Good Morning Traders.
Global equity markets seem to be hanging on the edge of a cliff as we speak. In the last few trading days the aggressive nature of the prevailing up trend has lost its explosive power but it continues to remain range bound at these high levels. We are seeking new highs being made in the US equity markets but there has been a lack of persistent follow through which will give both bulls and bears something to speak about.
The markets as a whole seem to be confined to these tight ranges and the lack of important economic headlines should keep us in these ranges unless we hear something unexpected.
The interesting story over the last few days that caught the attention of the market was the Wall St journal article which highlighted the FED's map to taper their monetary easing policy (QE) toward the end of 2013. This headlined caused a minor pull back in the equity markets only to be quickly bought up again. As we mentioned in a blog last week, the European session continues to lack volume and they have been selling the market and we have seen the american market participants come into the market and give strong support.
Levels for me today are as follows: EURUSD 1.3040 / 1.2940, S&P 1620 / 1636, DowJ 15070 / 15,110
In conclusion we have a bit of economic data from the Eurozone this morning in the form of German ZEW and Eurozone Economic Sentiment Indicator which should give direction to the market. We expect to see a German reading below expectation due to the recent leg lower in the DAX but want for the headline don't speculate. I would be sticking to the philosophy of buying any dips unless we see something drastic in the market.
Happy Trading
Tuesday, 14 May 2013
Monday, 13 May 2013
Breakfast Blog
Good Morning Traders,
A quiet start to the week with no Tier 1 Data from Europe this morning with Traders awaiting the Retail Sales Data from the States at 13 30 this afternoon.
Thursday and Friday were two days completely dominated by Dollar Strength. We saw the USD/JPY push from below 99 to nearly 102 in just two trading sessions. Strong U.S. Data combined with a rumour that FED watcher John Hilsenrath's weekend articles had a direct interview with a member of the FOMC and a detailed plan about the FED's exit strategy proved a catalyst for Dollar Strength with a number of significant levels being breached. These included 1.30 to the downside in the EUR/USD pair, parity in the AUD/USD pair, 100 to the upside in USD/JPY and the break of the narrow trading channel in spot Gold. This was a break of the 1440-1480 range, where we broke to the downside before recovering with a low print seen at 1419 on Friday, we trade at 1431 Spot as I type.
Over the Summer Months one of the Markets main risk events will be how the Fed plans to reduce/halt/continue/increase its Asset Purchase program as the Markets have become petrified that their training wheels could potentially be removed in Q4 of this year. Even on Thursday afternoon a rumour that John Hilsenrath's weekend press contained details of a Fed exit strategy from its current program caused a 60 point drop in the Dow Jones before it rallied back after the close of U.S. trading. This clearly shows the Market is overly long and looking for any reason to short the market. Trading Equity Indices in this current climate involves no knowledge of Company Performance, technical skills or Analysis. The Market simply revolves around Central Bank policy and nothing else and this evidently won't stop until Bernanke or Yellen or whoever chairs the Printing Press starts to draw out the Liquidity in the System causing a huge Stock Market Crash and hopefully resetting the Market in a more rational and transparent mind set.
The Move over 100 in the USD/JPY confirms that the Market believes in Kuroda and his easing Policies and bid to beat deflation once and for all. With Japanese nationals now Net buyers of Foreign Bonds compared to Domestic Bonds it saw the JGB Market being halted on Friday as the Yield grows so small as Japanese Investors are forced out of the Country with their Capital in a bid to Find a 3% or greater Yield for their Money. This is the point that the Yen may start to weaken significantly when Wealth from Japanese citizens is forced into Europe and The United States. If we see more Data supporting the outflow of Jaonese Wealth over the coming weeks and months we may see 1.20 in the Pair before the End of the Summer.
The EUR/USD pair has been constrained between the 200 DAY MA at 1.29 and 1.32 topside. The Market thinks that the Big Panda (Asian Central Bank) has a large DNT (do not touch) Option in play here and is playing the ranges with big money on both sides. The play here is to go with a daily close under or over these parameters or simply trade at extremes of this 300 Pip Range.
We will have some order levels up later once America wakes up.
Good Luck in the Markets. Lowkey
A quiet start to the week with no Tier 1 Data from Europe this morning with Traders awaiting the Retail Sales Data from the States at 13 30 this afternoon.
Thursday and Friday were two days completely dominated by Dollar Strength. We saw the USD/JPY push from below 99 to nearly 102 in just two trading sessions. Strong U.S. Data combined with a rumour that FED watcher John Hilsenrath's weekend articles had a direct interview with a member of the FOMC and a detailed plan about the FED's exit strategy proved a catalyst for Dollar Strength with a number of significant levels being breached. These included 1.30 to the downside in the EUR/USD pair, parity in the AUD/USD pair, 100 to the upside in USD/JPY and the break of the narrow trading channel in spot Gold. This was a break of the 1440-1480 range, where we broke to the downside before recovering with a low print seen at 1419 on Friday, we trade at 1431 Spot as I type.
