Global Markets: Dow Jones Nearing Key Support; + The ‘Other’ Presidential Candidates

The cautious view that we adopted towards the Dow Jones a couple of weeks ago on our online service has played out. The Dow’s break below trendline support around the 13,320 mark triggered a swift move lower. Although a short-term unwind of the recent summer rally is to be expected, the Dow is now homing in on major support at 12,975. An end-week close below this level would presage further weakness towards the 12,500 mark. Long-term trendline support for the Dow exists at 11,500.

With US equities under pressure, the dollar is strengthening against the euro. Although we see good euro support at US$1.2875/EUR, if the Dow continues to weaken, this level could well give way, setting up losses to US$1.2500/EUR. Conversely, on the upside, we see key euro resistance at US$1.3135/EUR.

The recent deterioration in risk appetite is favourable to our 2012 average Brent crude forecast of US$110.00/bbl. The rapid price drop over the past two weeks to a current level of US$108.10/bbl has brought the year-to-date average to around US$112.00/bbl. Support for the front contract exists at US$106.75/bbl. Given the oversold nature of the relative strength index (RSI), a period of stability is likely. Any further weakness would find strong support at US$102.50/bbl.

The ‘Other’ Presidential Candidates Hold A Debate

Turning to the US presidential race, although Barack Obama and Mitt Romney are – unsurprisingly – dominating the election campaign, there are quite a few others also running for the White House. On October 23, four lesser-known candidates – former Salt Lake City mayor Rocky Anderson (Justice Party), former Virginia congressman Virgil Goode (Constitution Party), former New Mexico governor Gary Johnson (Libertarian Party), and physician Jill Stein (Green Party) – held a presidential debate in Chicago. Among topics discussed were the need to break the Democrat-Republican duopoly of the political system; reducing corporate influence in politics; reducing the US defence budget by scaling back America’s global military presence; ending the war on drugs by legalising marijuana; addressing the high cost of college education; repealing the Patriot Act; and possible changes to the US constitution, for example through term limits on legislators. Johnson and Stein will hold a follow-up debate on October 30.

While none of the four have a chance of winning the presidency, they could inadvertently tip the outcome in a closely fought battle.

This Week’s Trivia Question

Last week, we asked: Which former (and now deceased) Head of State recently had a bronze statue of himself unveiled in Mexico City, adding to a list of several eastern European and Asian cities which now have statues of him? Our hint was that his country faces rising war risks. The answer is former Azerbaijani president Heydar Aliyev.

This week, we ask: Which well-known individual announced recently that he was resigning from his decades-long job in the newspaper print media, citing the poor state of journalism?