Good Morning Traders,
Another Rollercoaster ride in the markets yesterday with some technical damage being done in the Major European bourses. The Dax was down nearly 2% at one stage yesterday but the bounce back ability of the American stock market roughly halved its losses. A combination of more Cyprus rheotric, poor European data, Italian Downgrade rumours and a poor Italian debt Auction saw a very heavy session for all European asset classes. This also weighed on American stock Futures with the S&P 500 opening at the lows of the day at 1551 but closing at the highs of the day at 1563, a couple of points shy of the all time highs. Surely today we must see this 1566 level broken, what a perfect American first quarter of trading that would be.
Yesterday morning the Dax broke a very important trendline at 7855 tripping stops and sold off to 7755 before bouncing back in the afternoon. This trendline break shows a top is probably in place and a retest of this 7855 level would prove a great place to establish a short position.
Yesterday we saw European periphery bond yields climbing again on political uncertainty, Cyprus and contagion fears. We also believe it is a flow rotational issue where investors are liquidating positions in bonds and putting the money to work in stocks, specifically the American stock Market.
Moving onto currencies. The Euro lagged yesterday breaking through barriers at 1.2825 and 1.2800 in the EUR/USD pair, selling off to a new year to date low of 1.2750. The buyers came in here and this morning we are seeing a relieve rally with the Euro back over the 1.28 handle as I type. The Euro is a sell on any rally as some analysts are calling 1.15 in the coming months. Anywhere near the 200 day moving average at 1.2881 would be a great sell but i doubt we may see this level again for a long time.
USD/JPY looks to have based around the 94 handle and has been a period of consolidation with Japanese firms repatriating Yen for their Financial year end. We believe that next week and the start of the new quarter will bring further Easing and further Yen weakening. A medium target of 100 for this pair in the coming weeks/months is very achievable and these levels look strong. Trendline support at 93.55 proved very strong when tested on Monday and will most likely not be tested again.
This is the last trading day of the Month and the last quarter so expect some volatility as funds, traders and investors square their positions. For the Next quarter we believe a lot of investors will establishing short Yen and Euro positions and we may see more flow rotation into American Stocks. If this is the Case we will see more Dollar strength and if the correlation remains between the S&P 500 and the Dollar it may not be the "Sell in May and go away" story that we generally see in the Market.
Some touted levels on the EUR/USD are 1.2750 on the downside, strong buying here along with Barrier related interest, Topside offers can be seen at 1.2820 all the way up to the 200 Day MA at 1.2881.
USD/JPY see's strong bids at the 94 handle and selling pressure from Japanese exporters at 94.75 through to the 95 handle.
Good Luck in the Markets, See you in Q2!!!
Thursday, 28 March 2013
Wednesday, 27 March 2013
Good Morning Traders
Its looks as though the weather we are experiencing over here in Ireland is similar to the mood amongst European investors. We start the day off in the usual negative territory, something we have become accustomed to over the last few weeks. As the old saying goes when it rains its pours and we have seen negative news multiply around the euro zone over the past couple of days. It started off with Cyprus, and the markets do not seem to happy with the deal that has been reached between the Cypriot Lawmakers and the ECB full details are to be disclosed during the course of the week. On top of this the Italian election has taken over the spotlight again and itr should dominate the headlines as the struggling nation is without a leading government. To add fuel to the fire there has been unconfirmed talk of an Italian downgrade which will come as no shock to investors, but it will undoubtedly compromise confidence within the euro zone.
All of this bad news flow has hit the Euro hard and the pair has come under increased pressure now trading down around the 1.28300 handle.
Over in the US things are very different the US equity market continues to grind higher disregarding all the poor euro zone economic data while it continues on its road higher, trying to breach the historic highs set back in 2007. The SPX is only 2 points off these levels and we expect to see this level breached this week.
We have been talking a lot recently for a market correction to take place, and we are standing by this idea, however it is going to take something a bit bigger than Cyprus to make this happen. It will be interesting to see what the SPX reaction will be when it makes its new high, this coupled with a potential Italian downgrade may be the catalyst we have been waiting for, however as we well know its a dangerous game to try pick a top and the last thing you want to do is stand in the way of the FED and Mr Bernanke, so wait for the set-up and trade your plan.
I would been more focused on the US equity market for the coming days buying any dips while keeping and eye out of the European markets.
@lowkeycapital
Its looks as though the weather we are experiencing over here in Ireland is similar to the mood amongst European investors. We start the day off in the usual negative territory, something we have become accustomed to over the last few weeks. As the old saying goes when it rains its pours and we have seen negative news multiply around the euro zone over the past couple of days. It started off with Cyprus, and the markets do not seem to happy with the deal that has been reached between the Cypriot Lawmakers and the ECB full details are to be disclosed during the course of the week. On top of this the Italian election has taken over the spotlight again and itr should dominate the headlines as the struggling nation is without a leading government. To add fuel to the fire there has been unconfirmed talk of an Italian downgrade which will come as no shock to investors, but it will undoubtedly compromise confidence within the euro zone.
All of this bad news flow has hit the Euro hard and the pair has come under increased pressure now trading down around the 1.28300 handle.
Over in the US things are very different the US equity market continues to grind higher disregarding all the poor euro zone economic data while it continues on its road higher, trying to breach the historic highs set back in 2007. The SPX is only 2 points off these levels and we expect to see this level breached this week.
We have been talking a lot recently for a market correction to take place, and we are standing by this idea, however it is going to take something a bit bigger than Cyprus to make this happen. It will be interesting to see what the SPX reaction will be when it makes its new high, this coupled with a potential Italian downgrade may be the catalyst we have been waiting for, however as we well know its a dangerous game to try pick a top and the last thing you want to do is stand in the way of the FED and Mr Bernanke, so wait for the set-up and trade your plan.
I would been more focused on the US equity market for the coming days buying any dips while keeping and eye out of the European markets.
@lowkeycapital
Tuesday, 26 March 2013
Morning Update
Who let De-Boom off!!
A complete Market Meltdown after a loose lipped Dijsselbloem claimed Cyrpus was a template for Eurozone Bank Restructuring! This caused a 150 pip drop in the EUR/USD and closer to 300 in EUR/JPY! Then a few hours later he retracted his statement which caused a 10 pip pop in EUR/USD! So the Damage was already done! After the Cyprus deal went through early on Monday morning we saw a rally to 1.3050, combined with the DAX over 8000 and the S&P 500 in the high 1560's, It looked risk on. But from the open of the European markets we saw a steady decline in Risk Assets and a lot of Japanese Yen strength as investors sought Safe-haven flows. Financial and Bank stocks took a hammering with some Italian Banks having to halt trading for periods during the day!
The Dax was down over 200 points from its highs at one stage yesterday after Mr Dijsselboems comments, but recovered some losses after he retracted his comments. USD/JPY sold off from 95 to lows of 93.57 on risk off sentiment, Tripping some huge stops just below the 94 handle, But recovered to close above 94.
The S&P 500 took a nose dive from close to all time highs to reach session lows of 1545, but recovered and closed above 1550.
Yesterday's volatile day just proved how much of a disaster the Eurozone is and that the crisis is far from being resolved. All of the can kicking has resulted in a complete mess and at this rate it looks highly likely that some countries may be forced out of the Eurozone or their good be a realistic break up of the single currency. From a trading perspective a sell the bounce strategy has to be adopted because this nonsense looks like carrying on for a significant length of time with some analysts calling fair value of the EUR/USD at 1.15. That's a 1400 pip drop from the level we trade at now.
The American economy looks very resilient and the S&P 500 looks extremely well supported by Quantitative easing and an abundance of a good economic data. However they cannot avoid the chaos in the Eurozone as the global Financial system is all interlinked and we fear a deeper correction in the American bourses may be inevitable with this ongoing chaos.
Some levels to sell EUR/USD at today are 1.2881, which is the 200 day moving average and if it gets higher the 1.29 handle would be a great sell entry point.
If we see more Yen strength today a firm break of 94.00 in the USD/JPY pair could lead to a deeper correction towards 90 as the pair is extemely overbought and looks set for a correction.
Good luck in the markets!
Lowkey
A complete Market Meltdown after a loose lipped Dijsselbloem claimed Cyrpus was a template for Eurozone Bank Restructuring! This caused a 150 pip drop in the EUR/USD and closer to 300 in EUR/JPY! Then a few hours later he retracted his statement which caused a 10 pip pop in EUR/USD! So the Damage was already done! After the Cyprus deal went through early on Monday morning we saw a rally to 1.3050, combined with the DAX over 8000 and the S&P 500 in the high 1560's, It looked risk on. But from the open of the European markets we saw a steady decline in Risk Assets and a lot of Japanese Yen strength as investors sought Safe-haven flows. Financial and Bank stocks took a hammering with some Italian Banks having to halt trading for periods during the day!
The Dax was down over 200 points from its highs at one stage yesterday after Mr Dijsselboems comments, but recovered some losses after he retracted his comments. USD/JPY sold off from 95 to lows of 93.57 on risk off sentiment, Tripping some huge stops just below the 94 handle, But recovered to close above 94.
The S&P 500 took a nose dive from close to all time highs to reach session lows of 1545, but recovered and closed above 1550.
Yesterday's volatile day just proved how much of a disaster the Eurozone is and that the crisis is far from being resolved. All of the can kicking has resulted in a complete mess and at this rate it looks highly likely that some countries may be forced out of the Eurozone or their good be a realistic break up of the single currency. From a trading perspective a sell the bounce strategy has to be adopted because this nonsense looks like carrying on for a significant length of time with some analysts calling fair value of the EUR/USD at 1.15. That's a 1400 pip drop from the level we trade at now.
The American economy looks very resilient and the S&P 500 looks extremely well supported by Quantitative easing and an abundance of a good economic data. However they cannot avoid the chaos in the Eurozone as the global Financial system is all interlinked and we fear a deeper correction in the American bourses may be inevitable with this ongoing chaos.
Some levels to sell EUR/USD at today are 1.2881, which is the 200 day moving average and if it gets higher the 1.29 handle would be a great sell entry point.
If we see more Yen strength today a firm break of 94.00 in the USD/JPY pair could lead to a deeper correction towards 90 as the pair is extemely overbought and looks set for a correction.
Good luck in the markets!
