Good Morning Traders
Yesterday we saw another strong rally in the equity markets, and are we surprised? Not really. Over the last few weeks we have seen a lot an analysts trying to call a top of the market, but no news seems to be good news and markets continue to move higher. We saw the SPX trade above the 1594 and it looks as though 1600 is the next stop if the relative weakness in the USD continues. The trading day yesterday could be characterised by a total lack of volume and it was interesting for traders to see the morning momentum faded into the US close. As we noted yesterday all eyes will be on the ECB come Thursday and all of the Equity markets have largely priced in a rate cut, if Draghi does not deliver on this expect to see some panic selling across the board.
One of the biggest movers in yesterdays trading day was AAPL having its best day in over 3 months, it might be a bit early to call but I think there is a bottom in place and traders have begun to move money back into the tech giant as it now trades above its 50DMA. In the commodity market the USD weakness helped the commodity market pick up some gains with Gold, Silver and Brent all trading higher.
This morning we have seen the EURUSD pair give back some of its gains as the pair found soem significant resistance at the 1.31200 handle and now trades down below the 1.30800 handle, this USD strength is dragging the commodity market lower in morning trading. In terms of advice for today's session, we will be paying close attention to the Eurozone data due out during the course of the morning session, all in all the morning has been relatively quiet and we don't expect to see any aggressive swings until Thursdays decision, if anything we would favour a move to the downside coming into this meeting but we expect to see all equity markets confined in their immediate short term risk ranges.
As we all know, we start a new month tomorrow, 'May' and the 'sell in May and go away' psychology is bound to be on the back of some traders minds, we have come a long way in a short period of time and this could be seen as an excellent opportunity to lock in some profit and take some money off the table.
Happy Trading
@lowkeycapital
Tuesday, 30 April 2013
Monday, 29 April 2013
Breakfast Blog
Good Morning Traders,
This is the start of a big risk week for all the Major markets with the ECB's monthly meeting on Thursday followed by The Non-farm Payroll's on Friday afternoon from the States. The European Equity markets rallied all last week on bad news and have already priced in a cut to interest rates, so if the ECB don't cut rates on Thursday you can expect a massive pull-back in equity indexes and for a significant rally in the Euro currency.
Friday saw the release of the U.S. GDP for Q1, which came in much softer then forecast at 2.5% against the 3.0% growth expected. The Market took this data very well as it supports continued quantitative easing for the United States which will allow the Stock Markets to drift higher and higher. This is a very difficult thing for the Market bear's to accept as good and bad news pushes the Stock futures higher and complacency seems to be at an all time high as the VIX approaches all time lows. From a technical point of view the S&P 500 and the DAX look to both be forming the second shoulder of a head and shoulders reversal pattern on the Daily charts. This is an extremely bearish pattern as it shows the price struggling to go higher. Along with the Sell in May and go away saying that old fashioned investors coined about the Stock Market making its yearly gains in the first 4 months and the fact that the Market topped out on the 25th April last year their would be a lot of arguements to start entering short positions now.
However saying this, from a fundamental point of view the stock market looks like it could continue to drift higher towards 1620 or higher on low volume, maximum complacency and an attitude that the Market will be supported by central banks no matter how poor the economic data is.
Looking at Currencies, the EUR/USD is approaching the 1.31 handle as I type, supported by the formation of a new government in Italy over the weekend and with Italian bonds under 4% and the Dollar weaker from recent poor data the EURUSD could well drift higher regardless of a rate cut or not.
Today see's the release of German CPI data at 13 30 and some consumer confidence figures this morning, But all Traders will be waiting for The big risk events on Thursday and Friday and we suspect the markets may be quite range bound until then (Famous last words)!!
Some good levels to look out for in the EURUSD is 1.3020 downside and 1.31-1.3120 topside. Both Levels will be well defended. Looking at the Dax on a daily chart, There will be a lot of resistance around the 7,890 level, were at 7850 as i type. As I mentioned earlier, the 7890 level is the first shoulder of this Daily head and shoulders pattern that is forming. Looking at the S&P 500, it looks well supported on the downside as it tested the previous all time high of 1576 on friday post the GDP release and it held and may see further upside towards 1592 today, however if it breaks down through 1576 i would imagine a lot of traders shorting it as it would look like a topping pattern.
Good luck in the Markets. Lowkey
This is the start of a big risk week for all the Major markets with the ECB's monthly meeting on Thursday followed by The Non-farm Payroll's on Friday afternoon from the States. The European Equity markets rallied all last week on bad news and have already priced in a cut to interest rates, so if the ECB don't cut rates on Thursday you can expect a massive pull-back in equity indexes and for a significant rally in the Euro currency.
Friday saw the release of the U.S. GDP for Q1, which came in much softer then forecast at 2.5% against the 3.0% growth expected. The Market took this data very well as it supports continued quantitative easing for the United States which will allow the Stock Markets to drift higher and higher. This is a very difficult thing for the Market bear's to accept as good and bad news pushes the Stock futures higher and complacency seems to be at an all time high as the VIX approaches all time lows. From a technical point of view the S&P 500 and the DAX look to both be forming the second shoulder of a head and shoulders reversal pattern on the Daily charts. This is an extremely bearish pattern as it shows the price struggling to go higher. Along with the Sell in May and go away saying that old fashioned investors coined about the Stock Market making its yearly gains in the first 4 months and the fact that the Market topped out on the 25th April last year their would be a lot of arguements to start entering short positions now.
However saying this, from a fundamental point of view the stock market looks like it could continue to drift higher towards 1620 or higher on low volume, maximum complacency and an attitude that the Market will be supported by central banks no matter how poor the economic data is.
Looking at Currencies, the EUR/USD is approaching the 1.31 handle as I type, supported by the formation of a new government in Italy over the weekend and with Italian bonds under 4% and the Dollar weaker from recent poor data the EURUSD could well drift higher regardless of a rate cut or not.
Today see's the release of German CPI data at 13 30 and some consumer confidence figures this morning, But all Traders will be waiting for The big risk events on Thursday and Friday and we suspect the markets may be quite range bound until then (Famous last words)!!
Some good levels to look out for in the EURUSD is 1.3020 downside and 1.31-1.3120 topside. Both Levels will be well defended. Looking at the Dax on a daily chart, There will be a lot of resistance around the 7,890 level, were at 7850 as i type. As I mentioned earlier, the 7890 level is the first shoulder of this Daily head and shoulders pattern that is forming. Looking at the S&P 500, it looks well supported on the downside as it tested the previous all time high of 1576 on friday post the GDP release and it held and may see further upside towards 1592 today, however if it breaks down through 1576 i would imagine a lot of traders shorting it as it would look like a topping pattern.
