Summary:
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US retail sales M/M: +0.8% vs +0.5% exp
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Core reading also beats forecasts (+0.7% vs +0.5% exp)
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Gold break above Ichimoku cloud almost confirmed
There have been several data points released from the US ahead of the Wall Street open with the biggest positive coming from upbeat consumer spending figures. Retail sales for October came in at +0.8% M/M compared to +0.5% expected, a strong rise on the -0.1% seen last time out - although this was revised lower from +0.1%. The core reading was similarly strong, coming in at +0.7% against a median estimate of +0.5%, with the prior also being -0.1%. The latest beat is no doubt positive but while it ends the recent declines the current levels are still some way below their recent peak.
Retail sales have ended their drop with the latest release but they are still a fair distance off their recent highs. Source: XTB Macrobond
The declines seen in US stocks yesterday caused the US500 to drop back below the 2700 level for the first time this month. Taking fib retracements from the October low of 2603 we can see the market found some support around the 61.8% level of 2685 and this could be worth watching this afternoon. The 23.6% fib at 2767 worked nicely as a short setup when price broke below here earlier this week, with the fib taking on greater significance due to it previously acting as a swing level. A break below 61.8% would open up the 78.6% fib at 2649 and if this is breached to the downside then a retest of 2603 becomes a base case.
The US500 has retraced to the 61.8% fib of the latest rally around 2685 and this could now be seen as an important level to watch going forward. A break below here would open up the possibility of a retest of 2603. Source: xStation
The decline in equities has seen some money flow back into safe haven assets with the Japanese Yen and Swiss Franc gaining yesterday while Gold moved back above the $1200 mark. Gold in particular is worth keeping an eye on as the market is close to confirming a break above the Ichimoku cloud on D1. Price popped above the cloud after a large single day rally more than a month ago, but Gold bugs have been left frustrated with the lack of follow through as price meandered before pulling back. It should be noted that this break wasn’t supported by the lagging line. This lagging line now is on the verge of poking through the cloud however and further confirming this break. A move above 1216 would see the recent resistance taken out and also the lagging line move above the cloud and perhaps act as a catalyst for a strong push higher. The recent lows around 1196 could be seen as key support.
Gold is probing recent resistance around 1216 ahead of the US session and the market is close to confirming the cloud break higher with the lagging line. Source: xStation