Over the Summer Months one of the Markets main risk events will be how the Fed plans to reduce/halt/continue/increase its Asset Purchase program as the Markets have become petrified that their training wheels could potentially be removed in Q4 of this year. Even on Thursday afternoon a rumour that John Hilsenrath's weekend press contained details of a Fed exit strategy from its current program caused a 60 point drop in the Dow Jones before it rallied back after the close of U.S. trading. This clearly shows the Market is overly long and looking for any reason to short the market. Trading Equity Indices in this current climate involves no knowledge of Company Performance, technical skills or Analysis. The Market simply revolves around Central Bank policy and nothing else and this evidently won't stop until Bernanke or Yellen or whoever chairs the Printing Press starts to draw out the Liquidity in the System causing a huge Stock Market Crash and hopefully resetting the Market in a more rational and transparent mind set.
The Move over 100 in the USD/JPY confirms that the Market believes in Kuroda and his easing Policies and bid to beat deflation once and for all. With Japanese nationals now Net buyers of Foreign Bonds compared to Domestic Bonds it saw the JGB Market being halted on Friday as the Yield grows so small as Japanese Investors are forced out of the Country with their Capital in a bid to Find a 3% or greater Yield for their Money. This is the point that the Yen may start to weaken significantly when Wealth from Japanese citizens is forced into Europe and The United States. If we see more Data supporting the outflow of Jaonese Wealth over the coming weeks and months we may see 1.20 in the Pair before the End of the Summer.
The EUR/USD pair has been constrained between the 200 DAY MA at 1.29 and 1.32 topside. The Market thinks that the Big Panda (Asian Central Bank) has a large DNT (do not touch) Option in play here and is playing the ranges with big money on both sides. The play here is to go with a daily close under or over these parameters or simply trade at extremes of this 300 Pip Range.
We will have some order levels up later once America wakes up.
Good Luck in the Markets. Lowkey
Friday, 10 May 2013
Good Morning Traders
We have seen continued support of this aggressive rally and long may it continue. The trading psychology has been simple, buy any dips as the market is being bought at every given opportunity as retail investors look to get aboard this move. Depending on your trading strategy, I would remain cautious for investors entering at these levels with a long term hold view, in my opinion these levels favour short term day trading strategies with a daily or weekly time-frame in mind. As long as these markets are being supported by accommodative central bank policy these markets can only move higher, the stock markets have become totally un correlated with the health of the global economy. The markets disregards poor economic data and it looks that the only thing that will be able to make them turn around is the speculation of reduced central bank policy.
Yesterday we had some good job numbers from the US, although small the economy is taking a small step in the right direction. The main move we saw off the back of this news was strength in the USD against some of its major currency pairs. One interesting thing to note was the fact that the USD/JPY pair broke through the psychological 100 level, a level it had been testing for the last few weeks. As it is Friday and we have had another strong week with gains across the board we would expect to see some small profit taking across the board towards the close of the US session.
As mentioned in previously blogs this strong equity performance can be attributed to the fact that other asset classes continue to produce negative gains. Money has been taken out of both Gold and Bonds as investors look to cash in on the recent move in the equity market. That is why I don't see any correction in sigh unless we see some substantial news that will force individuals to sit on the sidelines.
Happy Trading
@lowkeycapital
We have seen continued support of this aggressive rally and long may it continue. The trading psychology has been simple, buy any dips as the market is being bought at every given opportunity as retail investors look to get aboard this move. Depending on your trading strategy, I would remain cautious for investors entering at these levels with a long term hold view, in my opinion these levels favour short term day trading strategies with a daily or weekly time-frame in mind. As long as these markets are being supported by accommodative central bank policy these markets can only move higher, the stock markets have become totally un correlated with the health of the global economy. The markets disregards poor economic data and it looks that the only thing that will be able to make them turn around is the speculation of reduced central bank policy.
Yesterday we had some good job numbers from the US, although small the economy is taking a small step in the right direction. The main move we saw off the back of this news was strength in the USD against some of its major currency pairs. One interesting thing to note was the fact that the USD/JPY pair broke through the psychological 100 level, a level it had been testing for the last few weeks. As it is Friday and we have had another strong week with gains across the board we would expect to see some small profit taking across the board towards the close of the US session.