Good luck in the Markets. Lowkey
Friday, 26 April 2013
Good Morning Traders
Another strong day for the equity markets yesterday,while the Euro lost some ground against its major currency pairs. One thing that has caught my attention over the last week or so in relation to the European equity markets is that they are beginning to trade very similar to that of their US counterparts. The US equity markets have been trading off the back of FED policy and whether news will effect QE, this has begun in Europe over the last week as all moves have become correlated to news relating to interest rate cuts. All interest rate related headlines have managed to cause aggressive swings and this play is likely to continue until next Thursday.
Today all eyes will be on the GDP figures for the US economy, traders are expected to see data showing that the US economy has grown in the first three months of 2013 at the fastest rate in more than one year. But don't be fooled the initial look at GDP often paints an exaggerated image of the economy. We are expecting to see a figure of 3.2% for annualised growth. We will be looking to see what sectors of the US economy are improving, and it will give individuals and government officials an indication of the success of QE.
Expect the morning to be quiet, we might see a move lower coming into the news release as traders take a bit of money off the table and lock in healthy gains from this weeks session. In Europe the news flow is quiet, so expect to see the market react to any comments made in relation to interest rates.
Happy Trading
Another strong day for the equity markets yesterday,while the Euro lost some ground against its major currency pairs. One thing that has caught my attention over the last week or so in relation to the European equity markets is that they are beginning to trade very similar to that of their US counterparts. The US equity markets have been trading off the back of FED policy and whether news will effect QE, this has begun in Europe over the last week as all moves have become correlated to news relating to interest rate cuts. All interest rate related headlines have managed to cause aggressive swings and this play is likely to continue until next Thursday.
Today all eyes will be on the GDP figures for the US economy, traders are expected to see data showing that the US economy has grown in the first three months of 2013 at the fastest rate in more than one year. But don't be fooled the initial look at GDP often paints an exaggerated image of the economy. We are expecting to see a figure of 3.2% for annualised growth. We will be looking to see what sectors of the US economy are improving, and it will give individuals and government officials an indication of the success of QE.
Expect the morning to be quiet, we might see a move lower coming into the news release as traders take a bit of money off the table and lock in healthy gains from this weeks session. In Europe the news flow is quiet, so expect to see the market react to any comments made in relation to interest rates.
Happy Trading
Thursday, 25 April 2013
Breakfast Blog
Good Morning Traders,
A lively week so far in the Markets, which has seen Europe adopt the "bad news is good" policy towards its Equity Markets. Poor German Manufacturing and Services Data was followed by a weak IFO Business Climate report Yesterday, which surely should have been negative for the Euro and for all European indexes, but instead we got a massive rally on the hope that the ECB will provide more accomodative policy and either cut interest rates or provide some sort of quantitative easing program to support the single currency. As I type now the German Dax is 350 points higher then it was this time on Tuesday Morning, with the Spanish Ibex and the Italian FTSE MIB realising similar gains.
The ECB's monthly meeting is next Thursday and the chance of a rate cut this soon is quite unlikely with only a handful of analysts predicting the cut to come next week, a more likely scenario would be a cut at the June meeting which would give the ECB time to analyse the Economic data before making a decision. I would expect some very dovish rhetoric from Mario Draghi next Thursday which may in itself help reduce the Exchange rate of the currency even though they claim this is not a mandate for them.
American Data has been very soft this week and is also helping to support EURUSD price action, this is also helping to support the American Equity Indexes aswell because with bad news they have the promise of never ending Quantitiative Easing. Today we see the release of the weekly Initial Jobless claims, which is the only tier 1 data from the States today with tomorrow's big Q1 GDP number on every traders mind.
Some good levels to look out for in the EURUSD pair is 1.3080 topside as a big resistance level and 1.30 downside. Looking at the S&P 500, 1576 is a previous high and there is not much in the from of resistance now until 1600, so any bullish data may see the market return to this level quickly.
Best of luck in the Markets.
A lively week so far in the Markets, which has seen Europe adopt the "bad news is good" policy towards its Equity Markets. Poor German Manufacturing and Services Data was followed by a weak IFO Business Climate report Yesterday, which surely should have been negative for the Euro and for all European indexes, but instead we got a massive rally on the hope that the ECB will provide more accomodative policy and either cut interest rates or provide some sort of quantitative easing program to support the single currency. As I type now the German Dax is 350 points higher then it was this time on Tuesday Morning, with the Spanish Ibex and the Italian FTSE MIB realising similar gains.
The ECB's monthly meeting is next Thursday and the chance of a rate cut this soon is quite unlikely with only a handful of analysts predicting the cut to come next week, a more likely scenario would be a cut at the June meeting which would give the ECB time to analyse the Economic data before making a decision. I would expect some very dovish rhetoric from Mario Draghi next Thursday which may in itself help reduce the Exchange rate of the currency even though they claim this is not a mandate for them.
American Data has been very soft this week and is also helping to support EURUSD price action, this is also helping to support the American Equity Indexes aswell because with bad news they have the promise of never ending Quantitiative Easing. Today we see the release of the weekly Initial Jobless claims, which is the only tier 1 data from the States today with tomorrow's big Q1 GDP number on every traders mind.
Some good levels to look out for in the EURUSD pair is 1.3080 topside as a big resistance level and 1.30 downside. Looking at the S&P 500, 1576 is a previous high and there is not much in the from of resistance now until 1600, so any bullish data may see the market return to this level quickly.
Best of luck in the Markets.
Tuesday, 23 April 2013
European Morning Review
Good Morning Traders
We are coming to you slightly later than usual this morning as we decided to wait for the heavy news flow out of the EU to pass before writing the blog.
This week we have got off to a slow start, and we seem to be still hovering around this levels stuck in a tight range. There has been repeated speculation that this may be the top of the equity markets both here in Europe and across the water in the US but we have failed to breach our short term resistance levels for this play to be confirmed. This mornings news-flow can be seen summarised below;
We are coming to you slightly later than usual this morning as we decided to wait for the heavy news flow out of the EU to pass before writing the blog.
This week we have got off to a slow start, and we seem to be still hovering around this levels stuck in a tight range. There has been repeated speculation that this may be the top of the equity markets both here in Europe and across the water in the US but we have failed to breach our short term resistance levels for this play to be confirmed. This mornings news-flow can be seen summarised below;
- French Services PMI 44.1 vs 42
- French Manufacturing PMI 44.4 vs 44.3
- German Manufacturing PMI 47.9 vs 49
- German Services PMI 49.2 vs 51
- Eurozone Services PMI 46.6 vs 46.6
- Eurozone Manufacturing PMI 46.5 vs 46.8
The morning started off on a positive note as the French figures beat analysts expectations, however early gains were wiped away as the German data was at its lowest level since 2009. The Eurozone figures came in broadly in line with analysts expectations. In between all of this we had hints on the newswires that the ECB may in fact be stepping closer to cutting interest rates off the back of the relatively weak data. As we know this would be positive for the European equity markets and be negative for the Euro currency against its major pairs.