Lowkey
Monday, 25 March 2013
Morning Update
Good Morning Traders
So we have finally come to an agreement the game of cat and mouse between the ECB and the Cypriot government seems to be over. The deal was announced early this morning, the deal will hopefully free up aid for the nations ailing finances and the countries banking sector will begin a deep restructuring process. Cyprus will be granted €10bn of emergency loans, and individuals with less than €100k in bank deposit accounts will receive protection under their European principles.As we mentioned last week we were always expecting a deal to be reached and as we saw towards the end of the trading week last week that markets had already priced in a deal, assuming that a solution will be found. On the back of this news we have seen all the European equity markets move into the Green, and the EURUSD traded up at 1.3048, its highest level in two weeks.
We expect to see a rally of some sort in the equity markets on the back of the good news from Cyprus, this will be positive for stocks in the short term and it will put an end to any speculation that we might see the turmoil spill over to other struggling European nations. We expect to see S&P breach its high this week as data from the US has continued to support the strong move we have seen since January. As we mentioned last week, we are beginning to see news headlines out of Italy as they continue in an effort to form a new government, I would expect to see Italy take over the headlines as Cyprus will now be a thing of the past.
Happy Trading
@lowkeycapital
So we have finally come to an agreement the game of cat and mouse between the ECB and the Cypriot government seems to be over. The deal was announced early this morning, the deal will hopefully free up aid for the nations ailing finances and the countries banking sector will begin a deep restructuring process. Cyprus will be granted €10bn of emergency loans, and individuals with less than €100k in bank deposit accounts will receive protection under their European principles.As we mentioned last week we were always expecting a deal to be reached and as we saw towards the end of the trading week last week that markets had already priced in a deal, assuming that a solution will be found. On the back of this news we have seen all the European equity markets move into the Green, and the EURUSD traded up at 1.3048, its highest level in two weeks.
We expect to see a rally of some sort in the equity markets on the back of the good news from Cyprus, this will be positive for stocks in the short term and it will put an end to any speculation that we might see the turmoil spill over to other struggling European nations. We expect to see S&P breach its high this week as data from the US has continued to support the strong move we have seen since January. As we mentioned last week, we are beginning to see news headlines out of Italy as they continue in an effort to form a new government, I would expect to see Italy take over the headlines as Cyprus will now be a thing of the past.
Happy Trading
@lowkeycapital
Friday, 22 March 2013
Irish Weather Technical Foracst
Due the recent downturn in the Irish weather we have compiled the below chart to see exactly what is going on over the last two months in terms of Irish weather. In the below chart we can see the actual precipitation highlighted by the (Green) line and the 5 year average precipitation seen by the (Blue) line. We saw the massive spike up in January as significant rainfall fell across the country. Analysts have stated that this was a short squeeze as the majority of the market were in fact short 'Irish rainfall'. The rainfall was met with warmer and drier conditions around the .65 level and the rainfall retraced back to its normalised levels over the following few days.
Towards the end of January we saw the rainfall consolidating in normalised ranges, with resistance seen by drier spells at the 23.6% retracement from the January high, and the white resistance line overhead. The rainfall spiked a few times during the period however we were unable to get a daily close of rainfall above these levels.
Looking forward, we have seen some increased rainfall over the last 48 hours and last night we got our first daily close (Continued rainfall throughout the course of the day and night) last night. Analysts predict this rainfall to continue characterised by the (Green dotted line), it will be interesting to see if we can break about the 38.2% retracement of the January high. However there is notable drier weather above these levels so levels above here should be seen as genuine selling opportunities with stops positioned above .40 inches.
Happy Trading
@lowKeyCapital
Towards the end of January we saw the rainfall consolidating in normalised ranges, with resistance seen by drier spells at the 23.6% retracement from the January high, and the white resistance line overhead. The rainfall spiked a few times during the period however we were unable to get a daily close of rainfall above these levels.
Looking forward, we have seen some increased rainfall over the last 48 hours and last night we got our first daily close (Continued rainfall throughout the course of the day and night) last night. Analysts predict this rainfall to continue characterised by the (Green dotted line), it will be interesting to see if we can break about the 38.2% retracement of the January high. However there is notable drier weather above these levels so levels above here should be seen as genuine selling opportunities with stops positioned above .40 inches.
Happy Trading
@lowKeyCapital
Morning Update
Good Morning,
Another day of Market Turmoil driven by rumours and rhetoric from every party involved in the Cyprus saga. Yesterday morning saw the release of some Eurozone data in the form of the Manufacturing and Services PMI's. These came in very poorly with France and Germany missing their estimates. This saw the EUR/USD take a leg lower towards the 200 Day Moving Average, the area around 1.28800 is extremely well supported but the bounces are getting shallower and at this rate some more bad developments from Cyprus may have the ammunition to take it out. Expect heavy stop loss selling on a break of this level. On Wednesday night we mentioned a potential trade selling EUR/JPY at 124.3. I hope some of you listened as you would have bagged 230 pips by this stage. The developments in Cyprus have caused the Yen to strengthen significantly against all currencies as traders are using the Yen as a safe haven. Along with an uninspiring speech from Kuroda and the end of Financial year repatriation in Japan we have seen a heavy sell off in EUR/JPY and USD/JPY.
EUR/JPY sits at the 122 handle as i type and USD/JPY at 94.50 just ahead of some large bids.
GBP/USD couldn't add to its strong retail sales results yesteday and sold off with Risk as yesterday progressed. Cable bounced to its first daily fibonacci retracement at 1.5209 and sold off perfectly after this. This was the 23.6% retracement of the drop from 1.6377 to 1.4844 and was always going to be sold on the first touch of this important resistance. This morning cable is approaching the 1.52 handle again and some Dollar weakness may give it a boost in the short term and a break of 1.521 will allow cable to get to 1.54330 fairly quickly as it is only fresh air between these two levels.
Quite a quiet day on the Economic calendar, we see the release of the German business expectations for March at 9 GMT and the details of the LTRO repayments at 11 GMT. A strong reading may give the Euro a bounce but the market is revolving around Cyrus so expect it to be short lived.
The S&P 500 had a big down day yesterday closing at 1546, trades at 1544 as I type having been as low as 1541 in overnight trade. It has been stuck in a range between 1538 and 1563, and a break of 1538 would open up 1530 and 1519 on the downside.
These markets are extremely choppy and working off news and rumours so we would advise stops to be kept very tight as the swings are extremely volatile. Find well supported area's and take a position accordingly.
Good luck in the Markets and enjoy your weekend.
Lowkey
Thursday, 21 March 2013
Cyprus In Comparsion
We have all heard headlines about Cyprus over the last few days, but what do we really know about the Cyprian stock exchange and its components? Below are the individual equities that make up the index including weightings, umber of shares and share price. It is a relatively small index due to the small size and population of the economy itself. The stock index is going to come under increased pressure the longer the discussions take place.
The Greek stock index is down 82% over the same period.
The Portuguese stock index is down 46% over the same period
The Irish stock exchange is down 39% over the same period
From the above charts it is quite clear that Cyprus is lagging behind the rest of the struggling eurozone regions. Although the stock index is not a clear indication of the performance of an economy it does have some significance and it should be noted. Without the help of the EU I am not sure how Cyprus could survive. It is now up to the EU to decide if it is prepared to keep funding the situation in Cyprus, as it has in Greece, Ireland, Portugal and Spain. That decision we will inevitably find out over the coming days.
If we look at the performance of the index going back to its high in June 2008 the index itself is down by 97.3% illustrated by the (pink) price change in the below graph. We will put this in comparative terms with a few of the other struggling eurozone states.
The Greek stock index is down 82% over the same period.
The Portuguese stock index is down 46% over the same period
The Irish stock exchange is down 39% over the same period
From the above charts it is quite clear that Cyprus is lagging behind the rest of the struggling eurozone regions. Although the stock index is not a clear indication of the performance of an economy it does have some significance and it should be noted. Without the help of the EU I am not sure how Cyprus could survive. It is now up to the EU to decide if it is prepared to keep funding the situation in Cyprus, as it has in Greece, Ireland, Portugal and Spain. That decision we will inevitably find out over the coming days.
GOLD UPDATE
As we have noted in previous blogs Gold is trading in interesting territory above the $1600 handle. We will be looking to see if it respects the 55MDA at $1632 before making a move back to the level we are looking to enter a long position $1525. This level has proven as a major support level highlighted by 4 previous touches which were all bought up. If we get to this level we expect to see a significant move to the upside targeting new highs and the $2000 level.
EURJPY UPDATE
Quick look at the EURJPY pair as we see BOJ governor Kuroda speak. There is a bullish flag forming which would be normally be seen as a bullish formation, however I would like to draw your attention to the lower high made, I think there could be some downside risk if we see a breakout below the flag.
EURUSD UPDATE
The EURUSD pair is currently being supported by the 200MDA level. We would be looking for this level to hold off the back of the poor PMI data that we have seen this morning. If this level is breached we could see some significant downside.
Good Morning Traders
Where to begin? This week has been the polar to last week, trading conditions have really improved and the increased volatility brought about by developments in Cyprus have given large range moves ideal for traders. All eyes will be on the eurogroup head Dijs-Selbloem as he updates Cypriate lawmakers at 8am. Lenders in Cyprus will remain closed until March 26 in an effort to prevent a bank run and to give a few extra days to try and come to some form of agreement. Following on from this we will more than likely see the ECB delay its decision on whether to continue supplying emergency funds to the troubled region. As we touched on during the week, we do not believe that the ECB will consider adopting this aggressive strategy with Cyprus and we think a deal will be reached to satisfy both parties. Although Cyprus is taking up all the headlines, there will be some movement in Italy as leaders of Italy's Five Star Movement will meet Giorgio Napolitano today as the president seeks to find a government.
Across the water yesterday, we saw US stocks take another leg to the upside after the Federal Reserve wrapped up its monthly policy meeting with continued assurance that it would continue to support the US economy through its QE programme until 6.5% unemployment is reached. This will put an end to all of the speculative 'End of QE' sell-offs that we have seen off the back of good data out of the US, and all positive data should be seen as a genuine buying opportunity going forward. Investors have rediscovered their appetite for riskier assets as concerns about the situation in Cyprus are now being overlooked and focus has now been directed back to the improving US economy. If we take the turmoil in the EU out of the situation and treat it as a speed bump in the move higher the global economy is in fact improving and growth has begun to stabilise highlighted by the improvement in Chinese manufacturing which beat analysts expectations overnight.
