By Margaret Yang, CMC Markets
Equities – US equities retraced from recent highs, with the S&P 500 down 0.52% to 2,091. The ECB decided to keep interest rates unchanged last night. Currently, the market is in a vulnerable balance – the commodities rebound eased worries of a global recession and the Fed’s dovish stance sent emerging market equities and currencies higher. On the flip side, earnings are soft, central banks’ monetary policy has been pushed to the extreme but become less effective and China’s economy saw some good signs but rising credit growth raises new worries about its debt burden.
Any unexpected events or bad news could break this balance and change the market’s direction. This is especially true for the US market, which has recovered its losses. For the S&P 500 index, the strong resistance zone is between 2,080-2,120 points.
Commodities – WTI crude oil consolidated around the $42-43 area. Little change was seen as the market is waiting for fresh news on the next freeze talk. Gold failed to break out of the upper channel near the $1,260 area, and then retraced to $1,246 this morning.
Silver, on the other hand, is gaining strong momentum this week. Silver prices showed no hesitation in advancing further after breaking through key resistance at $16.15 last week. It is now trading around $17.00, up 23% year to data. Looking at the weekly chart, the recent rally is just a small rebound against a prolonged bear trend. A Fibonacci retracement over the weekly chart shows that the next resistance for silver is at $18.75, or the 23.6% Fibonacci level. In the near term, it needs to breakout the upper side of the channel near $17.00 before further advance.
Silver – Cash (weekly)
Key Technical levels to watch:
- Immediate resistance levels: 17.00, followed by 18.75
- Immediate support levels: 15.20, followed by 13.72
- RSI spiked above 70%, showing signal of overbought
About the author
Margaret Yang Yan, CFA, is a market analyst for CMC Markets Singapore.