We have seen the European equity markets move back to session lows and the US equity futures are trading in the negative. We will remain cautious over the next few hours as any further hints in relation to a rate cut could cause a significant move to the upside. At the time of writing the EURUSD is trading below its significant 1.30 handle.
One of the big headlines today is the Apple Q1 results due our after the closing bell of the US session. Analysts are expecting a lower figure and earnings per share to fall slightly year on year. If its a big miss we could see the US equity indices lose some significant ground in after hour trading.
Happy Trading
Thursday, 18 April 2013
Morning Update
Good Morning,
An incredible weak of volatility for all asset classes; European and American Stocks, Commodities, Currencies and the lowest T note yield registered since 2013.
Last Friday Gold breached a very important technical level at 1525, which was a weekly triple bottom. The break of this level started a wave of heavy volume selling, together with rumours of leveraged funds being margin called caused a complete commodity sell off with Silver, Copper and Oil getting in on the act. Gold reached a bottom at 1324 on Monday evening where it bottomed, important support comes in at 1301, and a break of this level will inevitably lead to further declines. Looking at the Equity Markets, The German Dax broke through the 100 day moving average yesterday on Rumours of a German Sovereign downgrade. This downgrade came in the form of a small ratings agency called Egan Jones. The Dax lost over 200 points yesterday, closing below 7500. Strong support comes in for the Dax around the 7450 level (previous highs) and at 7365(200 Day MA).
The S&P 500 has been correcting heavily this week after making new all time highs last week and nearly reaching the 1600 level. It broke through intermediate trendline support at 1557 and reached lows of 1542. Important support comes in at 1537 which is a double bottom and the March lows. A break of this level will lead too a deeper correction towards 1500.
EUR/USD had a 200 pip rally on the back of bad news on Tuesday and then sold off 200 pips yesterday on the back of comments from ECB's Jens Wiedmann opening the door to potential rate cuts either in May or June, The negative sentiment in the Markets also added to the Euro's sell off, Giving the Yen some strength as traders moved money to the safe haven of the Japanese Currency.
American T-Notes also printed a 2013 record low yield at 1.67% as rumours of black box selling of E-Mini contracts and a Buy program of US Ten Year's was noted on Tuesday. Pimco's Bill Gross also came out stating he liked treasuries at these levels. This would lead us to believe that the Equity Market will likely correct sooner rather then later as Investors will put money into Defensive stocks and Bonds until they can Buy the Equity Market back at more attractive levels.
An altogether extremely volatile week for a number of reasons. We believe there will be a lack of direction in all Instuments for the coming weeks, so price action will likely be up and down with big swings in the Equity Market. Best option is to enter the Market with an open mind everyday and take a position on the basis of the Mood of the market and at the extreme's of the range that will likely prove strong Support or Resistance levels.
Good Luck in the Markets.
An incredible weak of volatility for all asset classes; European and American Stocks, Commodities, Currencies and the lowest T note yield registered since 2013.
Last Friday Gold breached a very important technical level at 1525, which was a weekly triple bottom. The break of this level started a wave of heavy volume selling, together with rumours of leveraged funds being margin called caused a complete commodity sell off with Silver, Copper and Oil getting in on the act. Gold reached a bottom at 1324 on Monday evening where it bottomed, important support comes in at 1301, and a break of this level will inevitably lead to further declines. Looking at the Equity Markets, The German Dax broke through the 100 day moving average yesterday on Rumours of a German Sovereign downgrade. This downgrade came in the form of a small ratings agency called Egan Jones. The Dax lost over 200 points yesterday, closing below 7500. Strong support comes in for the Dax around the 7450 level (previous highs) and at 7365(200 Day MA).
The S&P 500 has been correcting heavily this week after making new all time highs last week and nearly reaching the 1600 level. It broke through intermediate trendline support at 1557 and reached lows of 1542. Important support comes in at 1537 which is a double bottom and the March lows. A break of this level will lead too a deeper correction towards 1500.
EUR/USD had a 200 pip rally on the back of bad news on Tuesday and then sold off 200 pips yesterday on the back of comments from ECB's Jens Wiedmann opening the door to potential rate cuts either in May or June, The negative sentiment in the Markets also added to the Euro's sell off, Giving the Yen some strength as traders moved money to the safe haven of the Japanese Currency.
American T-Notes also printed a 2013 record low yield at 1.67% as rumours of black box selling of E-Mini contracts and a Buy program of US Ten Year's was noted on Tuesday. Pimco's Bill Gross also came out stating he liked treasuries at these levels. This would lead us to believe that the Equity Market will likely correct sooner rather then later as Investors will put money into Defensive stocks and Bonds until they can Buy the Equity Market back at more attractive levels.
An altogether extremely volatile week for a number of reasons. We believe there will be a lack of direction in all Instuments for the coming weeks, so price action will likely be up and down with big swings in the Equity Market. Best option is to enter the Market with an open mind everyday and take a position on the basis of the Mood of the market and at the extreme's of the range that will likely prove strong Support or Resistance levels.
Good Luck in the Markets.
Friday, 12 April 2013
Good Morning Traders
We have seen a solid week of gains for all the bulls out there with European stocks posting their biggest four day gain since early January. Across the water the US equity market has continued to make new historic heights and previous highs are now acting as support levels as we test these new levels. In yesterdays US trading session we saw initial Jobless claims falling more than previously estimated by analysts. The important thing we need to look at now is the next move and what we expect to see during today's trading session. I think today could be seen as a great opportunity for bulls to take some money off the table and lock in some gains ahead of the two day Ecofin meeting extension starting today. This meeting amongst European finance leaders should be treated with caution by traders as the agenda includes; bailout extensions for Portugal and Ireland, the ballooning Cypriot bailout and the issue of Slovenia is sure to raise an element of uncertainty.
Already this morning we have seen a lower open across the board, and I would expect to see this direction hold throughout the days trading session.
In terms of the FX markets the EUR has struggled overnight coming off its highs against some of the major pairs. The EURUSD touched the 1.31400 handle in yesterdays session but now trades slightly lower around the 1.30700 level. It looks to me as though the EURUSD pair is on course to the 1.32-1.33 in the short term, and it is also interesting to note that all the analysts calling for 1.16-1 levels on the pair are no where to be seen these days. One of the big stories of the week has been the JPY weakness off the back of Kurodas aggressive monetary easing policies. The EURJPY pair broke through the 130 handle and traded above the 131.100 handle for a brief period, however there has been some EUR weakness overnight and in the early morning session so the pair trades currently at 129.900. One thing we will be keeping a close eye on is the USDJPY we were all expecting to see a test of the 100 level but we fell just short of this a few times during the week, At the time of writing the pair trades below 99.300 so a test of this level is unlikely today but we expect to see the barrier broken in the short term.
