Today the Asian markets closed mixed. The Shanghai Composite Index down -1.34% to 2,652.50; the Shanghai 180 A share index down -1.58% to 6,106.07; Taiwanese market TWSE up +0.38% to 8,163.82; Hong Kong Hang Seng up +0.14% to 21,725.64; Singapore STI up +0.73% to 3,071.03; Nikkei up +2.34% to 9,516.56; South Korea, the Kospi up +0.48% to 1,823.88; Australia (the S&P/ASX 200) up +0.76% to 4,661.50; and India market, the S&P/CNX 500 up +0.68% to 4,861.30.
Great news came from Japan as the government made major move to weaken its own currencies Wednesday. Japanese exporters stocks were on fired across the board, sending the Nikkei 225 Stock Index jumped to a 1-month high. Japanese government intervened to limit the appreciation of the yen for the first time in six years. The yen has climbed to 15-years high against the dollar recently. This is not beneficial to Japan economy which is mainly dependent on exports. Japan’s central bank steps in to sell yen and buy the dollar. Today there was a report from CNBC that the BOJ’s intervention in the currency market may have exceeded 100 billion yen. The yen tanked to a two-week low against the dollar in today trading.
U.S. equities were set to open lower out of the gate, due to uninspiring macroeconomic data. September Empire State Manufacturing Survey Index that measured activity in the New York region tanked to 4.1 versus 7.1 in August. This is the lowest level since July 2009, indicating we are in a slow growth environment. On Wednesday the Federal Reserve also reported August industrial production, up modestly +0.2% versus it was up +0.6% in July. The data was disappointing to investors since economists were expecting a rise of +0.3%.
Malcom E. Polley, Executive Vice President and Chief Investment Officer of Stewart Capital Advisors is very bearish, citing we are in a directionless market. And he does not see any catalyst for a dramatic upward move. Mark Pado, chief U.S. market strategist at Cantor Fitzgerald, completely disagreed. “The market is at a great precursor to a year-end rally; the S&P 500 will break out after the resistance level 1130 is lifted,” said Pado. Joining the bull camp is Carter Worth, chief market technician at Oppenheimer & Co. “Even though the S&P traded above the 200d-MA, the market will have some struggle to climb above June top and August top. The index could lift the 1130 resistance and advance 2% from here to 1140-1150,” Oppenheimer CMT predicted.
Stocks managed to close at fresh one-month high, up 9th out of 10 trading sessions. The DOW closed up +0.44% to 10,572.73; Nasdaq up +0.50% to 2,301.32; and the S&P up +0.35% to 1,125.07. The bears and the bulls were in tugs of war all day long; but all the indexes drifted upward in the last hour of trading. Since the June high 1130 was not taken out, traders are still confused, asking how long will the S&P 500 get stuck in this conjuncture and which direction will the index turn next?
We will conclude today trading session with the same comment in yesterday report. Clearly, the S&P 500 strong resistance is June high at 1130 range. If the market can lift this important level up, we will have a potential “Triple Top break out” from June high, August high and September high. The potential targets from this break out are 1150, 1160, and MAY high at 1170s range. Traders seemed to go short rather than long near resistance in today trading session. Next support levels are the 200d-MA at 1115.74, the 50d-MA at 1189.38, and the 20d-MA at 1082.08. Let’s give the market time to consolidate and wait for a high probability set up rather than playing yo-yo trades at this time.
Best regards to all, and good luck in your trading.
Disclosure: No positions in stocks/ETFs mentioned at the time of writing.