Global Markets At Key Technical Points! What’s The Trade?June 17 | Posted by Kevin Monaghan | Inside Trader Highlights
The summer pullback is in full swing. Markets across the globe are letting worries get the best of them as the problems of the credit crisis still linger and further financial damage seems more inevitable than ever. One saving grace is that corporate earnings are only a few weeks away. If the markets can find a way to hold off until then, then corporate profits could provide a boost the markets. Companies like Apple (AAPL), which has a heavy weighting in the Nasdaq, can boost the overall markets with a good earnings report. If Apple continues to take market share from others that could however equate to more pain at dead money stocks, like Microsoft (MSFT) which have not seen their stock move in years due to lack of surging growth products like Apple has delivered.
Let’s take a Look at Some Charts
The S&P long term chart shows that this is a normal pullback that is right about at a level that could be dangerous. Many traders were talking about 1250-1260 as an important level to hold. Currently, we’re still on track.
A shorter term chart of the S&P 500 shows that we’re at the support level of the March Japan Earthquake. Also, the average is currently approaching its 200 day moving average.
HOW’S CHINA DOING?
China has pulled back on global concerns of a slowdown. However, the country has seen great numbers domestically lately and with government surpluses and high levels of reserves at the bank, China may be in a better position to stimulate its economy should a global slowdown occur. The 50 day average is approaching the 200 day moving average, if they cross, then it would indicate a bearish sign for technical traders.
While it’s tough to invest in the face of so much uncertainty, we’ve been dollar cost averaging into stocks relating to the Chinese market for the past year. The Shanghai composite has less correlation to other markets around the world, so it can march to the beat of its own drum. The country must continue to maintain steady growth to keep workers employed in an ever migrating population into urban areas, and with a huge surplus, China has the ammunition to do so.
Disclosure: Author, Kevin D. Monaghan, Senior Partner at Elite Investment Group, has no index positions mentioned, and is long APPL.