In conclusion, the play all week has been to buy the dips and trading has been relatively straight forward however I would be a bit weary today adopting that approach as we could see some profit taking going into the weekend. Things in North Korea look to be getting serious and we have the European leaders meeting in Europe so lets just take a cautious stance in today's trading session and wait for opportunities.
We have seen a solid week of gains for all the bulls out there with European stocks posting their biggest four day gain since early January. Across the water the US equity market has continued to make new historic heights and previous highs are now acting as support levels as we test these new levels. In yesterdays US trading session we saw initial Jobless claims falling more than previously estimated by analysts. The important thing we need to look at now is the next move and what we expect to see during today's trading session. I think today could be seen as a great opportunity for bulls to take some money off the table and lock in some gains ahead of the two day Ecofin meeting extension starting today. This meeting amongst European finance leaders should be treated with caution by traders as the agenda includes; bailout extensions for Portugal and Ireland, the ballooning Cypriot bailout and the issue of Slovenia is sure to raise an element of uncertainty.
Already this morning we have seen a lower open across the board, and I would expect to see this direction hold throughout the days trading session.
In terms of the FX markets the EUR has struggled overnight coming off its highs against some of the major pairs. The EURUSD touched the 1.31400 handle in yesterdays session but now trades slightly lower around the 1.30700 level. It looks to me as though the EURUSD pair is on course to the 1.32-1.33 in the short term, and it is also interesting to note that all the analysts calling for 1.16-1 levels on the pair are no where to be seen these days. One of the big stories of the week has been the JPY weakness off the back of Kurodas aggressive monetary easing policies. The EURJPY pair broke through the 130 handle and traded above the 131.100 handle for a brief period, however there has been some EUR weakness overnight and in the early morning session so the pair trades currently at 129.900. One thing we will be keeping a close eye on is the USDJPY we were all expecting to see a test of the 100 level but we fell just short of this a few times during the week, At the time of writing the pair trades below 99.300 so a test of this level is unlikely today but we expect to see the barrier broken in the short term.
In conclusion, the play all week has been to buy the dips and trading has been relatively straight forward however I would be a bit weary today adopting that approach as we could see some profit taking going into the weekend. Things in North Korea look to be getting serious and we have the European leaders meeting in Europe so lets just take a cautious stance in today's trading session and wait for opportunities.
Thursday, 11 April 2013
Breakfast Blog
Good Morning and Top of the Risk ON morning!
We got 1576, in fact we got 1588! The S&P 500 broke the 2007 high. It feels like the start of one of those cycles where every second sentence will be "fresh high, record high, highest since". In an up and down day with a few comical errors including the release of the FOMC minutes early at 2 GMT instead of 2 eastern. The FOMC were a negative for the U.S. Dollar and for stocks- they sounded like a big part of the FOMC was ready to pull the trigger on tapering but they hardly caused a blip. The USD/JPY reversed immediately higher after a 50 pip droop and continued higher immediately after the meeting, making it to within a few pips of the magical 100 once the 99.75 barrier had been taken out. Once the U.S. Market opened the S&P blasted through the 2007 highs finally erasing the Credit Crisis.
EUR/USD was bid early in the European session having broken as high as 1.3122 but huge sell offers capped anymore upsided and it drifted lower and was playing defence during the afternoon, But after 5 days of gains this short pullback be a breath of fresh air for the pair.
European Stocks had one of their best days in years with the outperformer being the Spanish Ibex, up over 3% and the German DAX up over 2%. This seems to be a flow dynamic, with money flowing out of Japan and into the better yielding European Debt Markets, these lower yields have given the European Stocks a boost. However, A strong Euro is exactly what Europe doesn't need at the moment and it is only a matter of time until the Equity markets will start to react negatively to the Strong Euro and start crying out for some Central Bank policy changes to make them more competitive.
The May meeting is too soon to see a cut from Draghi unless we get some terrible European Data next week but Potentially in June if the Euro continues to appreciate at this rate he may have no other choice even though rates are virtually as low as they can go.
Another sparse Economic Calendar today, we just saw French and German CPI's which came in slightly better then expected. The Only Tier 1 Data we have from the States is in the Form of the weekly Initial Jobless claims. Another soft Reading may give the Euro a slight boost but any reaction from these numbers is normally faded and comes back to where it was prior to the announcement.
Some good levels to look out for today on the EURUSD are 1.3040 downside, this was the Asian Low, Topside we have offers at 1.31 and much bigger ones at 1.3113-3120. Remember 1.3113 is the 38.2% retracement of the 2013 drop from 37.10 to 27.50 and is an important technical level. The EURUSD is in a strong uptrend and if it can get through these offers, there is not much in the form of strong resistance until 1.32.
Good Luck in The Markets
We got 1576, in fact we got 1588! The S&P 500 broke the 2007 high. It feels like the start of one of those cycles where every second sentence will be "fresh high, record high, highest since". In an up and down day with a few comical errors including the release of the FOMC minutes early at 2 GMT instead of 2 eastern. The FOMC were a negative for the U.S. Dollar and for stocks- they sounded like a big part of the FOMC was ready to pull the trigger on tapering but they hardly caused a blip. The USD/JPY reversed immediately higher after a 50 pip droop and continued higher immediately after the meeting, making it to within a few pips of the magical 100 once the 99.75 barrier had been taken out. Once the U.S. Market opened the S&P blasted through the 2007 highs finally erasing the Credit Crisis.
EUR/USD was bid early in the European session having broken as high as 1.3122 but huge sell offers capped anymore upsided and it drifted lower and was playing defence during the afternoon, But after 5 days of gains this short pullback be a breath of fresh air for the pair.
European Stocks had one of their best days in years with the outperformer being the Spanish Ibex, up over 3% and the German DAX up over 2%. This seems to be a flow dynamic, with money flowing out of Japan and into the better yielding European Debt Markets, these lower yields have given the European Stocks a boost. However, A strong Euro is exactly what Europe doesn't need at the moment and it is only a matter of time until the Equity markets will start to react negatively to the Strong Euro and start crying out for some Central Bank policy changes to make them more competitive.
The May meeting is too soon to see a cut from Draghi unless we get some terrible European Data next week but Potentially in June if the Euro continues to appreciate at this rate he may have no other choice even though rates are virtually as low as they can go.
