Third Quarter has Started

Alcoa’s results opened the third quarter yesterday, showing a loss of $454 million. The Aluminum Company stated that due to the decrease in demand of cars and construction, the price of aluminum had dropped severely throughout 2008-2009. Despite the heavy loss, the company did beat analyst’s expectations, therefore sending the stock higher. AA (Alcoa) closed the session with a gain of 4.12%

The U.S stock indices presented a volatile session yesterday, bouncing up and down, around critical support levels. On Wednesday, we mentioned the importance of divergence, which was seen on the Dow, on a 1 minute chart. As shown, the major indices bounced higher at the start of their session confirming the divergence, but quickly lost their steam. Even though the major indices closed the session mixed, they did present a volatile session dropping by over 1%, before coming back to their starting point.
 

Crude hit is Coming up to Support

After forming a double top scenario, crude oil continued on its cruise lower, during yesterday’s session, finishing just above $60 per barrel. Even though the Department of Energy had some affect on the intraday movement, showing a rise in storage, recent lack of demand helped to push the price lower, as consumption of the raw material has decreased dramatically over the last month.

Even though certain analysts are now concerned that the declines could indicate further weakness in the economy, we continue to believe that the fall in oil prices will help the economy long term as it will off-set inflation.
From a technical point of view crude oil has now broken out of trend, but could find support at its 200 MA.


 

 USD/JPY Shook the Markets

With a volatile stock market, the USD/JPY rattled the Forex market, dropping by over 200 pips. Even though there wasn’t any specific reason behind the move, economic data helped to send this pair lower throughout the session.
The IMF released a statement yesterday revising global economic growth in 2010 from 1.9% to 2.5%. They also stated that Japan’s growth projection was revised from 0.5% to 1.7%. While they also gave comments on deflationary pressures, they mentioned that those risks in the economy remain small and do not currently appear to be a threat.

The GBP/JPY also presented a dramatic move down as all carry trades lost their value during yesterday’s session. The GBP/JPY broke trend line support and is now testing that line, as resistance. One must note that despite the signs of a breakout, economic data today could have a major impact on this pair, presenting an unclear and volatile session. 
 

Market Data to Watch Out For

 Two major events will take place today, with the BOE first to take the stage. Even though the current consensus is for a no-change status, further quantitative easing could prevent the Pound from gaining back strength. In addition the U.S is expected to release its Initial Jobless Claims, which are expected to show a 610k result compared to last week’s 614k.