal and we're looking at around about two dollars fifty And that's signified by the horizontal line through the September highs We can see that in the past couple of days we started to roll over Along with the oscillator as well. And I think it's quite I think it's quite interesting that the UK 100 chart that we saw earlier as a simp as a similar Mechanism in terms of the oscillator is starting to roll over and that suggests to me that it's going to be very very difficult for both the UK 100 and copper prices to actually Gain any significant momentum to the upside while below those key resistance levels So we've looked at copper and we've looked at the FTSE 100 now Let's look at Rio Tinto because I think this chart is very interesting indeed We've got a very very big resistance level around about twenty six pound fifty two thousand six hundred and fifty It's also where the two hundred day moving average It's also the July August and the October highs So again, you know, what is going what is going to cause this particular stock to break out to the top side? We do appear to be finding a little bit of support around about twenty three pound sixty But again here the oscillator is starting to roll over Momentum does appear to be waning in light of the recent rebound that we saw at the beginning of October And I think overall, you know, unless we can get some sort of foothold back above this key resistance level and the 200 day Moving average then once again I think the potential is to start to or to continue to trade sideways below this very very key resistance level With BHP, it's a similar sort of story Once again, this is a daily chart and a slightly longer time frame I'm taking a resistance level from the December lows that we saw at the end of last year Comes in around about one thousand two hundred and fifty as we can see currently We've been unable to get back above that key level and once again I think it's very Indicative that an awful lot of these charts are a mirror image of the resistance in copper prices Again, these these two key stocks I think are going to be a very a very significant leading indicator for any potential turnaround in commodity prices Kind of finish up with a quick overlaid chart of US crude prices Overlaid against gasoline prices now We've heard an awful lot of narrative over the past few days about gasoline prices being at six year lows and yet US inflation does appear to be holding up fairly well that being said I think given the lagging effect that we're seeing on this particular chart if we look at the correlation between WTI prices, which is the purple line and Gasoline prices where we got a very strong rebound at the beginning of 2015 and we got a massive divergence Away from crude prices relative to gasoline prices and that held inflation up fairly well In the US economy. We're seeing that divergence start to turn around now We're getting a convergence and as we can see from the most recent chart The gap between gasoline prices and crude oil prices has started to close and actually is now moving away From crude prices that suggests to me that further deflation We affects could start to ripple through the US economy and I think that's why you got I think that's why you're now starting to see the signs of dissent in the FOMC voting committee With respect to those comments made by Lail Brainard and Daniel Tururo last week And it's certainly going to make next week's Fed meeting all the more interesting when you look at charts like this And you see gasoline prices start to fall much faster than crude prices So that's pretty much it for this week. Thanks again for listening It just remains for me to remind you that next Wednesday Colin and myself will be doing an FOMC Preview it's unlikely that we'll see a change in monetary policy next week If you want to listen into that particular webinar, you can sign in right there and All that leaves me to say is thanks very much for listening and I will see you all next week