Another sparse Economic Calendar today, we just saw French and German CPI's which came in slightly better then expected. The Only Tier 1 Data we have from the States is in the Form of the weekly Initial Jobless claims. Another soft Reading may give the Euro a slight boost but any reaction from these numbers is normally faded and comes back to where it was prior to the announcement.
Some good levels to look out for today on the EURUSD are 1.3040 downside, this was the Asian Low, Topside we have offers at 1.31 and much bigger ones at 1.3113-3120. Remember 1.3113 is the 38.2% retracement of the 2013 drop from 37.10 to 27.50 and is an important technical level. The EURUSD is in a strong uptrend and if it can get through these offers, there is not much in the form of strong resistance until 1.32.
Good Luck in The Markets
Wednesday, 10 April 2013
Good Morning Traders
Yesterday we saw trading adopting its usual rhetoric of a struggling European session followed by an aggressive US session. For the large part of the European session we saw all asset classes struggle to make moves to the upside and US futures started the day in the negative. It wasn't long before we saw the 'Buy the Dips' mentality across the market and the equity markets moved higher testing the previous highs. The Dow was trading above the 14700 handle and the SPX trading above the 1570 handle. Coupled with this move to the upside we saw US Dollar weakness and there were some big swings in the FX market with the US dollar losing ground against some of its major pairs.
As we noted on Monday we are now in earnings season in the US and so far so good earnings have beaten analysts expectations. There was a slight cause of worry for investors as 75% of the companies listed in the SPX had revised a negative earnings outlook, and it was seen as an opportunity to take some money off the table and lock in some profits. While some saw this as an opportunity to take money off the table we have seen continued pressure from retail investors who have missed out on the big equity moves to enter the market. This is a particularly dangerous game entering at these levels as we have come a long way in a short space of time and there are calls for a 5-10% correction over the coming weeks. I don't think that earnings in the US have enough power to be the catalyst for this correction we would need something a bit more substantial to get the correction under way, maybe some developments from North Korea or some significant data from the EU, until that happens we should continue to ride the wave created by the FED and as long as they keep their finger on the button markets will inevitably move higher.
Today the FED will release minutes of its March meeting when policy makers left the pace of bind purchases unchanged.
In the FX market we saw all the real volatility yesterday. The EURUSD pair traded down around the 1.30 handle during the European session but we saw the pair moving higher and tripping stops now trading above the 1.31 level. There is said to be significant orders above the 1.31200 level so a push through here could see an aggressive short squeeze.
In terms of the EURJPY pair we have seen the 130 level taken out, just to put into context the pair was trading down at 119 just seven trading days ago, the continued JPY weakness off the back of Kuroda's aggressive monetary easing campaign. The USDJPY is doing its best to take on the 100 figure but it has come into some large barriers around the 99.45 level but we do expect to see the 100 handle breached during the trading week.
Happy Trading
@lowKeyCapital
Yesterday we saw trading adopting its usual rhetoric of a struggling European session followed by an aggressive US session. For the large part of the European session we saw all asset classes struggle to make moves to the upside and US futures started the day in the negative. It wasn't long before we saw the 'Buy the Dips' mentality across the market and the equity markets moved higher testing the previous highs. The Dow was trading above the 14700 handle and the SPX trading above the 1570 handle. Coupled with this move to the upside we saw US Dollar weakness and there were some big swings in the FX market with the US dollar losing ground against some of its major pairs.
As we noted on Monday we are now in earnings season in the US and so far so good earnings have beaten analysts expectations. There was a slight cause of worry for investors as 75% of the companies listed in the SPX had revised a negative earnings outlook, and it was seen as an opportunity to take some money off the table and lock in some profits. While some saw this as an opportunity to take money off the table we have seen continued pressure from retail investors who have missed out on the big equity moves to enter the market. This is a particularly dangerous game entering at these levels as we have come a long way in a short space of time and there are calls for a 5-10% correction over the coming weeks. I don't think that earnings in the US have enough power to be the catalyst for this correction we would need something a bit more substantial to get the correction under way, maybe some developments from North Korea or some significant data from the EU, until that happens we should continue to ride the wave created by the FED and as long as they keep their finger on the button markets will inevitably move higher.
Today the FED will release minutes of its March meeting when policy makers left the pace of bind purchases unchanged.
In the FX market we saw all the real volatility yesterday. The EURUSD pair traded down around the 1.30 handle during the European session but we saw the pair moving higher and tripping stops now trading above the 1.31 level. There is said to be significant orders above the 1.31200 level so a push through here could see an aggressive short squeeze.
In terms of the EURJPY pair we have seen the 130 level taken out, just to put into context the pair was trading down at 119 just seven trading days ago, the continued JPY weakness off the back of Kuroda's aggressive monetary easing campaign. The USDJPY is doing its best to take on the 100 figure but it has come into some large barriers around the 99.45 level but we do expect to see the 100 handle breached during the trading week.
Happy Trading
@lowKeyCapital
Tuesday, 9 April 2013
Breakfast Blog
Good Morning,
Europe's markets look set to open higher once again this morning as they look to claw back the ground from last week's sell off, helped in no small part by another wall of money. This time from japan in a search for a return as yields on JGB's plunge, while the Japanese currency has also dropped, pushing to within 50 pips of 100 for the first time since May 2009. There appeared to be some demand for European Government bonds, in particular peripheral bond with higher yields with Spain and Italy seeing their yields slide back despite the dire economic outlook in both economies, while yields in France fell as well in spite of the poor outlook there. It would appear that the the prospect of the implied backstop of Draghi's OMT program is prompting a much more "risk on" attitude amongst yield starved investors. Time will eventually tell whether this is a wise move, given Europe's continuing problems.
The American stock market rallied yesterday to close the gap from the NFP's on Friday helped by The JPY weakness and extremely thin volume. Yesterday was actually the lowest Non-holiday trading day and Lowest average trade size. This shows that no big investors or funds want to go long the market at these lofty levels as a sizable pull-back is inevitable and all heavy volume trades have come when selling the market recently. Home-builders were the best performers yesterday, up 2% on no news what so ever. Copper and oil rose 0.9%, the USD gained 0.25% broadly and the Vix held around the 13.5 mark.
The EUR/USD was in a range between 1.2990 and 1.3035 yesterday and during the overnight Asian session we saw it test higher to highs of 1.3066 but is on offer this morning as it is nearing the 1.30 handle as I type. The economic calendar is very sparse for European Data this morning and it would have been an ideal opportunity for it to rally against the Dollar with the FOMC minutes coming up tomorrow night. A New York think tank published a report yesterday on a very Dovish Minutes from this meeting, with the Fed not wanting to taper or reduce Asset purchases until 2 very strong jobs reports in a row were seen together.
