Daily Forex Insight

Here are some insights from the currency strategists at dailyfx. They cover the fundamentals and technicals of key Forex pairs and other key markets along with some of the key economic news of the day. Today's commentary looks at a possible head and shoulders pattern forming in the S & P 500:

Daily Forex Insight

Here are some insights from the currency strategists at dailyfx. They cover the fundamentals and technicals of key Forex pairs and other key markets along with some of the key economic news of the day. Today's commentary looks at the dollar ahead of the important ECB meeting and Chinese GDP:

Market Signals for the US stock market S and P 500 Index and Indian Stock Market Nifty Index for the Week beginning October 17

Indicator	Weekly Level / Change	Implication for S & P 500	Implication for Nifty*
S & P 500	2133, -0.96%	Bearish	Bearish
Nifty	8583, -1.31%	Neutral**	Bearish
China Shanghai Index	3064, 1.97%	Bullish	Bullish
Gold	1256, 0.29%	Neutral	Neutral
WTIC Crude	50.75, 1.89%	Bullish	Bullish
Copper	2.11, -2.45%	Bearish	Bearish
Baltic Dry Index	892, -3.15%	Bearish	Bearish
Euro	1.097, -2.06%	Bearish	Bearish
Dollar/Yen	104.16, 1.21%	Bullish	Bullish
Dow Transports	8039, -0.22%	Neutral	Neutral
High Yield (ETF)	36.58, -0.27%	Neutral	Neutral
US 10 year Bond Yield	1.79%, 3.34%	Bearish	Bearish
Nyse Summation Index	217, -50.36%	Bearish	Neutral
US Vix	16.12, 19.58%	Bearish	Bearish
20 DMA, S and P 500	2154, Below	Bearish	Neutral
50 DMA, S and P 500	2165, Below	Bearish	Neutral
200 DMA, S and P 500	2069, Above	Bullish	Neutral
20 DMA, Nifty	8724, Below	Neutral	Bearish
50 DMA, Nifty	8706, Below	Neutral	Bearish
200 DMA, Nifty	8035, Above	Neutral	Bullish
India Vix	14.89, 2.78%	Neutral	Bearish
Dollar/Rupee	66.71, 0.15%	Neutral	Neutral
Overall	S & P 500	Nifty
Bullish Indications	4	4
Bearish Indications	9	10
Outlook	Bearish	Bearish
Observation	The S and P 500 and the Nifty fell last week. Indicators are bearish. Markets are failing at resistance again. Time to tighten those stops.
On the Horizon	China – GDP, Australia – Employment data, New Zealand – CPI, UK – CPI, Euro zone – ECB rate decision, Canada – CPI, Rate decision, U.S – CPI, Presidential race debate
*Nifty	India’s Benchmark Stock Market Index
Raw Data	Courtesy Google finance, Stock charts, dailyfx.com
**Neutral	Changes less than 0.5% are considered neutral

The S and P 500 and the Nifty fell last week. Signals are bearish for the upcoming week. Market momentum and breadth have been showing divergences for months now and sentiment indicators are still highly complacent and a big breakdown will likely start soon. It is interesting to see most risk assets suddenly moving together much like in 2008. This is setting us up for some serious downside unless recent resistance gets taken out soon. The market is struggling to get past its 50 DMA and gold just made a massive move down which is deflationary. Short term we are oversold but any oversold bounces may not last long. The critical levels to watch are 2140 (up) and 2120 (down) on the S & P and 8700 (up) and 8500 (down) on the Nifty. A significant breach of the above levels could trigger the next big move in the above markets. You can check out last week’s report for a comparison. Love your thoughts and feedback.