In terms of today's trading, the morning session is likely to be dominated by the eurozone PMI data, and this should give short term direction. We are likely to see the US session make another leg to the upside, and that all time high on the SPX is now in sight, and we wouldn't be surprised to see it taken out over the coming week. When we see this level breached I think then we will be in a position to start looking for the correction, to take the overbought signals out of the market. At present the VIX (Volatility Index) is trading around its all time low levels suggesting that fear levels amongst traders are at an all time low.
Happy Trading
@lowkeyCapital
Where to begin? This week has been the polar to last week, trading conditions have really improved and the increased volatility brought about by developments in Cyprus have given large range moves ideal for traders. All eyes will be on the eurogroup head Dijs-Selbloem as he updates Cypriate lawmakers at 8am. Lenders in Cyprus will remain closed until March 26 in an effort to prevent a bank run and to give a few extra days to try and come to some form of agreement. Following on from this we will more than likely see the ECB delay its decision on whether to continue supplying emergency funds to the troubled region. As we touched on during the week, we do not believe that the ECB will consider adopting this aggressive strategy with Cyprus and we think a deal will be reached to satisfy both parties. Although Cyprus is taking up all the headlines, there will be some movement in Italy as leaders of Italy's Five Star Movement will meet Giorgio Napolitano today as the president seeks to find a government.
Across the water yesterday, we saw US stocks take another leg to the upside after the Federal Reserve wrapped up its monthly policy meeting with continued assurance that it would continue to support the US economy through its QE programme until 6.5% unemployment is reached. This will put an end to all of the speculative 'End of QE' sell-offs that we have seen off the back of good data out of the US, and all positive data should be seen as a genuine buying opportunity going forward. Investors have rediscovered their appetite for riskier assets as concerns about the situation in Cyprus are now being overlooked and focus has now been directed back to the improving US economy. If we take the turmoil in the EU out of the situation and treat it as a speed bump in the move higher the global economy is in fact improving and growth has begun to stabilise highlighted by the improvement in Chinese manufacturing which beat analysts expectations overnight.
In terms of today's trading, the morning session is likely to be dominated by the eurozone PMI data, and this should give short term direction. We are likely to see the US session make another leg to the upside, and that all time high on the SPX is now in sight, and we wouldn't be surprised to see it taken out over the coming week. When we see this level breached I think then we will be in a position to start looking for the correction, to take the overbought signals out of the market. At present the VIX (Volatility Index) is trading around its all time low levels suggesting that fear levels amongst traders are at an all time low.
Happy Trading
@lowkeyCapital
Wednesday, 20 March 2013
Cyprus Chaos
Cyprus Chaos
I wanted to give investors a quick review of the Cyprus situation. As noted in the weekly review I had speculated that things in Cyprus might in fact begin to heat up and low and behold that is exactly what has happened. I am sure you have all read different headlines about the situation but lets just take a quick look and see what exactly is going on.
Over the weekend it became clear that Cyprus was in need of a €10bn bailout, the euro- area finance ministers conducted an emergency meeting to try and hammer out a deal to support the Cyprus economy. The deal deal sought to raise €5.8bn by selling government assets, raising corporate taxes and drawing funds from Cyprus bank accounts in exchange for €10bn in external aid.
Under the plan, deposits of less than €100k would be subject to a proposed 3% tax, deposits between €100-€150k would be subject to a €10% tax and deposits in excess of €150k would be subject to a 12% tax. Although Cyprus only accounts for .25% of euro-zone GDP, fear of contagion has caused markets to act in a defensive manner. Investors are not really too concerned what happens in Cyprus itself, they are reacting to the ‘What if factor’, what if this spread to other euro-zone countries such as Spain, Italy, Greece even Ireland.
The banks in Cyprus have been closed until Thursday to prevent a ‘Bank Run’, if no deal is reached before then we could expect to see this delayed until Friday or maybe even some day next week.
Last night the situation took a turn for the worst as Lawmakers in Cyprus rejected the proposed bailout deal. Protesters cheered outside parliament building as lawmakers voted against the proposal by 36 votes to none in favour of rejecting the deal. They are cheering now and I don’t blame them, but this does not send a good message back to the eurozone finance ministers. The big question now is whether the ECB consider the situation untenable? If it does, it has the ability to refuse the provision of further liquidity to Cyprus. To date the ECB has continued to remain optimistic about the ability to hammer out a deal, and prevent contagion across the eurozone.
We will continue to see this dilemma play out for the coming days, and in all likelihood some form of deal will inevitably be hammered out. For investors the longer this draws out the more of an impact it will have across financial markets, we have seen the euro currency come under increased pressure and until a deal is reached this will continue. I would keep an eye on the developments throughout the course of the next few days and watch defensive assets such as government bonds and gold as investors may look to move money out of equity markets.
Breakfast Blog
Good Morning Traders,
As we mentioned last night it really was a crazy day yesterday with the Market revolving Completely around the saga in Cyprus and the threat of possible contagion. What is going to happen now....will Russia bail them out? Will the ECB? A potential exit from the Eurozone? If they leave the Eurozone does this set a benchmark for other struggling countries to do the same? These are all questions that the market needs answers for and until we have some answers their will be no direction. The Market will simply switch from Risk on to Risk off depending on what news we see regarding the situation.
We saw the S&P 500 sell off to 1538 yesterday afternoon but this dip was quickly bought and sits at 1554 now in the premarket as i type. The EUR/USD hit 3 month lows at 1.2844 yesterday as it traded below the 200 Day Moving Average briefly but caught a bid tone later in the day and sits at the 1.29 handle now waiting for a catalyst to give it direction.
We don't have much news today during the European session except for the U.K. budget speech and minutes from the last BOE meeting and Unemployment change so expect the pound to be lively during this news. Sterling undoubtedly has further downside considering their new Governor Mark Carney's fiscal mantra towards further easing. However we are looking for a level closer to 1.52 to enter a short position not the 1.508 spot price we have now.
This evening we have the FOMC minutes and Ben Bernanke speaking so this will be very volatile for the Dollar and the Equity Indices. The Market is classifying this as a big risk event given the incredibly strong U.S. Data we have seen throughout the first 10 weeks of 2013 and their has been whispers of a an early exit or tapering of the quantitative easing program. This will quite simply not happen and the Market still doesn't realise it. The Fed will simply keep plowing ahead with 85 Billion a month in Asset purchases until we see the unemployment rate drop to 6% or very close to this. America simply can not risk taking liquidity out of the system at this stage when other countries are burning their currencies. A good strategy to adopt for the upcoming months is to fade any "No QE" move for example a sell off in Gold or Equities.
Some levels to look out for on the EUR/USD are 1.2920 topside and the 200 Day MA at 1.2875 on the downside, but the Market is trading on Macro developments today so technical levels may not be very effective.
Good luck in the Markets
Lowkey
As we mentioned last night it really was a crazy day yesterday with the Market revolving Completely around the saga in Cyprus and the threat of possible contagion. What is going to happen now....will Russia bail them out? Will the ECB? A potential exit from the Eurozone? If they leave the Eurozone does this set a benchmark for other struggling countries to do the same? These are all questions that the market needs answers for and until we have some answers their will be no direction. The Market will simply switch from Risk on to Risk off depending on what news we see regarding the situation.
We saw the S&P 500 sell off to 1538 yesterday afternoon but this dip was quickly bought and sits at 1554 now in the premarket as i type. The EUR/USD hit 3 month lows at 1.2844 yesterday as it traded below the 200 Day Moving Average briefly but caught a bid tone later in the day and sits at the 1.29 handle now waiting for a catalyst to give it direction.
We don't have much news today during the European session except for the U.K. budget speech and minutes from the last BOE meeting and Unemployment change so expect the pound to be lively during this news. Sterling undoubtedly has further downside considering their new Governor Mark Carney's fiscal mantra towards further easing. However we are looking for a level closer to 1.52 to enter a short position not the 1.508 spot price we have now.
This evening we have the FOMC minutes and Ben Bernanke speaking so this will be very volatile for the Dollar and the Equity Indices. The Market is classifying this as a big risk event given the incredibly strong U.S. Data we have seen throughout the first 10 weeks of 2013 and their has been whispers of a an early exit or tapering of the quantitative easing program. This will quite simply not happen and the Market still doesn't realise it. The Fed will simply keep plowing ahead with 85 Billion a month in Asset purchases until we see the unemployment rate drop to 6% or very close to this. America simply can not risk taking liquidity out of the system at this stage when other countries are burning their currencies. A good strategy to adopt for the upcoming months is to fade any "No QE" move for example a sell off in Gold or Equities.
Some levels to look out for on the EUR/USD are 1.2920 topside and the 200 Day MA at 1.2875 on the downside, but the Market is trading on Macro developments today so technical levels may not be very effective.
Good luck in the Markets
Lowkey
Tuesday, 19 March 2013
Evening Review
3 words for today! Crazy Cyprus Carnage! Gold up, Bonds Up, USD up and Dow Jones up!! I don't think this has ever been seen before! Various rumours about resignations, deposit chit chat and ECB rhetoric dogged the market today, an early morning sell off found a bid tone as America woke up but as the afternoon unfolded, stocks went red and the Euro got a hammering. EUR/USD breached the 200 Day Moving Average but rallied late on the No vote to close above the level and just under the 1.29 handle! We saw the S&P 500 sell off to 1538 but found a bid at the same time as the Euro to close at 1548 and of course Wall street had to go green just before the closing bell! A mad day by all accounts with some volatile price action which we will undoubtedly see for the rest of the week until we have a conclusion to this deposit tax.The EUR/GBP had a similar tone as it broke through the 55-day moving average at 0.8517 and then rebounded to 0.8537. The short-term breakouts leave a mixed technical picture with the verdict likely in the day ahead.
As worries mounted about Cyprus the market bought yen, knocking USD/JPY below bids at 95.00 and down to 94.72 before it rebounded to 95.07.
It was a volatile day full of major headline pitfalls but overall moves were relatively small as the market comes to terms with Cyprus’ tiny size of 0.2% of total Eurozone GDP.