This would essentially mean it will not be until Q3 or Q4 this year that we might potentially see a pull back in purchases because the Summer Months have been notoriously poor for Jobs numbers.
We have heard reports of good bids in the 1.2970-1.2980 level in the EURUSD and topside supply starting at 1.3050 all the way up to the 1.31 handle. Looking at the Equities, the range in the S&P 500 we have been following is from 1538 (March low) and 1573(year to date intraday trading high). These will both provide good support and resistance levels to trade off.
Good luck in the Markets./
Europe's markets look set to open higher once again this morning as they look to claw back the ground from last week's sell off, helped in no small part by another wall of money. This time from japan in a search for a return as yields on JGB's plunge, while the Japanese currency has also dropped, pushing to within 50 pips of 100 for the first time since May 2009. There appeared to be some demand for European Government bonds, in particular peripheral bond with higher yields with Spain and Italy seeing their yields slide back despite the dire economic outlook in both economies, while yields in France fell as well in spite of the poor outlook there. It would appear that the the prospect of the implied backstop of Draghi's OMT program is prompting a much more "risk on" attitude amongst yield starved investors. Time will eventually tell whether this is a wise move, given Europe's continuing problems.
The American stock market rallied yesterday to close the gap from the NFP's on Friday helped by The JPY weakness and extremely thin volume. Yesterday was actually the lowest Non-holiday trading day and Lowest average trade size. This shows that no big investors or funds want to go long the market at these lofty levels as a sizable pull-back is inevitable and all heavy volume trades have come when selling the market recently. Home-builders were the best performers yesterday, up 2% on no news what so ever. Copper and oil rose 0.9%, the USD gained 0.25% broadly and the Vix held around the 13.5 mark.
The EUR/USD was in a range between 1.2990 and 1.3035 yesterday and during the overnight Asian session we saw it test higher to highs of 1.3066 but is on offer this morning as it is nearing the 1.30 handle as I type. The economic calendar is very sparse for European Data this morning and it would have been an ideal opportunity for it to rally against the Dollar with the FOMC minutes coming up tomorrow night. A New York think tank published a report yesterday on a very Dovish Minutes from this meeting, with the Fed not wanting to taper or reduce Asset purchases until 2 very strong jobs reports in a row were seen together.
This would essentially mean it will not be until Q3 or Q4 this year that we might potentially see a pull back in purchases because the Summer Months have been notoriously poor for Jobs numbers.
We have heard reports of good bids in the 1.2970-1.2980 level in the EURUSD and topside supply starting at 1.3050 all the way up to the 1.31 handle. Looking at the Equities, the range in the S&P 500 we have been following is from 1538 (March low) and 1573(year to date intraday trading high). These will both provide good support and resistance levels to trade off.
Good luck in the Markets./
Monday, 8 April 2013
Good Morning Traders
Well Friday's NFP data was poor and it left a lot of analysts in shock, with the headline number of 88,000k coming in well below the expected 190,000k of new jobs added. Despite this poor reading the US economy still remains one of the few economies where the economic data is still porting numbers well above Europe and the UK. One thing traders and investors alike should take from this poor reading, is that the FED is likely to push back talk of the tapering of QE towards the end of this year. This week kicks off earning season, so all eyes will now be looking at whether the US equity markets are too high relative to valuations and future earnings estimates. Closer to home we have growth forecasts from the French and Spanish governments both expected to be revised down from previous expectations. In Italy we are likely to see the new government fiasco put on hold until the summer, as a new election can only take place after the election of a new president which is due to be rolled out in may, the markets continue to remain remarkably relaxed, reflected by the sharp decline in bond yields on Friday. We are likely to see some headlines creep up in relation to the Portuguese bailout, as we saw the rejection of the €1.3bn EU austerity measures by the Portuguese government.
In terms of the FX market, we saw the EURUSD pair move back above the 200MDA off the back of the poor NFP, sentiment has changed now for the EUR and we should look to move higher as long as we trade above the 1.2875 handle. If we can hold this level we will be targeting 1.3040 (100MDA) and potentially 1.3170. In terms of cable the bullish engulfing candle we saw a few weeks ago keeps the outlook positive and a push beyond 1.5230 targets a move higher to the 1.5420 level. I think at these levels we may see some sellers come into the market looking to short this pair on the back of Carney entering the frame this summer and he is expected to increase the monetary easing policy of the BOE.
In conclusion, there is plenty of news out this week so expect some wild swings and keep on top of that economic calender so you know what to expect and when, other than that happy trading.
@lowkeyCapital
Well Friday's NFP data was poor and it left a lot of analysts in shock, with the headline number of 88,000k coming in well below the expected 190,000k of new jobs added. Despite this poor reading the US economy still remains one of the few economies where the economic data is still porting numbers well above Europe and the UK. One thing traders and investors alike should take from this poor reading, is that the FED is likely to push back talk of the tapering of QE towards the end of this year. This week kicks off earning season, so all eyes will now be looking at whether the US equity markets are too high relative to valuations and future earnings estimates. Closer to home we have growth forecasts from the French and Spanish governments both expected to be revised down from previous expectations. In Italy we are likely to see the new government fiasco put on hold until the summer, as a new election can only take place after the election of a new president which is due to be rolled out in may, the markets continue to remain remarkably relaxed, reflected by the sharp decline in bond yields on Friday. We are likely to see some headlines creep up in relation to the Portuguese bailout, as we saw the rejection of the €1.3bn EU austerity measures by the Portuguese government.
In terms of the FX market, we saw the EURUSD pair move back above the 200MDA off the back of the poor NFP, sentiment has changed now for the EUR and we should look to move higher as long as we trade above the 1.2875 handle. If we can hold this level we will be targeting 1.3040 (100MDA) and potentially 1.3170. In terms of cable the bullish engulfing candle we saw a few weeks ago keeps the outlook positive and a push beyond 1.5230 targets a move higher to the 1.5420 level. I think at these levels we may see some sellers come into the market looking to short this pair on the back of Carney entering the frame this summer and he is expected to increase the monetary easing policy of the BOE.
In conclusion, there is plenty of news out this week so expect some wild swings and keep on top of that economic calender so you know what to expect and when, other than that happy trading.
@lowkeyCapital
Friday, 5 April 2013
Breakfast Blog
Good Morning, Happy Friday,
Well yesterday was one for the history books. A day of massive moves in the Forex Markets. Largest one-day gain for EUR/JPY since 2008! (498 pips). After Mario Draghi kept interest rates on hold he warned of downside risk to the Eurozone and set up the start of his press conference in a dovish manner but their was no follow through with his Dovish tone or downside in any Euro pair. The Euro initially climbed to 1.2835 after the interest rates were kept unchanged but started selling as soon as he mentioned "downside risk", the market was hoping for some indication about the ECB taking action and although he left the door open, he was vague and emphasized there was little the ECB could do. The Market had been pricing in an upcoming rate cut all week and with no clear sign it sparked a spectacular turnaround in EUR/USD . From 1.2750, the pair shot to 1.2934. The last leg of the move come from a break of the 200-DMA at 1.2893.
