 Hello and welcome to CMC Markets on Tuesday 6th January 2015 and what a year I think it promises to be. I think there's a significant amount of uncertainty as to what direction equity markets are going to go to next if you actually look at the performance of say for example the German DAX, the S&P 500 and the FTSE 100. There's been a significant amount of divergence in the performance of all three. Obviously the S&P 500 has broadly outperformed. It's two major counterparts. The German DAX does appear to be starting to roll over at the moment and the FTSE 100 appears to be trading broadly within a range where the base is round about 6,200 and with the top around about 6,800. So I think at the moment there's a significant amount of uncertainty as to what could well happen next. We've got speculation this week about what the ECB might do at its monthly meeting which this month is the 22nd of January as they go over to a new meeting structure for 2015. Lithuania has joined the Euro so there are now 19 member countries within the Euro area and what that also means is there's going to be a slight change to the voting patterns on the ECB governing council on a month by month basis and that essentially means that in the May and October meetings Bundesbank's Jens Weidmann actually doesn't get a vote. So that could actually make things particularly interesting in the event that the ECB needs to do some extra stimulus and that more than anything is the major debate, it's the major debate that's being had right now. There's also a significant amount of concern about the really sharp decline that we're seeing in oil prices, Brent prices in particular are now 50% down from the highs that we saw in the middle of the summer and there's widespread speculation that we could actually see further declines in that. So what does that do for deflation risk in the Euro area as well as obviously globally? What does that mean for interest rate rises going forward? I think it pretty much means they're off the table. People are talking about the US raising interest rates later this year. I think that's unlikely. I mean people are betting on it and the dollar is certainly benefiting from that. The Euro is suffering as a result of speculation about QE as early as this month. Again I think the ECB is unlikely to do any type of QE at the January meeting. Why? Simply because I think the Greece exit scenario has reared its head again and the Greek elections are on the 25th of January. Now at the moment the likelihood is Sarisa could actually form a government there and I think it's unlikely that the ECB will undertake to buy sovereign bonds before they know the outcome of that election. Irrespective of what this week's or this month's or last month's EU CPI figures come in at on Wednesday and the likelihood is that they're going to come in negative. That's obviously going to increase the pressure on the ECB to do more. The big question is can the ECB get a consensus to do that? At the moment the Euro is lower. On the basis that Mr Draghi has once again said that the ECB is prepared to do more and by actually saying that the ECB is prepared to do more the Euro has come down. The big question at the moment I think is what that means for equity markets and I'm going to have a look at the German DAX. I'm going to look at the S&P 500. Look at the key support levels on those two indexes given the declines that we've seen so far this year. I'm going to look at the Euro dollar. I think the likelihood is we could see further declines on that given that we've broken a very key technical support there and I'm also going to have a look at Brent Crude and look at where the next key level on that particular market is as well. So let's start with the S&P 500 and the German DAX and we're going to start with the daily candle chart. This is the S&P 500 and we can see that I've drawn a trend line on this particular chart from the October lows and we can see that that support currently comes in around about 2015-2020 level. So a good area of support through there. If we break below there then we're really then again looking towards the December lows around about the 1975 area. Now I think when we're looking at what the S&P could well do over the next few sessions I think it's important to remember the impact that a stronger dollar could have on S&P 500 earnings. The big question I think is whether or not the Fed will look to tighten policy this year. FOMC voting members are changing this year and if anything I think the new committee looks slightly more dovish than hawkish. So the minutes from the last meeting I think are largely going to be not that important in the context of the dissent on that particular committee because all three dissenters will not have a vote in 2015. So I think from a I think from the Fed point of view I think it's important to look at the monetary policy stance of the new members that are coming in and if anything there's only one hawk coming onto the committee and two hawks are leaving. So the balance of power has slightly shifted towards the dovish side and notwithstanding a slowdown in global growth that should be fair that should underpin I think equity markets in the short to medium term. What it means over the longer term is slightly more difficult to assess. So key supports on the S&P 2015 and 1975. Moving on to the German DAX and again we've got a daily candle chart and again it's fairly similar sort of look. The only difference being is that we had a lower peak after December peak at the beginning of the month and that suggests that maybe momentum is waning a little bit on the German DAX but once again we've got support at a fairly similar level and a fairly similar gradient on the trend line that we got from the October lows. So I think in terms of the future direction of the DAX and the S&P we need to keep an eye on those key support lines that I've drawn from the lows in October. Moving on to the euro dollar and I've chosen to use a monthly chart here simply because I think it's very very instructive in what it shows me about the future direction or the potential future direction of the euro. We've broken the 200 month moving average for the first time since 2005. Now that acted as a key support on the trend line support that I've also drawn on this particular monthly candle chart in 2010 and 2012. We've closed below it. We've also closed below the trend line support from the 2005 lows and that potentially argues for a move towards 112 by the end of this year. The only thing that would negate a potential move lower in euro dollar over the course of the next few weeks and months will be a monthly close above 122.40. So if we do get a rebound in euro dollar off the lows that we've seen so far around about 1860, 1870 which was round about equivalent to the lows that we saw in 2012 then I think it's quite likely that we could see further losses over the course of the next 12 months. We'll finish up with Brent Crude and I'll make this short and sweet. We can see quite clearly the extent of the decline since the highs that we saw in the middle of the summer last year and judging by the look of that chart I think there's certainly potential for us to fall an awful lot lower. We've broken below all the key Fibonacci retracement levels from the move that we saw from the lows in 2009 where we saw $36 for a price of a barrel of Brent Crude to the highs that we saw in 2011. So I think the next target for Brent Crude is the April 2009 lows around about $50 a barrel. If we break below $50 a barrel then I certainly think there's a very very good chance that we could well see further declines towards the lows that we saw in 2009. So that's it for this week. Hopefully giving you quite a bit to chew over there. If you have any questions, tweet me on at Emma Houston underscore CMC. In the meantime, please feel free to sign up for Friday's non-farm payrolls webinar, which could actually give a little bit of a pep to US equity markets, especially if it comes in as good a number as the November number of $321,000. Otherwise, until next week, this is Michael Houston signing off from CMC markets.