Global Market Trading Strategy: Global Equity Indices Bounce From Big Picture Support
Paul Ruddleston
On 10 October, the key global equity indices at long last reached (or fell to within a hair's breadth of) what we had defined as 'big picture' downside attraction/support areas. For example; as representatives of Asia, the Hang Seng Index and Nikkei 225 reached around 8,700 and 8,100 respectively. As a representative of Europe, the Eurostoxx reached 2136, and representing the U.S., the S&P 500 reached around 760. Since then we have witnessed significant strength, and most markets have already reached the nearest relevant short-term upside attraction areas, according to our analysis.
We will continue to focus on the S&P 500 as a representative of global equity markets. We are viewing strength from around 760 (the only solid support that we could define above 675/666) toward the nearest relevant short-term attraction area around 895 as a normal reaction within the down trend. Although we are taking the current strength from the 'big picture' support in the 760 area seriously, futures prices must convincingly break through the 895/907 barrier (i.e., preferably on a closing basis) to negate the chance of a continuation of the major downtrend from that area. A convincing breach of the 895/907 barrier would in fact suggest more serious strength as market participants attempt to push prices through the resistance around the late August highs (i.e., the 950/60 area) toward the bigger-picture attraction area around 1042/57, possibly 1088/95, before allowing the major downtrend to attempt to reassert itself in an effort to pull prices through support towards 675/666.
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