Enjoy your evening, Get some sleep, might be useful for the rest of the week
Lowkey
Good Morning Traders
We touched on some of the major news that took place yesterday in our evening market update last night, but we will cover the over night developments in this mornings blog. It looks like all eyes will be on Cyprus again today as the Euro-area finance ministers have told Cyprus to raise €5.8bn from bank deposits. As we all know the suggested tax levy has lead to drastic protests within Cyprus and residents seem to be very unhappy with the current proposals which can be seen below:
Cyprus Proposed Deposit Tax
Deposits < €100k subject to 3% tax
Deposits €100k- 150k subject to 10% tax
Deposits > €150k subject to 12% tax.
The Cyprian lawmakers have been given until 4pm today to vote on how they plan on spreading the burden. There has been speculation that depositors will be compensated with income from the sale of government owned gas. As traders we take a look at the market reaction to the news and put it into relative context, Cyprus accounts for less that .25% of the Euro areas GDP, so the market reaction yesterday I believe was more due to the prospect that this tax could be imposed somewhere more serious. eg. (Spain, Italy, Greece, Ireland). It is important that depositors are protected to calm the shock waves rippling through the euro area today. In terms of market reaction to the news we saw a pull-back in the EURUSD as it traded under the 1.29 handle we are currently trading up above this level but the pair has been relatively quiet since the Cyprus news yesterday and we don't expect to see much volatility until further news is released in relation to the proposed deal.
In terms of the equity markets in the US this 'Cyprus Sell-Off' was seen as a genuine buying opportunity for US investors attracted by these cheap levels, with the SPX trading down around the 1545 handle. As we have seen over the past few weeks there has been increased talk and discussion about the correction and the fact that the markets are overbought, while I do agree with the above I think we are going to need something significant to drag us off this top. It is in my opinion going to be something a little bigger than Cyprus, but we have come a long way in a short period of time so the longer we stall at these levels the more nervous investors become and we would expect to see some profit taking.
I would just like to draw you attention to two interesting charts that have caught my eye this morning. The first is GBPUSD the GBP has lost its relative strength against its major pairs but most notably the USD. Tomorrow we will see the UK budget released and this could really move the pair. We had previously advised that we have been waiting on a retracemenet back to the 1.52 level before shorting the pair and we are nearly there at the time of writing. We would see a short term price target of 1.45.
The next thing that I have been keeping a close eye on is $AAPL up $12 in yesterdays trading session. This has been its largest gain since it began descending off its $700 top. It managed to close above the $455 level which was very significant for traders as the equity was well supported into the close. This level will be seen as a support level and it will be interesting to see if the stock can add to gains in today's trading session. Also it is important for traders to be aware how significant as a core component driver to the SPX, so if you see AAPL making a move to the upside don't be surprised to see the SPX making gains.
Happy Trading
@lowkeycapital
We touched on some of the major news that took place yesterday in our evening market update last night, but we will cover the over night developments in this mornings blog. It looks like all eyes will be on Cyprus again today as the Euro-area finance ministers have told Cyprus to raise €5.8bn from bank deposits. As we all know the suggested tax levy has lead to drastic protests within Cyprus and residents seem to be very unhappy with the current proposals which can be seen below:
Cyprus Proposed Deposit Tax
Deposits < €100k subject to 3% tax
Deposits €100k- 150k subject to 10% tax
Deposits > €150k subject to 12% tax.
The Cyprian lawmakers have been given until 4pm today to vote on how they plan on spreading the burden. There has been speculation that depositors will be compensated with income from the sale of government owned gas. As traders we take a look at the market reaction to the news and put it into relative context, Cyprus accounts for less that .25% of the Euro areas GDP, so the market reaction yesterday I believe was more due to the prospect that this tax could be imposed somewhere more serious. eg. (Spain, Italy, Greece, Ireland). It is important that depositors are protected to calm the shock waves rippling through the euro area today. In terms of market reaction to the news we saw a pull-back in the EURUSD as it traded under the 1.29 handle we are currently trading up above this level but the pair has been relatively quiet since the Cyprus news yesterday and we don't expect to see much volatility until further news is released in relation to the proposed deal.
In terms of the equity markets in the US this 'Cyprus Sell-Off' was seen as a genuine buying opportunity for US investors attracted by these cheap levels, with the SPX trading down around the 1545 handle. As we have seen over the past few weeks there has been increased talk and discussion about the correction and the fact that the markets are overbought, while I do agree with the above I think we are going to need something significant to drag us off this top. It is in my opinion going to be something a little bigger than Cyprus, but we have come a long way in a short period of time so the longer we stall at these levels the more nervous investors become and we would expect to see some profit taking.
I would just like to draw you attention to two interesting charts that have caught my eye this morning. The first is GBPUSD the GBP has lost its relative strength against its major pairs but most notably the USD. Tomorrow we will see the UK budget released and this could really move the pair. We had previously advised that we have been waiting on a retracemenet back to the 1.52 level before shorting the pair and we are nearly there at the time of writing. We would see a short term price target of 1.45.
The next thing that I have been keeping a close eye on is $AAPL up $12 in yesterdays trading session. This has been its largest gain since it began descending off its $700 top. It managed to close above the $455 level which was very significant for traders as the equity was well supported into the close. This level will be seen as a support level and it will be interesting to see if the stock can add to gains in today's trading session. Also it is important for traders to be aware how significant as a core component driver to the SPX, so if you see AAPL making a move to the upside don't be surprised to see the SPX making gains.
Happy Trading
@lowkeycapital
Monday, 18 March 2013
Evening review
Good Evening
We are coming to you a little later than usual due to the bank holiday here in Ireland, but we decided just to post a short review of what went on in today's trading session across the globe. It was an unusual start to the day we saw Cyprus making all the headlines with talk of an unprecedented levy on bank deposits. The president Nicos Anastasiades appealed to lawmakers to ratify the levy today. Just to have a quick glimpse at the proposal, and no wonder there was worries of a bank run;
Cyprus Proposed Deposit Tax
Deposits < €100k subject to 3% tax
Deposits €100k- 150k subject to 10% tax
Deposits > €150k subject to 12% tax.
The Euro currency was hit hard overnight and during the morning session along with European equity markets as uncertainty entered the frame. As expected the initial panic was all forgotten about when the US participants commenced trading and it was seen as a genuine buying opportunity as the $SPX traded down at 1545 prior to the opening bell. It is amazing to see the reaction to such news when put into context Cyprus accounts for less than .25% of the Euro areas GDP. I think we are going to need more the Cyprus to bring the correction into the market. The US equities want to continue going higher and unless something drastic happens that's the way its going to be. We are expecting to hear more in relation to the Italian election during the course of the week which may also send a few shock waves across the markets but unless we see some hardcore negative data it looks as though higher highs is the likelihood. I would also like to flag that we do envisage a correction in the coming weeks, as markets remain in overbought territory and we have seen a significant move in defensive assets (Gold) and Yen strength coming to light, but as we know its impossible to pick a top.
@Lowkeycapital
We are coming to you a little later than usual due to the bank holiday here in Ireland, but we decided just to post a short review of what went on in today's trading session across the globe. It was an unusual start to the day we saw Cyprus making all the headlines with talk of an unprecedented levy on bank deposits. The president Nicos Anastasiades appealed to lawmakers to ratify the levy today. Just to have a quick glimpse at the proposal, and no wonder there was worries of a bank run;
Cyprus Proposed Deposit Tax
Deposits < €100k subject to 3% tax
Deposits €100k- 150k subject to 10% tax
Deposits > €150k subject to 12% tax.
The Euro currency was hit hard overnight and during the morning session along with European equity markets as uncertainty entered the frame. As expected the initial panic was all forgotten about when the US participants commenced trading and it was seen as a genuine buying opportunity as the $SPX traded down at 1545 prior to the opening bell. It is amazing to see the reaction to such news when put into context Cyprus accounts for less than .25% of the Euro areas GDP. I think we are going to need more the Cyprus to bring the correction into the market. The US equities want to continue going higher and unless something drastic happens that's the way its going to be. We are expecting to hear more in relation to the Italian election during the course of the week which may also send a few shock waves across the markets but unless we see some hardcore negative data it looks as though higher highs is the likelihood. I would also like to flag that we do envisage a correction in the coming weeks, as markets remain in overbought territory and we have seen a significant move in defensive assets (Gold) and Yen strength coming to light, but as we know its impossible to pick a top.
@Lowkeycapital
Friday, 15 March 2013
Morning Update
Good Morning Traders
Looks like the upward momentum in the equity markets will continue after we saw positive data from the US in yesterdays afternoon session. The initial jobless claims came in at 332k lower than the analysts expectations of 350k, this signals that growth is in fact improving in the US although not a leading indicator it is a good measure of the unemployment rate in the US. We saw an initial sell off on the back of these good figures and yet again we thought we might be seeing traders play the 'End of QE' sell-off but this sell off was short lived and the shallow dip was immediately bought. The $SPX traded as high as 1565 and the $DOW in new territory at 14550. As we have been saying all week this market is in very overbought territory and a correction is needed to neutralise the market however you can only trade what is in front of you and these markets want to keep moving higher. Today's trading day is known as 'Triple Witching' which means that contracts for stock futures, stock index options and stock options all expire on the same day. Triple witching days happen four times a year on the third Friday of March, June, September and December. It is regarded as an unusual trading day and markets can tend to active irrationally and make drastic moves, so it is best to keep trade sizes small and use tight stops. However, this morning we continue in RiskOn mode, the equity markets are opening up in the green this morning so expect continued upward momentum unless something drastic happens.
In terms of the FX markets we saw some interesting moves taking place yesterday in both the EURUSD and GBPUSD pairs. Cable led the charge breaking about the 1.50 handle and trading up at 1.51240 at the time of writing, this in turn gave a boost to the EURUSD and we saw the pair break above the 1.30 handle and trade as high as 1.30400 overnight. This drastic move was a direct result of what is know by traders as a short squeeze, this take place when a large percentage of the market have active short positions and orders to short a market in a predominant down trend. The market finds support at a particular level and bounces slightly, the stronger the bounce the more stops it trips and this causes the market to move in an explosive manor.
In terms of what we are looking out for in the FX market: We are looking to keep a close eye on the GBPUSD pair. The pair has been trending down very nicely over the past couple of months and it looks to have formed a bottom around the 1.48389 level, the GBP weakness is a direct result of the BOE's monetary policy to adapt their own style of QE to stimulate the economy obviously this has a negative effect on the GBP currency as it becomes devalued in relative terms against other currencies in this case the USD. We are looking for a pull back to the 1.5196-52 level to re-enter a short position targeting 1.42 in the long run.
