A particularly active political season in North America drew to a close last night with a decisive and historic Presidential election victory by Mr. Obama, which may represent the most significant shift in public policy sentiment since 1980. Although this victory on a mandate of change may help to boost market confidence over the long term (and don't forget that equities have historically done better under the Democrats than the Republicans) it appears that for the moment there still seem to be some concerns among investors over current economic conditions.
With employment data and non-manufacturing PMI data coming in worse than expected, equity markets have been unable to sustain upward momentum, with the S&P 500 (SPX500 CFD) encountering resistance at the 1,000 levels and the Dow Industrials stalling near 9,600. It also appears there may be some profit taking and the raising of cash against the election news and disappointing corporate earnings news and guidance. Although equities still appear to be facing some upside resistance, the pending change of government in the U.S. may provide some anticipation of a new direction that may keep equities well above last months lows and in consolidation mode for some time. Initial support levels appear near 9,300 and 9,000 for the Dow Industrials (US30 CFD), 960-970 for the S&P 500 (SPX500 CFD), and 600 and 580 for the S&P/TSX 60.
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Commodities have been giving back some of yesterday's gains and appear to be consolidating or base-building. This suggests that while the worst of the summer sell off may be behind us and sentiment toward the global economy may not be as negative as before, there does not appear to have been enough data at this point to give bulls the conviction to launch a recovery trend either. As such, a number of new consolidation ranges appear to be emerging such as $1.80 to $2/bbl for copper, $60 to $70/bbl for crude oil, $5 to $6/bushel for wheat and $3.75 to $4.25/bushel for corn. There has been some positive momentum in commodities today. Silver continues to trade above the key $10/oz level, while natural gas has been testing resistance at $ 7.25/mmbtu. Next resistance appears near $11-$12/oz for silver and $7.50 or $8.00/mmbtu for natural gas.
Canadian share update: Engineering sector rebounds, HudBay climbs apparently off earnings. The Canadian engineering sector appears to have attracted significant new interest in recent sessions. For most of the last three months, the group has been under pressure, but last month, positive MACD divergences suggested momentum may be changing. Today, Stantec (TSX: T.STN, Stock Forum) has jumped 7.3% and broken through $12.50, a key support/resistance level while SNC Lavalin (TSX: T.SNC, Stock Forum) has rallied 3.6% and appears to be trending toward another test of resistance near $40. Next significant resistance for Stantec, meanwhile, appears near $25 on trend.
Earnings reports also appear to be having a significant impact on trading today. HudBay minerals (TSX: T.HBM, Stock Forum), for example, has rallied 10% today after reporting a $2.8 million Q3 profit despite a drop in the price of zinc and an asset impairment writeoff. HudBay broke through $6.50 and out of a downtrend after this news came out and appears to be facing resistance closer to the $7.50 level. Earnings reports also appear to be weighing on selected shares. Golden Star (TSX: T.GSC, Stock Forum) dropped 16.6% and Kingsway Financial (TSX: T.KFS, Stock Forum) dropped 15.1% after both companies reported significant losses last night.