Intraday Market Thoughts

Archived IMT (2010.09.27)

by Ashraf Laidi
Sep 27, 2010 14:54

DOW 11,000 appears increasingly viable on a combination of market-friendly data from Germany (IFO) and the US (new & existing home sales) and inevitable liquidity injections from the major central banks. It is a question of time before the Fed steps up its round of treasury purchases aimed at preventing inflation from slowing excessively. Annual CPI is at 1.1%, while the Feds favourite inflation indicator annual core PCE price index is at 1.4%. Last week, the Fed clearly showed its concern with inflation has declined to a level that is slightly below that which FOMC participants view as most conducive to a healthy economy. Consequently, with no downside surprise in the data, both the Dow-30 and S&P500 look set to retest their 200-WEEK MAs at 11,000 and 1,200 respectively. Interim resistance for S&P500 stands at 1169, which is the 76.4% retracement of the decline from the 1,219 high to the 1,007 low. EURUSD stalls below its 50% retracement of $1.3510, while EURGBP struggles to regain the 0.8520 trendline resistance on the hourly chart. For, now EURUSD requires a new solid catalyst to get it over $1.35 and so we could see a another retreat towards 1.3400 before the $1.38 target on the basis of reverse H&S formations. No major US data today means stocks could wekk extend their gains nearer the aforementioned levels. .


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