Forex Investment and Currency Trading

The hold  of the 76.4% Fibonacci retracement at 884 is indicating a bounce in the ST back towards resistance at 1,007. The market may still be forming a reverse head and shoulders and a rally towards 1,140 - 1,150 cannot be written off.

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NDX Index: The reverse head and shoulders neckline comes in at 1,386 and a close above there would then target 1,610. Note that this pattern follows the long term 76.4% Fibonacci pullback of the rally from the lows in 2002 (below).

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S&P 500: The reverse head and shoulders pattern on the S&P 500 is beginning to suggest that the rally ahead could be more aggressive than originally thought. The neckline is at 1,013 and a rally through there would suggest a move up to 1,160 which is marginally below the July low. Interim resistance is at 1,043.

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The dismal performance last two days in US equities came despite a normalization of 3-month Libor down to 2.39%, (which mirrors the narrower spread to 3-month Treasuries as well).   After months of looking to the non-functioning credit market for signs of improvement, it comes… and the US equity indexes go off the proverbial cliff.  The US day started with major, coordinated rate cuts in Europe.  The Bank of England led the way with an unanticipated and unprecedented 150 bps. The ECB, Bank of Denmark, Norgesbank, Swiss National Bank all cut by 50 bps, the SNB without a scheduled meeting.  It [...]

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The largest Election Day rally in US equities on record - with S&P 500 closing +4.1% - suggests that markets were already celebrating the prospect of Barack Obama being elected as 44th President of the United States.
Presumably the bullish mood of the market reflects the likelihood that the Democrats will pursue a more aggressive fiscal package to support the economy because 1) they have been more open to government spending as a principle and 2) they could have unified control of the Congress/White House, so it will be easier to pass policy measures. Indeed the election results reinforce the view [...]

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