We all sat through a fairly non-descript European Central Bank press conference yesterday, with Mario Draghi seemingly denying equity bulls a possibility of full scale QE, but ultimately suggesting that unanimity was not necessary to push this type of policy through.
As one would expect, the effect on global indices was a swift move to the downside. It was only the emergence of a Bloomberg headline which stated that according to sources familiar with the matter, the ECB was planning to embark on sovereign debt buying as early as January.
Thus, indices have rebounded and the December rally looks set to continue; newswire surprises notwithstanding.
Non-farm payrolls, due for release at 1.30pm (London time) will likely be the marquee event today as is the norm. While the importance of this number has dissipated somewhat, owing to the end of QE, it will only really have an impact if we see a significant miss. Expectations are for a print of 230,000 – anything below the 200,000 mark would likely cause a little bit of upheaval in the short term.
FTSE eyes 6770
The downside moves in oil continue to depress the FTSE, and while support was garnered around the 6670 level yesterday, the 6770 level remains the metric to puncture if the UK benchmark is to pose any challenge to the highs seen in mid-September.
The trendline support from the October lows remains valid, and while above the 200-day moving average, the bias is for additional upside.
The 100-hour MA is also a decent intraday support level, so we may see the index bounce between this and the current intraday highs around 6730 in advance of the US employment numbers. A break above 6730 targets the 6760-70 level. Any move down through 6707 would see a return to 6670.
DAX supported by 9844
Yesterday’s candle on the DAX had quite a range, with the lows and highs breaching both the top and bottom of the recent consolidation. The 10,050 level is still the area to watch and good support is coming from the 9844 level. A break below here takes us back to 9800, with the 9690-9700 level coming in below that and coinciding with the 100-period MA on the four-hour chart, along with the bottom band of the bullish channel.
Intraday, the 9940 level is holding and price action is above all three major averages. Hourly relative strength index is looking a tad overbought but still seems to have some legs.
Dow close to 18,000
We’re still a whisker away from the 18,000 level and you get the feeling that markets will not be satisfied until this level is touched. Right now Dow Jones futures are pointing to a higher opening, and while above the 17,900 level there is a significant chance that today will be the day that 18,000 is tested.
Yesterday’s highs at 17,940 will be the area to watch – a move through here will be bullish. On the downside, we have a degree of negative divergence on the hourly RSI so we may well see a pull back towards 17,897 and the 50-hour MA before the next leg higher. Support below this lies at 17,860.