Tech Weighted NASDAQ Bucks Trend to Finish Higher
James Hyerczyk from ForexHound.com at 10/20/09
The tech weighted December E-mini NASDAQ market bucked the overall bearish tone of the day to post a moderate gain. The NASDAQ was driven higher by extremely bullish earnings from Apple, Inc. The heavily weighted Apple, Inc. stock helped drive up the NASDAQ Index while the December E-mini S&P and December E-mini Dow rallied off their lows but still finished lower.
Traders drove all indices lower from the start this morning following the release of weaker than expected reports regarding housing and producer prices. Both reports indicated the U.S. economy is still weakening. The PPI report drummed up thoughts of a potential deflationary scenario.
U.S. Treasury futures rallied sharply higher after the release of a pair of bearish U.S. economic reports. Today’s housing and PPI reports suggested the economy was still weak and that the Fed would continue to keep pressure on interest rates. Falling equity prices helped drive investors into the lower yielding December Treasury Bonds and Treasury Notes.
The U.S. Dollar gained on Tuesday as traders became more risk averse. The December Euro backed off from the psychological 1.50 area after comments from Euro Zone officials regarding the value of the Euro and its possible effects on exports. The December Yen rallied early in the session as Japanese Finance Minister stated he had no intentions of intervening unless the Yen got too volatile. By the end of the day, the weaker equity markets helped drive traders into the Dollar. The biggest loser was the December Canadian Dollar. Traders aggressively sold the Canadian Dollar after the Bank of Canada said it the rise in the currency wiped out economic gain. This gave rise to the thought that the BoC was considering an intervention to weaken its currency.
December Gold tried to breakout to the upside early in the session as the Dollar weakened, but traders refused to buy at the current lofty levels. The first sign of weakness was gold’s inability to take out the all-time high at $1072 while the Dollar was reaching a 14-month low. The lower close suggests developing weakness. A trader through $1043 is likely to trigger an acceleration to a major 50% level at $1028.80.
December Crude Oil poked through $80 per barrel momentarily before selling back below. This market has divorced itself from the fundamentals and is relying on speculation, higher equity prices and a weaker Dollar to support it. If any one of these three factors changes, crude oil could begin to sell off sharply. The technical closing price reversal top indicates the potential for a retest of the $75.00 area.