For trading updates follow us @lowkeycapital
Looks like the upward momentum in the equity markets will continue after we saw positive data from the US in yesterdays afternoon session. The initial jobless claims came in at 332k lower than the analysts expectations of 350k, this signals that growth is in fact improving in the US although not a leading indicator it is a good measure of the unemployment rate in the US. We saw an initial sell off on the back of these good figures and yet again we thought we might be seeing traders play the 'End of QE' sell-off but this sell off was short lived and the shallow dip was immediately bought. The $SPX traded as high as 1565 and the $DOW in new territory at 14550. As we have been saying all week this market is in very overbought territory and a correction is needed to neutralise the market however you can only trade what is in front of you and these markets want to keep moving higher. Today's trading day is known as 'Triple Witching' which means that contracts for stock futures, stock index options and stock options all expire on the same day. Triple witching days happen four times a year on the third Friday of March, June, September and December. It is regarded as an unusual trading day and markets can tend to active irrationally and make drastic moves, so it is best to keep trade sizes small and use tight stops. However, this morning we continue in RiskOn mode, the equity markets are opening up in the green this morning so expect continued upward momentum unless something drastic happens.
In terms of the FX markets we saw some interesting moves taking place yesterday in both the EURUSD and GBPUSD pairs. Cable led the charge breaking about the 1.50 handle and trading up at 1.51240 at the time of writing, this in turn gave a boost to the EURUSD and we saw the pair break above the 1.30 handle and trade as high as 1.30400 overnight. This drastic move was a direct result of what is know by traders as a short squeeze, this take place when a large percentage of the market have active short positions and orders to short a market in a predominant down trend. The market finds support at a particular level and bounces slightly, the stronger the bounce the more stops it trips and this causes the market to move in an explosive manor.
In terms of what we are looking out for in the FX market: We are looking to keep a close eye on the GBPUSD pair. The pair has been trending down very nicely over the past couple of months and it looks to have formed a bottom around the 1.48389 level, the GBP weakness is a direct result of the BOE's monetary policy to adapt their own style of QE to stimulate the economy obviously this has a negative effect on the GBP currency as it becomes devalued in relative terms against other currencies in this case the USD. We are looking for a pull back to the 1.5196-52 level to re-enter a short position targeting 1.42 in the long run.
For trading updates follow us @lowkeycapital
Thursday, 14 March 2013
Breakfast Blog
Happy Thursday Traders ,
That's 9 up day's from 9 sessions for the Dow Jones 30, the longest winning streak in nearly 20 years and another all time closing high 14460! When will this rally end! But another thing to note is that yesterday was the lowest volume today of the year, so institutional and smart money are obviously sitting on the sidelines as they are not prepared to have a position with the Equity market too over extended to take a long position and with no bad news on the horizon to allow it to correct properly.
The Markets this week have take a real breather and can not seem to find a direction after the brilliant trend we have had for the first couple of months in 2013.
Yesterday saw the release of U.S. retail sales which came in at 1.0% from a estimate of 0.2%! This added to Dollar strength and tanked the EUR/USD to new 2013 year lows at 1.2920 from session highs of 1.307 earlier in the session. At this rate we reckon a test of the 200 Day Moving Average at 1.2850 may well be on the cards sooner rather then later. The downside area from 1.29 through to 1.28 will be extremely well protected by Asian central banks and Sovereigns protecting big DNT option interest and will likely be defended aggressively. We believe a Long EUR/USD trade could be prove a high probability set up with an entry point somewhere between 1.29 and the 200 Day MA at 1.2850 with a stop below 1.28 targeting 1.33.
Overnight we saw some extremely strong Australian Data which has given a boost to all the commodity Currencies and Commodities in general. This has led to a risk on sentiment across all asset classes this morning with the DAX at 8040 as I type and Bund futures at their lows. We have also seen a tightening in Italian and Spanish Bond spreads over the German bench mark and the Italian FTSE MIB the notable outperformer up nearly 1% in early trade.
A fairly sparse week for data releases and today is no exception with the only notable tier 1 data from the States being the weekly initial jobless claims.
Some notable levels to look out for on the EUR/USD today are 1.2920 downside and 1.2980-1.30 topside.
USD/JPY has broken out again this morning and we would look for a pull back again towards 95 before entering a long targeting 99 but the pull backs are shallow as the trend is so strong.
We have illustrated some technicals on our Bloomberg to show the entry point we are waiting for to trigger a long EUR/USD Position. You can see the 50% Fibonacci retracement of the rally from July to February co-inciding with the 200 Day Moving Average. The exit point of 2/3 of this the trade would be 1.3266 and leaving the additional 1/3 to run targetting 1.33-1.34 with the stop loss being adjusted to 1.3180 once 1.3266 has been hit.
Good luck in the Markets
That's 9 up day's from 9 sessions for the Dow Jones 30, the longest winning streak in nearly 20 years and another all time closing high 14460! When will this rally end! But another thing to note is that yesterday was the lowest volume today of the year, so institutional and smart money are obviously sitting on the sidelines as they are not prepared to have a position with the Equity market too over extended to take a long position and with no bad news on the horizon to allow it to correct properly.
The Markets this week have take a real breather and can not seem to find a direction after the brilliant trend we have had for the first couple of months in 2013.
Yesterday saw the release of U.S. retail sales which came in at 1.0% from a estimate of 0.2%! This added to Dollar strength and tanked the EUR/USD to new 2013 year lows at 1.2920 from session highs of 1.307 earlier in the session. At this rate we reckon a test of the 200 Day Moving Average at 1.2850 may well be on the cards sooner rather then later. The downside area from 1.29 through to 1.28 will be extremely well protected by Asian central banks and Sovereigns protecting big DNT option interest and will likely be defended aggressively. We believe a Long EUR/USD trade could be prove a high probability set up with an entry point somewhere between 1.29 and the 200 Day MA at 1.2850 with a stop below 1.28 targeting 1.33.
Overnight we saw some extremely strong Australian Data which has given a boost to all the commodity Currencies and Commodities in general. This has led to a risk on sentiment across all asset classes this morning with the DAX at 8040 as I type and Bund futures at their lows. We have also seen a tightening in Italian and Spanish Bond spreads over the German bench mark and the Italian FTSE MIB the notable outperformer up nearly 1% in early trade.
A fairly sparse week for data releases and today is no exception with the only notable tier 1 data from the States being the weekly initial jobless claims.
Some notable levels to look out for on the EUR/USD today are 1.2920 downside and 1.2980-1.30 topside.
USD/JPY has broken out again this morning and we would look for a pull back again towards 95 before entering a long targeting 99 but the pull backs are shallow as the trend is so strong.
We have illustrated some technicals on our Bloomberg to show the entry point we are waiting for to trigger a long EUR/USD Position. You can see the 50% Fibonacci retracement of the rally from July to February co-inciding with the 200 Day Moving Average. The exit point of 2/3 of this the trade would be 1.3266 and leaving the additional 1/3 to run targetting 1.33-1.34 with the stop loss being adjusted to 1.3180 once 1.3266 has been hit.
Wednesday, 13 March 2013
Morning Update
Good Morning Traders...
So we look to be stalled at the top for the time being, we have seen a significant change in sentiment across the equity markets and we don't seem to have the same degree of buying in the market as we have had over the last few weeks. We have been trading in a tight sideways range this week and and yesterdays trading session was almost identical to Mondays trading day where we saw a slight pull back only to be bought up, but yet again there seems to be a top in place for the short term. The $SPX looks to have made a top at the 1557 level while the $DOW continues to grind slightly higher into new highs we have seen a top at 14479. In the European session, it looked as though things were shaping up for a correction, and there was talk across the social media sites that yesterday might have been the day where we saw so money taken off the table as uncertainty crept into the market. This was largely based on a few factors, we saw a significant move in Gold which now trades above the 1592 handle, copper continued to fall and the divergence between $SPX and Copper is now quite significant on all time frames (Copper is the leading indicator for $SPX and it has corrected 10% in February ) and finally we saw some Yen strength in the market. However after a slight move to the downside in the afternoon session we saw that the dip was yet again bought up. I would like to draw people attention to the strength and the volume behind these short lived rallies, they lack momentum and this would suggest to me that these dips are being bought by retail investors which to most is an obvious sign that the 'Top' is near. As we know it is a dangerous game trying to call or pick a top so we might just have to wait on the sidelines until we get some drastic news that might ignite the correction.
In terms of the FX market we have seen the EURUSD pair move well above the 1.30 handle and as we mentioned in a previous blog, we think the pair is on it way to 1.33100 to complete the H&S formation on the daily chart. We have seen GBPUSD struggle over the last few weeks and it currently trades below the 1.50 handle however it has now moved back up to 1.49400 from its low of 1.48389, this pair will try and grind higher there is talk of it getting back to the 1.51-1.52 handle before making the next leg lower targeting 1.42. There are a lot of macroeconomic factors driving this pair lower and if the BOE continue to put to foot on the gas in terms of printing these levels may not be far away.
In terms of what to look out for today, we have EU Industrial production this morning followed by US retail sales this afternoon, with the lack of news flow this week these headlines could determine market direction for the course of the day.
So we look to be stalled at the top for the time being, we have seen a significant change in sentiment across the equity markets and we don't seem to have the same degree of buying in the market as we have had over the last few weeks. We have been trading in a tight sideways range this week and and yesterdays trading session was almost identical to Mondays trading day where we saw a slight pull back only to be bought up, but yet again there seems to be a top in place for the short term. The $SPX looks to have made a top at the 1557 level while the $DOW continues to grind slightly higher into new highs we have seen a top at 14479. In the European session, it looked as though things were shaping up for a correction, and there was talk across the social media sites that yesterday might have been the day where we saw so money taken off the table as uncertainty crept into the market. This was largely based on a few factors, we saw a significant move in Gold which now trades above the 1592 handle, copper continued to fall and the divergence between $SPX and Copper is now quite significant on all time frames (Copper is the leading indicator for $SPX and it has corrected 10% in February ) and finally we saw some Yen strength in the market. However after a slight move to the downside in the afternoon session we saw that the dip was yet again bought up. I would like to draw people attention to the strength and the volume behind these short lived rallies, they lack momentum and this would suggest to me that these dips are being bought by retail investors which to most is an obvious sign that the 'Top' is near. As we know it is a dangerous game trying to call or pick a top so we might just have to wait on the sidelines until we get some drastic news that might ignite the correction.
