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North American Indices and Shares: Equities Show
Resilience After Disappointing Employment Reports |
MarketTrends: November 6,
2009
Issued by Colin Cieszynski, CFA, CMT,
Market Analyst, CMC Markets Canada
Equity indices have turned in a relatively
strong performance today. It appeared early in the day that equities had
every reason to drop heading into the weekend, with a disappointing
Canadian employment report (-43.2K vs street +10K), and the US
unemployment rate breaking through the 10.0% level to 10.2%, and
yesterday’s rally creating profit-taking opportunites. Instead, after a
brief downdraft, indices quickly bounced back, indicating strong
underlying support apparently based on long-term recovery anticipation.
For example, the Dow Industrials (US30 CFD)
fell to test 9,900 support in early trading, but quickly back toward the
10,000 level where it continued to consolidate yesterday’s gains. Next
key resistance appears in the 10,100-10,150 area. Similarly, the S&P 500
(SPX500 CFD) held well above 1,025 support this morning and has been
trading near 1,070 resistance with next resistance near 1,100. The
Canadian market has also rebounded with the S&P/TMX 60 (Toronto60 CFD)
taking a run at 670 resistance followed by 700 with 650 support holding.
Magna International (MGa) has been the leading
advancer among Canadian Share CFDs today, rising 14.9% after the auto
parts maker’s earnings came in well above expectations ($0.45 vs street
($0.42)) on better than expected revenues and increasing content per
vehicle. The shares also continue to respond favourably to the failure
of the Opel deal, and the removal of the associated integration,
operating, political and customer risks that appear to have been
overhanging the shares. Other Canadian shares moving off earnings today
include: Thompson Creek (TCM) up 8.5% and Telus (T) down 0.9% after it
beat on earnings but cut guidance.
In the US, Sunoco (SUN) has been selling off
after posting a disappointing earnings report overnight (($0.29) vs
street $0.03). Along with Sunoco’s own 10.2% slide, other refiners have
been falling in sympathy with Tesoro (TSO) down 3.6% and Valero (VLO)
down 2.0%. US shares responding favourably to earnings reports include:
Nvidia (NVDA) up 7.2% and Starbucks (SBUX) up 6.4%.
Commodities Update: Opposite Directions for
Energy and Metals
It has been a tough day for the energy
commodity group which fell in the morning and stayed down. Crude oil has
been leading the group lower, breaking down through $77.50 support and
holding near the $77.00/bbl level with additional support possible near
$76.60 then $75.00/bbl. Resistance remains in place near the $80.00/bbl
level. Natural gas has also been trading lower although it has rebounded
back above $4.60/mmbtu after successfully testing $4.50 support.
Resistance remains near the $4.75/mmbtu level. Gasoline has also been
soft falling toward the $1.90 level while heating oil has dipped below
the $2.00 level.
Precious metals, on the other hand, have been
holding steady or rising, suggesting continues USD weakness. Gold
continues to test resistance at the $1,100/oz level with next resistance
possible in the $1,125-$1,040/oz area. Silver, meanwhile, continues to
trade in the $17.25-$17.50/oz range.
Canadian Dollar Today:
Sentiment turned decisively against CAD today,
which fell out of bed with a thud after the release of today’s
employment report.
CADUSD Notes
CADUSD broke down through its 50-day average
near $0.9360 once again today. Although it appears to have stabilized
for the moment near $0.9300, there remains a risk that the 100-day
average near $0.9175 could still be tested.
USDCAD Notes
USDCAD broke through its 50-day average near
$1.0680 once again today. Although it appears to have stabilized for the
moment near $1.0750, there remains a possibility that the 100-day
average near $1.0900 could still be tested.
Other CAD Pairs Notes
GBPCAD continues to rebound from recent
multi-decade lows. Today the pair has been testing resistance near
$1.7850 with next resistance near $1.8000 and support near $1.7700
followed by $1.7500.
EURCAD has been attempting to move higher, but
appears to be running into significant resistance at the $1.6000 level,
with initial support in the $1.5750 to $1.5800 area.
AUDCAD broke through resistance at $0.9800 to
its highest level since 2004. From here, the door appears open for a run
at par. Note that 5 years ago, the pair briefly traded up to the $1.0500
level.
CADJPY has slipped back to 83.50 after failing
to break through 86.00 resistance and setting another lower high earlier
in the week. This leaves the risk that 82.00 or possibly 80.00 support
could be tested.
