Oil continues to feel the pain on the charts when it comes to global markets, as despite previous support levels it seems impossible to stop falling at this stage. Despite, the recent news globally that Saudi Arabia may consider an OPEC like move the impact from china growth continuing to slow has had a massive implication globally that not many analysts/economists ever expected for the precious black gold. Thus far Chinese growth fears are not being alleviated by the government in China, and many are viewing this not as a recession at all, but instead an overdue correction that should have taken place some time ago. Either way oil continues to find itself under pressure and Iran is not helping the situation as it looks to ramp up production in the face of all of this.
On the chart the previous support level at 32.09 has quickly been thrown aside which has surprised me somewhat, as it had previously held out against heavy pressure. I believe it will now be most likely used as resistance for any push higher and we may see accumulation around this level. Further lower lows are likely to hunt out support yet again, and the next level down is 29.49, which really heralds the end for a lot of oil producers as it crosses out of 30 dollar barrels of oil and into the dangerous 20's which will put immense pressure on the market.
The S&P 500 has also felt the brunt of the Chinese movements as it continues to feel the pressure on the markets. This is despite the strong result we saw last Friday where non-farm payrolls were up to 292k (200k exp), which sent a strong signal to the market that the US labour force was picking up, despite the fact that work rates were at their lowest every historically. For me this continues to be an underlying theme in that there are more people coming back into the work place, but at the same time is the market truly at full capacity as less and less people are actually looking for work. Either way the S&P 500 has fluctuated heavily as a result and there could be further pain for equity bulls at this stage.
Support can now be found at 1891 and this is likely to hold up thus far under pressure. Any drops lower from here will find the next level down at 1861 and 1830, all of which are looking like strong support levels overall. The soft equity markets for me expose the current weakness of the economic system which relies heavily on global growth, and we could possible see further falls if China's economy continues to bleed openly without the PBOC intervening.
Lastly, silver continues to be the most level headed of the precious metals out there as it has so far refused to budge out of its current range and is tracking lower on the charts. For me this really does show that things may be slightly overblown and the fall in silver could point to a pick up by the bulls again and strengthening of global economies the second we get a ray of sunshine. Support at 13.653 is likely to be heavily tested when that happens though.
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