As mentioned in previously blogs this strong equity performance can be attributed to the fact that other asset classes continue to produce negative gains. Money has been taken out of both Gold and Bonds as investors look to cash in on the recent move in the equity market. That is why I don't see any correction in sigh unless we see some substantial news that will force individuals to sit on the sidelines.
Happy Trading
@lowkeycapital
Tuesday, 7 May 2013
Good Morning Traders
We are all back in the office this morning after the extended bank holiday weekend and we have al European markets open for trading. It is amazing to reflect back on last week as we saw the SPX make new historic highs and this was re-enforced by a strong close above the 1600 level. So we ask ourselves where to next? There has been a lot of speculation that we might see a 5-10% correction across some of the equity markets, as some analysts have called for some profit taking coming into the month of May, but the 'Sell in May and go away' ideology may be a thing of the past. It was normally seen as a time when traders would leave the office in May to attend summer events and take a break from the market after locking in some nice first quarter profits but with the advances in technology traders can access the markets through a variety of mediums (Laptop, Ipad, Iphone) so I think this may be a thing of the past and I would take it with a pinch of salt.
The current environment is dominated by low interest rates and central bank aggressive easing policies and this is being reflected in the equity markets across the globe. In sort the SPX trades over the 1615 level, the Dow trades above the 14070 level, the Dax 8130 all of these levels in extreme over bought levels signalled by the RSI indicator. But there is nothing we can do and it is not a wise move to be fighting the central banks and their whatever it takes attitude. We saw last week that the ECB reduced interest rates by .25% in an effort to stimulate the Eurozone, and it was hinted that they would be keen to reduce interest rates going forward if things don't improve. This market will remain in a strong up-trend unless we get some significant news headlines, and as of yet there is nothing in sight to cause a turn around so expect to see markets move higher. Also take note that poor headline data will not be enough to trigger this correction it will in fact be seen as a catalyst for more easing or a reduction in interest rates so we will be faced with the 'Bad news is good news' scenario for the coming months.
In terms of the FX market all of the easing measures adopted by central banks should be negative for domestic currencies, but with all economies taking this approach the effects may be slightly diluted and not as drastic as previously expected.
In conclusion these are very unusual trading times and volatility is widespread across all asset classes, we have seen some of the safe heavens such as gold and silver react in a volatile manor, which has caused a rotation into the equity markets as investors hunt for gains. If there is one bit of advice I can give you, don't fight the central banks and don't look for a top in this market regardless if you feel that the market is too high, buy the dips as we continue to move higher.
@lowKeyCapital
We are all back in the office this morning after the extended bank holiday weekend and we have al European markets open for trading. It is amazing to reflect back on last week as we saw the SPX make new historic highs and this was re-enforced by a strong close above the 1600 level. So we ask ourselves where to next? There has been a lot of speculation that we might see a 5-10% correction across some of the equity markets, as some analysts have called for some profit taking coming into the month of May, but the 'Sell in May and go away' ideology may be a thing of the past. It was normally seen as a time when traders would leave the office in May to attend summer events and take a break from the market after locking in some nice first quarter profits but with the advances in technology traders can access the markets through a variety of mediums (Laptop, Ipad, Iphone) so I think this may be a thing of the past and I would take it with a pinch of salt.
The current environment is dominated by low interest rates and central bank aggressive easing policies and this is being reflected in the equity markets across the globe. In sort the SPX trades over the 1615 level, the Dow trades above the 14070 level, the Dax 8130 all of these levels in extreme over bought levels signalled by the RSI indicator. But there is nothing we can do and it is not a wise move to be fighting the central banks and their whatever it takes attitude. We saw last week that the ECB reduced interest rates by .25% in an effort to stimulate the Eurozone, and it was hinted that they would be keen to reduce interest rates going forward if things don't improve. This market will remain in a strong up-trend unless we get some significant news headlines, and as of yet there is nothing in sight to cause a turn around so expect to see markets move higher. Also take note that poor headline data will not be enough to trigger this correction it will in fact be seen as a catalyst for more easing or a reduction in interest rates so we will be faced with the 'Bad news is good news' scenario for the coming months.
In terms of the FX market all of the easing measures adopted by central banks should be negative for domestic currencies, but with all economies taking this approach the effects may be slightly diluted and not as drastic as previously expected.
In conclusion these are very unusual trading times and volatility is widespread across all asset classes, we have seen some of the safe heavens such as gold and silver react in a volatile manor, which has caused a rotation into the equity markets as investors hunt for gains. If there is one bit of advice I can give you, don't fight the central banks and don't look for a top in this market regardless if you feel that the market is too high, buy the dips as we continue to move higher.
@lowKeyCapital
Tuesday, 30 April 2013
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
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
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
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