Fundamental Analysis:
The worst week of S&P500 from 2012 when S&P500 lost 3.6% over the month as FED unwinding QE and the worry about the stability of Emerging Market such as Turkey, South Africa, Russia, and Argentina.
There are two definite things on the table now:
- FED surely will keep unwinding QE3, taper consecutively each Meeting.
- Government s of EM will try their best to maintain the stability of financial markets.
And one unsure problem is: How will investors react with two definite things above? We know that the biggest advance of SPX last two years is supported by QE3, now the stimulus surely winds up end of this year. Investors need to find dynamic to buy Equity, and the dynamic definitely is the advance of US economy. If the US economic data is not good, there is no reason the investors would Sell Equity aggressively. Let rethink a little bit, if US economy is not on the advance road, FED will not taper, so I expect US economy perform well next months.
This week is very important. Economic data play a key role in guiding SPX: The sell-off momentum is stopped or continue to decline to lower level.
I recap US economic data last week:
- Markit Services PMI : positive
- Durable Good Orders: Negative : slump -4.3%
- Confidence Consumers : positive
- GDP : 3.2%
- Personal Income : No change.
- Personal Spending :positive.
I see there is stagnation in manufacturing sector and positive signal in service sector.US economy needs to maintain GDP in the range between 3% - 4% : 3.2% is very positive. US economy is still on the recovery road.
And here is the main economic data of this week:
- Monday
+ Markit Manufacturing PMI
+ ISM Manufacturing PMI
- Tuesday
+ Factory Orders
- Wednesday
+ ADP Employment Change
+ Markit Service PMI
+ ISM Non-Manufacturing PMI
- Friday
+ NFP report
I think Manufacturing PMI and Factory Orders are not positive, but I don’t pay much attention on those data because US economy doesn’t base on Manufacturing sector but depend on Service sector. Last week, GDP and Markit PMI are positive, so I think ISM Non-Manufacturing PMI will be good. The main concern is NFP report. Most economists expect NFP will bounce from 74k last month to 184k this month, and I am too. I hope NFP will be positive, and this will assist for SPX rallies, end the most terrible month from 2012.
- Technical Analysis
I draw on the chart : 38.2% Fib Retracement : 1775 level: is very strong support level. This was resistance level and support level. SPX cannot break this key level easily, it needs enough catalyst to push it below this key level. Moreover, 1775 level also coincides SMA100 : the medium term trend. If SPX pierces SMA100, it will slump to SMA200. I don’t expect this will happen. Any move below 1775 level will open the door for the next targets are 1746 and 1729.
Next,the short term trend : SMA50 was broken this week. It now becomes the resistance level : 1811
Moreover, I can see SPX is under Kumo cloud. Last week, SPX was trade below Kumo cloud. Below Kumo cloud is bearish trend. I hope SPX jumps above Kumo cloud.
In short, with positive data including NFP report , I think SPX would bounce from 1775 support zone and test the resistance level 1812: SMA50. And in the worst scene, if NFP is negative, SPX would test 1746 level.
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The worst week of S&P500 from 2012 when S&P500 lost 3.6% over the month as FED unwinding QE and the worry about the stability of Emerging Market such as Turkey, South Africa, Russia, and Argentina.
There are two definite things on the table now:
- FED surely will keep unwinding QE3, taper consecutively each Meeting.
- Government s of EM will try their best to maintain the stability of financial markets.
And one unsure problem is: How will investors react with two definite things above? We know that the biggest advance of SPX last two years is supported by QE3, now the stimulus surely winds up end of this year. Investors need to find dynamic to buy Equity, and the dynamic definitely is the advance of US economy. If the US economic data is not good, there is no reason the investors would Sell Equity aggressively. Let rethink a little bit, if US economy is not on the advance road, FED will not taper, so I expect US economy perform well next months.
This week is very important. Economic data play a key role in guiding SPX: The sell-off momentum is stopped or continue to decline to lower level.
I recap US economic data last week:
- Markit Services PMI : positive
- Durable Good Orders: Negative : slump -4.3%
- Confidence Consumers : positive
- GDP : 3.2%
- Personal Income : No change.
- Personal Spending :positive.
I see there is stagnation in manufacturing sector and positive signal in service sector.US economy needs to maintain GDP in the range between 3% - 4% : 3.2% is very positive. US economy is still on the recovery road.
And here is the main economic data of this week:
- Monday
+ Markit Manufacturing PMI
+ ISM Manufacturing PMI
- Tuesday
+ Factory Orders
- Wednesday
+ ADP Employment Change
+ Markit Service PMI
+ ISM Non-Manufacturing PMI
- Friday
+ NFP report
I think Manufacturing PMI and Factory Orders are not positive, but I don’t pay much attention on those data because US economy doesn’t base on Manufacturing sector but depend on Service sector. Last week, GDP and Markit PMI are positive, so I think ISM Non-Manufacturing PMI will be good. The main concern is NFP report. Most economists expect NFP will bounce from 74k last month to 184k this month, and I am too. I hope NFP will be positive, and this will assist for SPX rallies, end the most terrible month from 2012.
- Technical Analysis
I draw on the chart : 38.2% Fib Retracement : 1775 level: is very strong support level. This was resistance level and support level. SPX cannot break this key level easily, it needs enough catalyst to push it below this key level. Moreover, 1775 level also coincides SMA100 : the medium term trend. If SPX pierces SMA100, it will slump to SMA200. I don’t expect this will happen. Any move below 1775 level will open the door for the next targets are 1746 and 1729.
Next,the short term trend : SMA50 was broken this week. It now becomes the resistance level : 1811
Moreover, I can see SPX is under Kumo cloud. Last week, SPX was trade below Kumo cloud. Below Kumo cloud is bearish trend. I hope SPX jumps above Kumo cloud.
In short, with positive data including NFP report , I think SPX would bounce from 1775 support zone and test the resistance level 1812: SMA50. And in the worst scene, if NFP is negative, SPX would test 1746 level.
If you like my analysis, please visit my page: www.sforex-solution.com/index.html
And like my FB page to share Forex idea: www.facebook.com/sforexsingals