 Good morning and welcome to CMC Markets on Friday the 23rd of November and this quick look ahead to the week beginning the 26th of November but before we look at next week events of which there are many, let's have a quick look back at the events of the past few days. And equity markets have continued to remain under pressure but I think it's significant that thus far we haven't been able to take out the lows of the last few days. If we look at the FTSE 100 here, the UK 100, we can see that there is decent support in and around 6,900, 6,850 which obviously was the lows back in October. And what is also quite significant is if we look at this candle here, it does appear to suggest that there is certainly evidence that there is buying interest at these sorts of lower levels but it's not just the FTSE 100 that I've been looking at, it's also been the German DAX and the S&P 500 so if we look at the Germany 30 we can also see similar evidence of some form of potentially short term base building formation. Now that's not to say that we're definitely going to rebound from these levels but certainly there does appear to be buying interest in and around the 11,000 level and here again we can see from this candle earlier this week that we have the potential there for a little bit of a bullish reversal. Having said that we have been trading sideways for the past four or five weeks so it's important not to read too much into that but certainly I think if we drop below 11,000 we could drop quite a bit lower if this support line breaks. If we also look at the S&P 500 it's a similar sort of story, if we look at this trendline that I've drawn from the lows all the way back in 2016 we can see there is similar evidence of a potential bottom coming in as well. It's not particularly elegant in terms of where the line is if we draw on a weekly chart it looks slightly, it certainly looks more compelling but certainly I think we are near a tipping point on the S&P 500 as well as the Dow Jones. If we look at this from the 2016 lows here we can probably also draw a line through here as well so we're a very very key point in terms of the story for US equity markets and particularly on the tech sector if we look at the Dow as well as the US 30 as people like to call it we can see that there is also a nice little line all the way through here for some reason the line has disappeared so I'm just going to quickly draw that in for you on this chart here so we'll go, oh there it is, it's come back, I knew I'd drawn it in somewhere so if I just get rid of that make it a daily chart we can draw it back in there so if we draw a line through these lows here once again we're very close to some key support levels and obviously the lows of this year so these are the levels that I will be keeping a very close eye on over the course of the next few days if we get a sustained break below these lows in the US 30 and the S&P then the net result of that could be to drag the rest of the global equity market sector lower. So looking ahead it's been very Brexit dominated it's been very Italian politics dominated and also we have to look ahead to next week's G20 summit in Buenos Aires. Now relations between China and the US are likely to be under scrutiny next week given that it is reported that President Trump and China's Xi Jinping could well meet on the sidelines of that conference I think it's still very unlikely that there will be any agreement between the US and China in terms of trade which means that the likelihood of an increased tariff kicking in at the beginning of next year going from 10 an extra 15% tariff on Chinese goods that's likely to kick in at the beginning of next year now I think potentially what could happen is there could be an agreement to maybe stay that increase in tariffs but I certainly don't expect the tension between the US and China to diminish significantly and for the tariffs to disappear completely. We've also got an EU summit over the weekend or we should be having an EU summit over the weekend as I recall this video to discuss and ratify the the Brexit withdrawal agreement as well as the political direct declaration on the future relationship between the United Kingdom and the European Union now there have been a number of objections raised by Spain France and to a lesser extent the Netherlands and Belgium but those objections are unlikely to delay any ratification by the European Union of that agreement Spain does not have a veto it will probably done by qualified majority voting which means it's likely to get voted through simply because neither side wants a no-deal Brexit and I think that's probably why we're seeing the pound chop around so much if we can look at this chart here this daily chart we can see that the price action is compressing from the June highs and the July and August lows so I think any break either above the downtrend line or below the uptrend line could see a significant sharp move higher or lower now at the moment while we're trading within the confines of this range it's likely to continue to do so but if we do break then we're going to get a very strong move either lower or higher not interested in the direction as long as we get a strong move higher or lower before this these two converging trend lines break to the apex then we could see either a sharp move towards 140 on cable or down to 120 on cable so keeping an eye on those two key levels there we've also got the UK bank stress test now they've been brought forward from the 5th of December to the 28th of November and I think the thinking behind that is to give MPs as well as investors clarity on how well insulated UK banks are to a no-deal Brexit if the worst scenario plays out now if we look at RBS shares we can see that there's a nice support line coming in around about 208 so we pay particular attention to RBS shares ahead of the stress tests I think an awful lot of the bad news is already priced in we've seen heavy selling of UK banks over the past few weeks so I think it's unlikely these banks stress tests will put further downward pressure on UK bank share prices now there could be a spillover effect because of concerns about what's going on in Italy and events in Italy I still think there's a phony war going on there between the European Commission and the Italian government and I don't think it's in either side's interest to ramp up the tension higher than it already is which suggests to me that I think as long as the Italian government can get itself through to the European elections the European Commission is unlikely to poke it too hard with its excessive deficit procedures stick so I think on that point of view I think the tensions are likely to remain high but I think they're likely to remain manageable we also look at Euro dollar we can see once again we've got a big top around about 115 but we've got fairly decent interest around about 112 so I think the range trade is going to be the the main trade for that particular market as well we've got all we've also got a whole host of economic data coming out next week US third-quarter GDP coming out on the 28th the bank stress tests are also out on the 28th of November the EU summit is on the Sunday concludes on the Sunday on the 25th assuming it takes place we've also got latest you in US inflation data personal income and personal spending on the 29th now the dollar has started to get a slightly softer tone over the course of the past few days I think a large part of that I think is over a growing realization in the market perhaps given recent comments by Richard Clarida who's one of the who's the deputy chair of the the Federal Reserve that the neutral rate for the US for US rates might be closer than markets are currently predicting so while we'll probably get a rate rise in December I think the Fed could go on pause potentially in the first part of next year now that's not been confirmed and I certainly don't think they're going to raise expectations too much with respect to that but what I would say is that I think if you're looking to see three or four rate rises next year I would I think you could well be disappointed that could actually see some of these dollar gains that we've seen over the past few weeks start to get given back so certainly pay close attention to the dollar index pay close attention to euro dollar we've also got a number of retailers reporting next week in the wake of Cyber Monday which is obviously on Monday Dick's Sporting Goods third quarter Abercrombie and Fitch third quarter we've also got Thomas Cook's latest numbers and they'll be keenly watched given some of the decent or some of the some of the poor numbers that we've seen out of the airline sector and we also have patisserie holdings given the recent scandal there so that's it for this week ladies and gentlemen hope you all have a great weekend and a good last week of November it's Michael Houston talking to you from CMC Markets