Early in US Trading, USD/JPY took another leg higher adding another 100 pips to 96.41. Cable went along for the ride, jumping nearly 200 pips from the lows to 1.5232 from the 1.5045 lows.
Overall it was an intense day of trading with some gigantic moves in all the Yen crosses salted with major volatility in the Euro and Pound. If we had days like that more often we could sit on a beach in St Barts and do this all day!!
Looking at Equities, The Dax along with some of the other European bourses sold off heavily after Draghi left rates unchanged. If you remember on Tuesday the Dax rallied nearly 150 points on bad economic news and that move has been nearly paired now. To be honest I am nearly sure that the 7770 will be tested this morning. This is where the move began and generally when a market gets let down like this its back to where it came from. There is a trendline at 7855 which was broken yesterday and last Thursday and this will provide resistance.
Is it just us or have the European Equities started to cry out for easing? The European Markets are behaving exactly like the American stock Market did prior to QE3, rallying on bad news because of the likelihood of more or continued Quantitative Easing or more acomodating Monetary Policy. Yesterday the DAX, IBEX and the FTSE all fell hard when their respective central banks failed to deliver more liquidity support. We are very bearish on European stocks for this reason as we believe the ECB will definitely not deliver a cut at the May meeting and with only a chance of doing so at the June meeting. For this reason additional capital may flow out of European stocks and into the S&P 500.
This just proves the fact that every Stock Market is revolving around central bank policies and yesterday just re-instated the fact to not fight this fact but to just go with the flow.
Yesterdays reversal candle on the Daily chart of the EURUSD was extremely strong. A huge Dragon Fly doji, with 200 points in the difference between the lows and highs. It technically looks extremely bullish and from a fundamental perspective with the Japanese burning their currency and the Americans doing likewise it would not take much good news for the Euro to be squeezed much higher against the Dollar. Some medium term upside targets could be around the 1.33- 1.34 area. The break of the 200 Day moving Average will allow traders to start buying dips as opposed to selling rallies. However a break below the 200 DMA at 1.2893 would look bearish again showing the pair hasn't the ability to bounce. It will be tricky for the next few days until we get some direction. Hopefully the American Non Farm Payroll's data at 13 30 GMT today will give the Dollar and thus the Euro some direction near term. A poor number which is likely considering this weeks soft Data may cause another Euro squeeze with Funds and traders Dollars and buying back Euro short positions.
Good luck today and have a great weekend.
Thursday, 4 April 2013
Good Morning Traders
These next two days could be potentially the most volatile days of the trading month as we will be waiting to hear from the ECB and the BOE on Interest rate decisions early this afternoon, we have the NFP tomorrow from the US and on top of all this we have the BOJ governor Kuroda meeting for the first time of his leadership campaign. Overnight in the Asian trading session we saw a big move in the USDJPY pair as investors are expecting Kuroda to adopt an aggressive monetary easing programme in an effort to achieve his 2% inflation target, At the time of writing the pair sits at 95.40 and we should be looking at 100 as a target over the medium/long term. The graph below will give you a graphical representation of the big move we saw overnight.
We saw a report out this morning from Citi bank which stated that the 'fair value' of the EURUSD pair for the moment is 1.26, we have seen the significant move to the downside in the pair over the last couple of months and we would be hoping that the previous resistance levels below 1.30 can hold for the pair, but any additional negative sentiment from the eurozone will inevitably cause a move to the downside targeting this 1.26 level. We will be keeping a close eye on the ECB interest rate decision this afternoon, and we are not expecting to see any change from the .25% existing rate, but Draghi might drop a few hints of a rate change over the coming weeks and traders will need to be prepared for the volatile swings that a statement of this nature could bring with it.
Across the water in the US we saw bad economic data (ADP: 158,000) which caused a sell off in the US equity markets as traders are expecting a lower than expected NFP number tomorrow. At one stage the SPX was down 20 points but selling was met by buying power and the index recovered with a strong bounce and it looks to have stabilised this morning.
In terms of advice for traders today, we would be looking to sit on the sidelines as we know the dangers of trading these big news releases, swings can be aggressive and we like the JPY play against the USD and the EUR but we would wait to buy on weakness as the big move came overnight (Seen Below).
Happy Trading
@lowkeycapital
These next two days could be potentially the most volatile days of the trading month as we will be waiting to hear from the ECB and the BOE on Interest rate decisions early this afternoon, we have the NFP tomorrow from the US and on top of all this we have the BOJ governor Kuroda meeting for the first time of his leadership campaign. Overnight in the Asian trading session we saw a big move in the USDJPY pair as investors are expecting Kuroda to adopt an aggressive monetary easing programme in an effort to achieve his 2% inflation target, At the time of writing the pair sits at 95.40 and we should be looking at 100 as a target over the medium/long term. The graph below will give you a graphical representation of the big move we saw overnight.
We saw a report out this morning from Citi bank which stated that the 'fair value' of the EURUSD pair for the moment is 1.26, we have seen the significant move to the downside in the pair over the last couple of months and we would be hoping that the previous resistance levels below 1.30 can hold for the pair, but any additional negative sentiment from the eurozone will inevitably cause a move to the downside targeting this 1.26 level. We will be keeping a close eye on the ECB interest rate decision this afternoon, and we are not expecting to see any change from the .25% existing rate, but Draghi might drop a few hints of a rate change over the coming weeks and traders will need to be prepared for the volatile swings that a statement of this nature could bring with it.
Across the water in the US we saw bad economic data (ADP: 158,000) which caused a sell off in the US equity markets as traders are expecting a lower than expected NFP number tomorrow. At one stage the SPX was down 20 points but selling was met by buying power and the index recovered with a strong bounce and it looks to have stabilised this morning.
In terms of advice for traders today, we would be looking to sit on the sidelines as we know the dangers of trading these big news releases, swings can be aggressive and we like the JPY play against the USD and the EUR but we would wait to buy on weakness as the big move came overnight (Seen Below).
Happy Trading
@lowkeycapital
BOJ Meeting
The Bank of Japan kept overnight rates at 0.0-0.1% and introduces quantitative qualitative easing, pledging to buy JPY 7trl of bonds per month-a faster rate than expected. 40 year JGB's are now eligible for bond purchases and the BOJ are to double the holdings of JGB's and ETF's in two years . with the aim of increasing the monetary base at an annual pace of JPY 60-70trl. The BOJ unanimously agreed to bring forward the timing of open-ended asset purchases and extending the duration of JGB's targetted.
