Morning Call by Greg Secker

On Friday the FTSE 100 closed down 64 points at 4,448 and may be entering a range between 4,423 and 4,660. We are watching this with a great deal of interest because the resistance level is the break of the double bottom and the support level in near the 50ema. When the UKX is in between the 50ema and 200ema the markets are in an area of indecision. The Dow opened the day with early selling pressure as the index quickly dropped to the 8,600 level and eventually closed at a loss of 143 points. The Dow continues to wind up within a large triangle pattern and is now testing the lower boundary of the range at 8,600. Triangles are very powerful patterns that can sometimes spark a big breakout move. However, the geometry of this pattern is not conducive to such a breakout at this time. That’s because the index is trading too close to the apex of the pattern which means any breakout could be just a way to redefine the pattern’s boundaries until the real breakout occurs. A jump in unemployment (Non-Farm Payroll) sent stocks sharply lower on Friday as global investors feared that the US won’t deviate from their tightened budgets. The Labour Department’s much-anticipated report showed employers cut 524,000 jobs in December. But the unemployment rate jumped to a 16-year high of 7.2 percent — more than the 7 percent economists predicted — from 6.8 percent in November. Today we have no major news releases on the GBP, EUR or USD currencies. We have the Business Outlook Survey in Canada released at 15:30 and Business Confidence in New Zealand released at 21:00. Overall this coming week will relatively quiet for news releases. Good trading.