In terms of the FX market we have seen the EURUSD pair move well above the 1.30 handle and as we mentioned in a previous blog, we think the pair is on it way to 1.33100 to complete the H&S formation on the daily chart. We have seen GBPUSD struggle over the last few weeks and it currently trades below the 1.50 handle however it has now moved back up to 1.49400 from its low of 1.48389, this pair will try and grind higher there is talk of it getting back to the 1.51-1.52 handle before making the next leg lower targeting 1.42. There are a lot of macroeconomic factors driving this pair lower and if the BOE continue to put to foot on the gas in terms of printing these levels may not be far away.
In terms of what to look out for today, we have EU Industrial production this morning followed by US retail sales this afternoon, with the lack of news flow this week these headlines could determine market direction for the course of the day.
Tuesday, 12 March 2013
Breakfast Blog
Good Morning Traders,
A Quiet start to the week yesterday but it still gave us a new all time high in the Dow Jones 30 and a new YTD high in the S&P 500 at 1556. The market is still drifting upwards on low volume and maximum complacency and with the market so close to the all time highs of 1576 it must be a matter of days not weeks or months before we reach this level. Stocks have been so bullish all year with a rotation from commodities and bonds into the better returns of the stockmarket have given us a parabolic upmove that shows no sign of stopping. Trying to pick the top is a very dangerous game which we would not advise. A buy the dips strategy is the only option until some macro news gives us a reason to switch.
Dollar strength has been one of the main stories in the last 6 weeks as the correlation between a weak dollar and a strong stockmarket was broken and now the two are making new year to date highs together. This shows how bullish the U.S. has become. We would struggle to find anything to not be bullish about in The States this year as their economic data has been extremely impressive and their political situation seems to be coming to a positive conclusion. The strange thing is that any bad news in the upcoming months or unforeseen risk events will most likely cause the dollar to become even stronger. This is all happening in a zero interest rate environment with the Fed printing $85 billion a month and with trillions on its balance sheet!
Yesterday in the Markets was the exact same trend we have seen all year, Sell Yen, Sell Sterling and Buy the American Stock Market! Getting a bit boring isn't it! The move in USD/GBP happened in the morning when it broke through the 1.49 handle and posted new year lows of 1.4867, their was no follow through and when the stock market started to rise in the early afternoon it came off its lows and re took the 1.49 handle. This is a pair that is extremely oversold and will most likely have to bounce to 1.52 before we consider entering another short position. USD/JPY traded in a 20 pip range for most of the Asian session and into the European morning but found a pulse when the S&P 500 broke back through 1550 and made its way to highs of 96.7 in the late evening as rumours of more easing from the BOJ were seen.
The EUR/USD is sidelined and is trading in a range between 1.305 and 1.297 and may continue like this until we see some additional fundamental news to kick start this pair again. However we believe this pair may be supported very well from the 200 day moving average at 1.284, a weakening Yen and the Dollar index that has is coming to some long term resistance points.
Just an additional note to say that for the rest of the month the U.S. markets open at 13 30 GMT and closes at 8 until the the Europeans catch up with daylight savings at the end of March.
Good luck in the Markets and the very best of Luck in Cheltenham today and for the rest of the week!!!
Lowkey
Monday, 11 March 2013
Good Morning Traders.....
The market today is poised to take a little breather and digest some of the news that we got towards the back end of last week. On Friday we saw the US, the worlds largest economy really starting to to gain momentum on the back of the extremely positive NFP (Non Foreign Payrolls) of 236,000 beating the analysts expectations of 165,000. However it was interesting to see the market reaction to the good news, as some experts were expecting to see a potential 'End Of QE' sell off, however we did see a slight move to the downside in most US equity markets but the reaction was relatively quiet. We did note last week however, that we are coming to levels where we would expect to see some profit taking, we have come a long way in a relatively short period of time, and everyone seems to be talking about the market correction. As it currently stands all the dips are being seen as a buying opportunity, but I have a feeling that we are beginning to see retail investors enter the frame, and as we all know as soon as this happens, a change in direction is never far away.
In terms of this week we started off the morning with data out of Germany, exports rose 1.4% in January for the second monthly. Overnight China's industrial output had the worst start of the year since 2009, this has not been the first time we have seen Chinese data lag behind the rest of the worlds economies and this remains as a slight cause of worry for investors due to the importance of the Chinese economy. We have seen some commentary out of the BOJ nominee Haruhiko Kuroda overnight showing his continued commitment to buying derivatives if he's confirmed.
In terms trading ideas for the week ahead, I would keep a close eye on the FX market and avoid the equity market. We are yet to see a true market reaction to Fridays news and I would be cautious entering any new long positions as I feel we are near a top. I would keep an eye on GBPUSD as we have seen the breach of the significant 1.50 level and we are now trading below the yearly lows, so I think this pair has some significant downside and I would be selling any rallies below the 1.50 handle. In terms of the EURUSD it doesn't look as though we can get below the 1.29800 and the pair looks to be strongly supported around these levels. In terms of the JPY crosses I think there is significant upside on the cards, although there has been some big swings over the past few days I would have no problem buying and dips and holding them on the back of continued JPY weakness and improving US and European economies.
Any questions follow us @lowkeycapital
The market today is poised to take a little breather and digest some of the news that we got towards the back end of last week. On Friday we saw the US, the worlds largest economy really starting to to gain momentum on the back of the extremely positive NFP (Non Foreign Payrolls) of 236,000 beating the analysts expectations of 165,000. However it was interesting to see the market reaction to the good news, as some experts were expecting to see a potential 'End Of QE' sell off, however we did see a slight move to the downside in most US equity markets but the reaction was relatively quiet. We did note last week however, that we are coming to levels where we would expect to see some profit taking, we have come a long way in a relatively short period of time, and everyone seems to be talking about the market correction. As it currently stands all the dips are being seen as a buying opportunity, but I have a feeling that we are beginning to see retail investors enter the frame, and as we all know as soon as this happens, a change in direction is never far away.
In terms of this week we started off the morning with data out of Germany, exports rose 1.4% in January for the second monthly. Overnight China's industrial output had the worst start of the year since 2009, this has not been the first time we have seen Chinese data lag behind the rest of the worlds economies and this remains as a slight cause of worry for investors due to the importance of the Chinese economy. We have seen some commentary out of the BOJ nominee Haruhiko Kuroda overnight showing his continued commitment to buying derivatives if he's confirmed.
In terms trading ideas for the week ahead, I would keep a close eye on the FX market and avoid the equity market. We are yet to see a true market reaction to Fridays news and I would be cautious entering any new long positions as I feel we are near a top. I would keep an eye on GBPUSD as we have seen the breach of the significant 1.50 level and we are now trading below the yearly lows, so I think this pair has some significant downside and I would be selling any rallies below the 1.50 handle. In terms of the EURUSD it doesn't look as though we can get below the 1.29800 and the pair looks to be strongly supported around these levels. In terms of the JPY crosses I think there is significant upside on the cards, although there has been some big swings over the past few days I would have no problem buying and dips and holding them on the back of continued JPY weakness and improving US and European economies.
Any questions follow us @lowkeycapital
Friday, 8 March 2013
Breakfast Blog
Happy NFP Day Traders,
This is the big jobs numbers day of the Month on the Data calendar and the first of 3 significant risk event coming up in the next few weeks that will give the Equity Markets and the Dollar direction.
First to recap on yesterday which saw the BOE leave rates unchanged and a decision to leave QE at its current rate when the market had priced in an extra £25 Billion a month. This caused a pop in cable from just under 1.50 to session highs of 1.508 but after that it was all down hill as it gradually grinded lower back to 1.5015 from an extremely strong dollar and traders using the spike in Sterling to initiate more short positions.
The ECB also left rates unchanged and Mario Draghi gave a more hawkish press conference then the market was expecting. This caused a Euro rally with the EUR/USD reaching 1.3120 from a low of 1.2990 during the meeting and now the EUR/JPY cross stands more then 250 pips higher then it was this time yesterday with some broad YEN weakness observed. After the Interest rate decisions yesterday the market started to price in some very good Non-Farm Payroll data and the USD/JPY major broke the 95 level for the first time since May 2010, it trades at 95.40 spot as I type.
This morning should be quiet ahead of this afternoons data but the American equity markets are already starting to price in a huge number with the Dow Jones 30 trading at the highest intra day level of all time as i type right now at 14394, and the S&P 500 now only 2% off the all time highs at 1576.
Generally the best way to play a strong non-farm payroll number is to sell gold and to sell a foreign currency against the Dollar, especially a weak currency like Sterling or the Yen as the Dollar strength will give maximum returns against a weak currency. The Equity play against a strong NFP number is more difficult as the market should rally but in the past strong numbers have been perceived as bad news because the Market thinks that QE will be be curtailed and as a result Equities have sold off after an additional spike higher. This could very well be the case today with a High Jobs number and a lower unemployment rate number. The more important is the Unemployment rate as this is directly linked to the Quantitative Easing program and with the FOMC coming up on Wednesday week (the second major risk event) a lot of traders may choose to take profit on any long Equity positions before this meeting.
The Data is at 13 30 GMT and we would advise not to have a position going into this as the market will spike violently and it is a recipe for getting stopped out, the best option is to wait for the direction a few minutes after before taking a position.
Good levels to sell rallies for Euro are 1.3120 and 1.3160. Cable a short anywhere near 1.5080 would be a high probability trade and Gold around 1590-1600 would provide a solid entry point for a short targeting the Years lows at 1550 and then 1525.
Good luck today and have a great weekend.
Lowkey
This is the big jobs numbers day of the Month on the Data calendar and the first of 3 significant risk event coming up in the next few weeks that will give the Equity Markets and the Dollar direction.
First to recap on yesterday which saw the BOE leave rates unchanged and a decision to leave QE at its current rate when the market had priced in an extra £25 Billion a month. This caused a pop in cable from just under 1.50 to session highs of 1.508 but after that it was all down hill as it gradually grinded lower back to 1.5015 from an extremely strong dollar and traders using the spike in Sterling to initiate more short positions.