Here is the move from this mornings announcement.
Here is the move from this mornings announcement.
Wednesday, 3 April 2013
Cable Weekly Chart
Cable's weekly chart set up for a further decline, Some poor economic data over the last couple of weeks combined with the new incoming Governor's potential for an aggressive easing program may see declines towards 1.42 in the coming months. On the weekly chart we saw selling off the important 1.526 level which was a previous support now turned resistance. This may cap the bounce in Cable and would require some very good Fundamental news to breach.
Breakfast Blog
Good Morning Traders,
Today will be the first real trading day of the Second Quarter and the first day in the build up for Friday's Jobs report, The Non-Farm Payrolls. Yesterday's price action was muted from a combination of low volume and Trader's adopting a wait and see approach to this week's Three risk events; The BOJ two day meeting, ECB Press conference and the Job's report.
The American Markets were open on Monday whilst the European bourses remained closed. We saw the release of the ISM Manufacturing Index which came in at 51.3 from a forecast of 54.2. This can normally be seen as a good indicator for the Jobs report on Friday and we saw some Dollar weakness and position squaring ahead of the key risk events. USD/JPY sold off to 92.50 but found a bid there and has now retraced back to 93.4, with an Asian High of 93.697. The EUR/USD also managed to retrace some ground but only down to this Dollar weakness we saw on Monday, we reached session highs of 1.2873 but have sold off since then and now trade just under the 1.28 handle. The Euro definitely remains a sell on any rally with some Analysts calling for 1.15 inside the next 6 Month. Near term support can be seen at 1.2750 with reported barrier option interest here, but realistically it looks like we are going to test the November 2012 lows of 1.2690 in the coming days or weeks. If we do not see a bounce here we may see further declines quickly as Euro bulls may start to throw in the Towel. More rhetoric about Cyrpus, The Slovenian problems and Strong American Data weigh all the risks to the downside in this pair.
The Dax rallied nearly 150 points in Yesterdays session on weak Eurozone Manufacturing. This doesn't quite make sense. There could be a few reasons for this move however, A rotation into Equities for big funds who are not getting any proper return from bonds and commodities or has the market started to price in an Interest Rate cut for the ECB tomorrow which would be negative for the Euro and Bonds but Positive for Stocks.
Gold has been in a tight range for the last 2 weeks, stuck between 1612 and 1590, It finally broke through resistance at 1590 yesterday and has sold off to 1567 with no real resistance now until the 2013 low of 1555. Funds are liquidating positions in Precious metals and putting money to work in the Stock Market because the returns are so much better and a further decline in the Price of Gold could be seen if we break through this important 1555 level. Gold Retraced to its 50% Fibonacci level following its 2013 drop and if it can not find support now it is poised to test the 1525 level.
Today will be the first real trading day of the Second Quarter and the first day in the build up for Friday's Jobs report, The Non-Farm Payrolls. Yesterday's price action was muted from a combination of low volume and Trader's adopting a wait and see approach to this week's Three risk events; The BOJ two day meeting, ECB Press conference and the Job's report.
The American Markets were open on Monday whilst the European bourses remained closed. We saw the release of the ISM Manufacturing Index which came in at 51.3 from a forecast of 54.2. This can normally be seen as a good indicator for the Jobs report on Friday and we saw some Dollar weakness and position squaring ahead of the key risk events. USD/JPY sold off to 92.50 but found a bid there and has now retraced back to 93.4, with an Asian High of 93.697. The EUR/USD also managed to retrace some ground but only down to this Dollar weakness we saw on Monday, we reached session highs of 1.2873 but have sold off since then and now trade just under the 1.28 handle. The Euro definitely remains a sell on any rally with some Analysts calling for 1.15 inside the next 6 Month. Near term support can be seen at 1.2750 with reported barrier option interest here, but realistically it looks like we are going to test the November 2012 lows of 1.2690 in the coming days or weeks. If we do not see a bounce here we may see further declines quickly as Euro bulls may start to throw in the Towel. More rhetoric about Cyrpus, The Slovenian problems and Strong American Data weigh all the risks to the downside in this pair.
The Dax rallied nearly 150 points in Yesterdays session on weak Eurozone Manufacturing. This doesn't quite make sense. There could be a few reasons for this move however, A rotation into Equities for big funds who are not getting any proper return from bonds and commodities or has the market started to price in an Interest Rate cut for the ECB tomorrow which would be negative for the Euro and Bonds but Positive for Stocks.
Gold has been in a tight range for the last 2 weeks, stuck between 1612 and 1590, It finally broke through resistance at 1590 yesterday and has sold off to 1567 with no real resistance now until the 2013 low of 1555. Funds are liquidating positions in Precious metals and putting money to work in the Stock Market because the returns are so much better and a further decline in the Price of Gold could be seen if we break through this important 1555 level. Gold Retraced to its 50% Fibonacci level following its 2013 drop and if it can not find support now it is poised to test the 1525 level.
Tuesday, 2 April 2013
Breakfast Blog
Good Morning Traders
Hope everyone is well and recovering after the extended weekend. Things have started off the new quarter relatively quiet in the first few hours of trading. The only major thing to note so far is that the USD is trading a bit softer but we do have a significant amount of US data out later on in the week which should help with a bit of direction and get the ball rolling again. It will be interesting to see if the strong USD and a strong SPX will continue as it has last month. In terms of things a bit closer to home the Euro is off its lows but we will be continuing our 'Selling Rallies' psychology as there is plenty of turmoil still surrounding the eurozone and we would not be looking to hold any long positions until we get some conformation that things are improving.
Lets keep money off the table until we can establish the mood across the markets, there has been a lot talk of profit taking as soon as the SPX made its new high, and we shall wait for the respective triggers before placing any trades. Also just to note that we are back on our usual timing sequence as the clocks went forward over the weekend.
Hope everyone is well and recovering after the extended weekend. Things have started off the new quarter relatively quiet in the first few hours of trading. The only major thing to note so far is that the USD is trading a bit softer but we do have a significant amount of US data out later on in the week which should help with a bit of direction and get the ball rolling again. It will be interesting to see if the strong USD and a strong SPX will continue as it has last month. In terms of things a bit closer to home the Euro is off its lows but we will be continuing our 'Selling Rallies' psychology as there is plenty of turmoil still surrounding the eurozone and we would not be looking to hold any long positions until we get some conformation that things are improving.
Lets keep money off the table until we can establish the mood across the markets, there has been a lot talk of profit taking as soon as the SPX made its new high, and we shall wait for the respective triggers before placing any trades. Also just to note that we are back on our usual timing sequence as the clocks went forward over the weekend.
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