The ECB also left rates unchanged and Mario Draghi gave a more hawkish press conference then the market was expecting. This caused a Euro rally with the EUR/USD reaching 1.3120 from a low of 1.2990 during the meeting and now the EUR/JPY cross stands more then 250 pips higher then it was this time yesterday with some broad YEN weakness observed. After the Interest rate decisions yesterday the market started to price in some very good Non-Farm Payroll data and the USD/JPY major broke the 95 level for the first time since May 2010, it trades at 95.40 spot as I type.
This morning should be quiet ahead of this afternoons data but the American equity markets are already starting to price in a huge number with the Dow Jones 30 trading at the highest intra day level of all time as i type right now at 14394, and the S&P 500 now only 2% off the all time highs at 1576.
Generally the best way to play a strong non-farm payroll number is to sell gold and to sell a foreign currency against the Dollar, especially a weak currency like Sterling or the Yen as the Dollar strength will give maximum returns against a weak currency. The Equity play against a strong NFP number is more difficult as the market should rally but in the past strong numbers have been perceived as bad news because the Market thinks that QE will be be curtailed and as a result Equities have sold off after an additional spike higher. This could very well be the case today with a High Jobs number and a lower unemployment rate number. The more important is the Unemployment rate as this is directly linked to the Quantitative Easing program and with the FOMC coming up on Wednesday week (the second major risk event) a lot of traders may choose to take profit on any long Equity positions before this meeting.
The Data is at 13 30 GMT and we would advise not to have a position going into this as the market will spike violently and it is a recipe for getting stopped out, the best option is to wait for the direction a few minutes after before taking a position.
Good levels to sell rallies for Euro are 1.3120 and 1.3160. Cable a short anywhere near 1.5080 would be a high probability trade and Gold around 1590-1600 would provide a solid entry point for a short targeting the Years lows at 1550 and then 1525.
Good luck today and have a great weekend.
Lowkey
Thursday, 7 March 2013
Morning Brief
Good Morning Traders......
Today is a big day on the markets for Europe, and it is one that traders have been waiting for all week. Overnight Portugal's credit rating outlook was raised to stable from negative by S&P as the economy showed slight economic improvements over the last 12 months. Last night in the Asian session the BOJ (Bank Of Japan) rejected a call for an immediate start to open-ended asset purchases, on the back of this news we saw the Nikkei loose some ground but it still remains in a strong up-trend. This morning all focus will be on the EBC and the BOE as we are expecting to see interest rate decisions at 12.45. The consensus is to leave rates unchanged but traders will be paying close attention to Draghis press conference at 1.30pm and any commentary he may have about the likelihood of a rate cut during the course of the year. Just to note any commentary in relation to a rate cut will be positive of European equities and negative for the euro currency against its major pairs.
In terms of FX trading we saw a significant move to the downside yesterday for the EURUSD pair and it traded towards the lows under 1.30 overnight testing the significant support level of 1.29800, if this level is breached expect to an extended move lower testing the 2013 low of 1.29600. But as we have said the interest rate decision and the press conference from the ECB will dictate the direction of the pair. At the time of writing the EURUSD has made a move to the upside breaking above the 1.30 handle off the back of GBP and JPY weakness but this could provide a nice trading level for traders looking to hold a short position into the meeting.
Across the water we saw the US equities make a further move to the upside with the $DOW making new historic highs closing yesterday at 14,296 and the $SPX closing at 1541. An interesting point to note is that $SPX is yet to make historical highs, and continues top lag behind the $DOW, there are numerous factors contributing to this, analysts are pointing the finger to $AAPL which continues to struggle closing at $425 yesterday. If you are trading US equities expect volume to be relatively light with the NFP (Non Foreign Payrolls) due out tomorrow. We expect the numbers to be positive for the US economy as all data has been extremely positive this year, however it will be interesting to see the market reaction to good news as a strong number may be played as risk off, on the basis that it might signal economic improvement and an end to continued QE.
Happy Trading.
Any questions follow us @lowkeycapital
Today is a big day on the markets for Europe, and it is one that traders have been waiting for all week. Overnight Portugal's credit rating outlook was raised to stable from negative by S&P as the economy showed slight economic improvements over the last 12 months. Last night in the Asian session the BOJ (Bank Of Japan) rejected a call for an immediate start to open-ended asset purchases, on the back of this news we saw the Nikkei loose some ground but it still remains in a strong up-trend. This morning all focus will be on the EBC and the BOE as we are expecting to see interest rate decisions at 12.45. The consensus is to leave rates unchanged but traders will be paying close attention to Draghis press conference at 1.30pm and any commentary he may have about the likelihood of a rate cut during the course of the year. Just to note any commentary in relation to a rate cut will be positive of European equities and negative for the euro currency against its major pairs.
In terms of FX trading we saw a significant move to the downside yesterday for the EURUSD pair and it traded towards the lows under 1.30 overnight testing the significant support level of 1.29800, if this level is breached expect to an extended move lower testing the 2013 low of 1.29600. But as we have said the interest rate decision and the press conference from the ECB will dictate the direction of the pair. At the time of writing the EURUSD has made a move to the upside breaking above the 1.30 handle off the back of GBP and JPY weakness but this could provide a nice trading level for traders looking to hold a short position into the meeting.
Across the water we saw the US equities make a further move to the upside with the $DOW making new historic highs closing yesterday at 14,296 and the $SPX closing at 1541. An interesting point to note is that $SPX is yet to make historical highs, and continues top lag behind the $DOW, there are numerous factors contributing to this, analysts are pointing the finger to $AAPL which continues to struggle closing at $425 yesterday. If you are trading US equities expect volume to be relatively light with the NFP (Non Foreign Payrolls) due out tomorrow. We expect the numbers to be positive for the US economy as all data has been extremely positive this year, however it will be interesting to see the market reaction to good news as a strong number may be played as risk off, on the basis that it might signal economic improvement and an end to continued QE.
Happy Trading.
Any questions follow us @lowkeycapital
Wednesday, 6 March 2013
Breakfast Blog
Top of the Risk Management Morning Traders,
The main headline from yesterday had to have been the Dow Jones 30 closing at all time highs. Driven by Optimistic Chinese Growth projections and strong European PMI's during the morning session. The American stock market was bulling to go higher when it opened at 14 30 GMT and grinded higher until the release of the ISM Non-Manufacturing Index at 15 00 which was extremely strong at 56, this sent the American Bourses surging with the Dow nearly hitting 14300 and The S&P 500 at 1545. The two ISM numbers are a very good indicator for the Big jobs report on Friday The Non-Farm payrolls.
All the indicators are pointing at a very good number and this may be the catalyst needed for the S&P 500 to take on the all time highs of 1576, Because at this stage the Market is to close and seems too bullish not to at least attempt these higher highs.
Today has the potential to be a quiet day with some profit taking ahead of the BOE and ECB interest rate decisions tomorrow and the press conference where we will be listening out for any dovish comments or potential cuts or additional QE from King and Draghi. The EUR/USD is intriguing at present because it has arrived and based at a very significant level of 1.30 and doesn't want to go bounce or sell off. It is perfectly poised to start a new cycle and Tomorrow will definitely give us some direction for the coming weeks.
Dovish comments from Draghi will most likely lead the Euro to test the 200 Day Moving Average which comes in at 1.2840. A break of this would lead to a test of 1.269(the starting point of the rally to 1.37) and 1.25 if this broke. Any hawkish comments from Draghi may give the Euro a bit of a boost in the near term but from a technical perspective a rally to 1.33-1.34 would look like a massive head and shoulders on a daily chart with the next leg down to 1.269.
What we believe may well occur in the next couple of days is the Euro taking a new leg lower from a combination of dovish comments from Draghi and some strong data from the States which will prompt questions about tapering QE.
Some good levels to look out for in the EUR/USD are 1.3080 topside and 1.2980 is solid support for the time being on the downside.
From an Equity perspective we may see some profit taking ahead of the important events tomorrow and Friday so we would not advise any position today.
Good luck in the Markets. Lowkey
The main headline from yesterday had to have been the Dow Jones 30 closing at all time highs. Driven by Optimistic Chinese Growth projections and strong European PMI's during the morning session. The American stock market was bulling to go higher when it opened at 14 30 GMT and grinded higher until the release of the ISM Non-Manufacturing Index at 15 00 which was extremely strong at 56, this sent the American Bourses surging with the Dow nearly hitting 14300 and The S&P 500 at 1545. The two ISM numbers are a very good indicator for the Big jobs report on Friday The Non-Farm payrolls.
All the indicators are pointing at a very good number and this may be the catalyst needed for the S&P 500 to take on the all time highs of 1576, Because at this stage the Market is to close and seems too bullish not to at least attempt these higher highs.
Today has the potential to be a quiet day with some profit taking ahead of the BOE and ECB interest rate decisions tomorrow and the press conference where we will be listening out for any dovish comments or potential cuts or additional QE from King and Draghi. The EUR/USD is intriguing at present because it has arrived and based at a very significant level of 1.30 and doesn't want to go bounce or sell off. It is perfectly poised to start a new cycle and Tomorrow will definitely give us some direction for the coming weeks.
Dovish comments from Draghi will most likely lead the Euro to test the 200 Day Moving Average which comes in at 1.2840. A break of this would lead to a test of 1.269(the starting point of the rally to 1.37) and 1.25 if this broke. Any hawkish comments from Draghi may give the Euro a bit of a boost in the near term but from a technical perspective a rally to 1.33-1.34 would look like a massive head and shoulders on a daily chart with the next leg down to 1.269.
What we believe may well occur in the next couple of days is the Euro taking a new leg lower from a combination of dovish comments from Draghi and some strong data from the States which will prompt questions about tapering QE.
Some good levels to look out for in the EUR/USD are 1.3080 topside and 1.2980 is solid support for the time being on the downside.
From an Equity perspective we may see some profit taking ahead of the important events tomorrow and Friday so we would not advise any position today.
Good luck in the Markets. Lowkey
Tuesday, 5 March 2013
Breakfast Brief
Good Morning Traders....
We are coming to you a bit later this morning due to the heavy data flow from the Eurozone this morning, we felt it would be more beneficial to to bring the morning brief to you on the back of the Eurozone PMI data as these figures would inevitably set the tone for today's trading.
Overall PMI's were relatively positive for the euro, showing that there has been a slight month on month improvement in manufacturing within the member states. Initially we witnessed a slight move to the upside in the euro but this has been since eradicated and we are back trading around the unchanged level. The EURUSD topped out at 1.30750 and the EURJPY touched the downward trend-line at 121.750. Traders will be keeping a close eye on any statements released from the EU finance ministers meeting which takes place in Brussels today. We will be hoping to see some further development on the loan easing process for Ireland and Portugal. Irish finance ministers will be seeking backing for rules on bank capital requirements that include bonus curbs. However things are set to be relatively quiet in the European markets until the ECB press conference on Thursday, having said that any developments regarding the Italian election should prove as a genuine trading opportunity.
One of the most interesting things to take from this morning session so far has been the stronger than expected UK PMI services data which we saw at 9.30am. Yesterday we saw worse than expected UK PMI manufacturing data, so traders will be taking note of the divergence between the manufacturing and services sector for forward economic outlooks. The USDGBP (Cable) pair has found support from its 1.50 low and is currently trading around the 1.517 handle, suggesting traders have have been aware of the divergence and it was a case of buying the rumour throughout the Asian session and the early part of the European session.
Across the water we have seen a 'Bullish' close in the US equity market yesterday which would suggest that we may seen a further move to the upside today and throughout the course of the week. As you know we are sceptable of the continued move to the upside and we do feel that a correction is not far away within the equity markets. However picking a top can be a dangerous game so we would advise to keep money on the sidelines unless you have bought US equities at decent levels (SPX: 1495-1515).
For all of the individuals trading Apple shares things do not look to positive, we were hoping for the stock to find support at $425 and a close above this level may have given an opportunity to get long however it failed to do so, so we continue to remain bearish on the stock until it can find a clear and decisive bottom and a genuine buying opportunity.
Any questions find us at @lowkeycapital
We are coming to you a bit later this morning due to the heavy data flow from the Eurozone this morning, we felt it would be more beneficial to to bring the morning brief to you on the back of the Eurozone PMI data as these figures would inevitably set the tone for today's trading.
Overall PMI's were relatively positive for the euro, showing that there has been a slight month on month improvement in manufacturing within the member states. Initially we witnessed a slight move to the upside in the euro but this has been since eradicated and we are back trading around the unchanged level. The EURUSD topped out at 1.30750 and the EURJPY touched the downward trend-line at 121.750. Traders will be keeping a close eye on any statements released from the EU finance ministers meeting which takes place in Brussels today. We will be hoping to see some further development on the loan easing process for Ireland and Portugal. Irish finance ministers will be seeking backing for rules on bank capital requirements that include bonus curbs. However things are set to be relatively quiet in the European markets until the ECB press conference on Thursday, having said that any developments regarding the Italian election should prove as a genuine trading opportunity.
One of the most interesting things to take from this morning session so far has been the stronger than expected UK PMI services data which we saw at 9.30am. Yesterday we saw worse than expected UK PMI manufacturing data, so traders will be taking note of the divergence between the manufacturing and services sector for forward economic outlooks. The USDGBP (Cable) pair has found support from its 1.50 low and is currently trading around the 1.517 handle, suggesting traders have have been aware of the divergence and it was a case of buying the rumour throughout the Asian session and the early part of the European session.
Across the water we have seen a 'Bullish' close in the US equity market yesterday which would suggest that we may seen a further move to the upside today and throughout the course of the week. As you know we are sceptable of the continued move to the upside and we do feel that a correction is not far away within the equity markets. However picking a top can be a dangerous game so we would advise to keep money on the sidelines unless you have bought US equities at decent levels (SPX: 1495-1515).
For all of the individuals trading Apple shares things do not look to positive, we were hoping for the stock to find support at $425 and a close above this level may have given an opportunity to get long however it failed to do so, so we continue to remain bearish on the stock until it can find a clear and decisive bottom and a genuine buying opportunity.
Any questions find us at @lowkeycapital
Monday, 4 March 2013
Morning Brief
Good Morning Traders....
Over the weekend we saw continued speculation over the Italian election, Pier Bersani whose coalition won the most votes in Italy's elections insisted he would form a government on his own without seeking an alliance with his main rivals. Overnight we saw poor data from China, has pointed the European futures market into negative territory before the opening bell this morning.
All eyes will be on Brussels this afternoon as European Finance ministers meet, so traders will be paying close attention to any information relating to the meeting itself. In terms of trading this morning we have seen significant technical levels breached during the course of last week and we have a few of the major currency pairs sitting in and around major technical levels. The EURUSD is hovering around the psychological 1.30 level, however we did see this level breached in Fridays trading session, so we could expect to trade below this level if the Euro- area consumer confidence figures are poor due out this morning.
Another currency pair that we here at Lowkey are keeping a close eye on is 'Cable' or GBPUSD, it has been trading down as low as the 1.50 mark and this level was breached for a short period on Friday but the pair managed to close above here on Friday which proved that there is significant support down at these levels, but I have a feeling that there could be some more downside in this pair, as outlook for the Uk looks bleak and we have the BOE monetary Policy Committee on Thursday and they will be coming under increased pressure to authorise additional money printing which as we know will be positive for stocks (FTSE) and negative for the GBP currency.
Across the water all focus will continue to be on President Obama and his cat and mouse game with the house representatives to bash out a deal. It doesn't look to positive I was confident that a deal would have been ironed out on Friday but there was no deal reached and we saw another 'Can Kicking' exercise. Traders will be keeping a close eye on the process and any deal will be positive for US equities.
Happy Trading
@LowkeyCapital
Over the weekend we saw continued speculation over the Italian election, Pier Bersani whose coalition won the most votes in Italy's elections insisted he would form a government on his own without seeking an alliance with his main rivals. Overnight we saw poor data from China, has pointed the European futures market into negative territory before the opening bell this morning.
All eyes will be on Brussels this afternoon as European Finance ministers meet, so traders will be paying close attention to any information relating to the meeting itself. In terms of trading this morning we have seen significant technical levels breached during the course of last week and we have a few of the major currency pairs sitting in and around major technical levels. The EURUSD is hovering around the psychological 1.30 level, however we did see this level breached in Fridays trading session, so we could expect to trade below this level if the Euro- area consumer confidence figures are poor due out this morning.
Another currency pair that we here at Lowkey are keeping a close eye on is 'Cable' or GBPUSD, it has been trading down as low as the 1.50 mark and this level was breached for a short period on Friday but the pair managed to close above here on Friday which proved that there is significant support down at these levels, but I have a feeling that there could be some more downside in this pair, as outlook for the Uk looks bleak and we have the BOE monetary Policy Committee on Thursday and they will be coming under increased pressure to authorise additional money printing which as we know will be positive for stocks (FTSE) and negative for the GBP currency.
Across the water all focus will continue to be on President Obama and his cat and mouse game with the house representatives to bash out a deal. It doesn't look to positive I was confident that a deal would have been ironed out on Friday but there was no deal reached and we saw another 'Can Kicking' exercise. Traders will be keeping a close eye on the process and any deal will be positive for US equities.
Happy Trading
@LowkeyCapital
Friday, 1 March 2013
Good Morning Traders
Yesterday saw the last day of February and trading conditions were quite choppy as was expected with some month end positioning towards the end of the US session. The Eur came under pressure throughout the European session as continued worries about the Italian remain as the dominating factor throughout Europe We also saw the ECB Vice President Vitor Constancio state that the EU must plan for bank failures, this also added to existing worries about the eurozone and we saw the Euro lose recent gains against some of the major currency pairs. From a technical perspective the Euro looks to be supported between 1.30 on the downside with bids seen below this level and 1.32 on the upside with orders seen above this figure.
This morning we have a heavy news flow out the Eurozone with Euro-area PMI's at(9am) which may confirm the pace of contraction picked up in February even as output grew in Germany (8.55am). The ECB will then announce its LTRO repayment at 11am.
Across the pond it is the day we have seen the continued move to the upside throughout the early trading session, the US equity markets continue their move higher and it has been like this for the past few weeks, with the exception of the Italian election turmoil. However the sharp sell-off into the US close last night was an interesting move and one that has to be analysed by traders, was it simply month end positioning? Profit taking for February month end, with some large institutions taking money off the table? Or was it worries concerning the spending cuts that are due to set in tomorrow?. All talk and focus from the US today will be over the 'Sequester' and whether the democrats and Republicans can iron out a deal before the deadline is reached. In my opinion some deal will be reached, it may be another 'kicking the can down the road exercise' but expect to see US markets react aggressively to whatever news is released.
In summary it is due to be an extremely volatile trading day due to the number of important data set to be released from the EU and the US, be sure to keep and eye on the economic calender and try to use the news to your advantage, wait from breakouts of levels and trade the trend, try not to get caught up trading within the range its too dangerous.
Happy Trading
@lowkeycapital
Yesterday saw the last day of February and trading conditions were quite choppy as was expected with some month end positioning towards the end of the US session. The Eur came under pressure throughout the European session as continued worries about the Italian remain as the dominating factor throughout Europe We also saw the ECB Vice President Vitor Constancio state that the EU must plan for bank failures, this also added to existing worries about the eurozone and we saw the Euro lose recent gains against some of the major currency pairs. From a technical perspective the Euro looks to be supported between 1.30 on the downside with bids seen below this level and 1.32 on the upside with orders seen above this figure.
This morning we have a heavy news flow out the Eurozone with Euro-area PMI's at(9am) which may confirm the pace of contraction picked up in February even as output grew in Germany (8.55am). The ECB will then announce its LTRO repayment at 11am.
Across the pond it is the day we have seen the continued move to the upside throughout the early trading session, the US equity markets continue their move higher and it has been like this for the past few weeks, with the exception of the Italian election turmoil. However the sharp sell-off into the US close last night was an interesting move and one that has to be analysed by traders, was it simply month end positioning? Profit taking for February month end, with some large institutions taking money off the table? Or was it worries concerning the spending cuts that are due to set in tomorrow?. All talk and focus from the US today will be over the 'Sequester' and whether the democrats and Republicans can iron out a deal before the deadline is reached. In my opinion some deal will be reached, it may be another 'kicking the can down the road exercise' but expect to see US markets react aggressively to whatever news is released.
In summary it is due to be an extremely volatile trading day due to the number of important data set to be released from the EU and the US, be sure to keep and eye on the economic calender and try to use the news to your advantage, wait from breakouts of levels and trade the trend, try not to get caught up trading within the range its too dangerous.
Happy Trading
@lowkeycapital
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