Good Morning Traders,
Another Rollercoaster ride in the markets yesterday with some technical damage being done in the Major European bourses. The Dax was down nearly 2% at one stage yesterday but the bounce back ability of the American stock market roughly halved its losses. A combination of more Cyprus rheotric, poor European data, Italian Downgrade rumours and a poor Italian debt Auction saw a very heavy session for all European asset classes. This also weighed on American stock Futures with the S&P 500 opening at the lows of the day at 1551 but closing at the highs of the day at 1563, a couple of points shy of the all time highs. Surely today we must see this 1566 level broken, what a perfect American first quarter of trading that would be.
Yesterday morning the Dax broke a very important trendline at 7855 tripping stops and sold off to 7755 before bouncing back in the afternoon. This trendline break shows a top is probably in place and a retest of this 7855 level would prove a great place to establish a short position.
Yesterday we saw European periphery bond yields climbing again on political uncertainty, Cyprus and contagion fears. We also believe it is a flow rotational issue where investors are liquidating positions in bonds and putting the money to work in stocks, specifically the American stock Market.
Moving onto currencies. The Euro lagged yesterday breaking through barriers at 1.2825 and 1.2800 in the EUR/USD pair, selling off to a new year to date low of 1.2750. The buyers came in here and this morning we are seeing a relieve rally with the Euro back over the 1.28 handle as I type. The Euro is a sell on any rally as some analysts are calling 1.15 in the coming months. Anywhere near the 200 day moving average at 1.2881 would be a great sell but i doubt we may see this level again for a long time.
USD/JPY looks to have based around the 94 handle and has been a period of consolidation with Japanese firms repatriating Yen for their Financial year end. We believe that next week and the start of the new quarter will bring further Easing and further Yen weakening. A medium target of 100 for this pair in the coming weeks/months is very achievable and these levels look strong. Trendline support at 93.55 proved very strong when tested on Monday and will most likely not be tested again.
This is the last trading day of the Month and the last quarter so expect some volatility as funds, traders and investors square their positions. For the Next quarter we believe a lot of investors will establishing short Yen and Euro positions and we may see more flow rotation into American Stocks. If this is the Case we will see more Dollar strength and if the correlation remains between the S&P 500 and the Dollar it may not be the "Sell in May and go away" story that we generally see in the Market.
Some touted levels on the EUR/USD are 1.2750 on the downside, strong buying here along with Barrier related interest, Topside offers can be seen at 1.2820 all the way up to the 200 Day MA at 1.2881.
USD/JPY see's strong bids at the 94 handle and selling pressure from Japanese exporters at 94.75 through to the 95 handle.
Good Luck in the Markets, See you in Q2!!!
Thursday, 28 March 2013
Wednesday, 27 March 2013
Good Morning Traders
Its looks as though the weather we are experiencing over here in Ireland is similar to the mood amongst European investors. We start the day off in the usual negative territory, something we have become accustomed to over the last few weeks. As the old saying goes when it rains its pours and we have seen negative news multiply around the euro zone over the past couple of days. It started off with Cyprus, and the markets do not seem to happy with the deal that has been reached between the Cypriot Lawmakers and the ECB full details are to be disclosed during the course of the week. On top of this the Italian election has taken over the spotlight again and itr should dominate the headlines as the struggling nation is without a leading government. To add fuel to the fire there has been unconfirmed talk of an Italian downgrade which will come as no shock to investors, but it will undoubtedly compromise confidence within the euro zone.
All of this bad news flow has hit the Euro hard and the pair has come under increased pressure now trading down around the 1.28300 handle.
Over in the US things are very different the US equity market continues to grind higher disregarding all the poor euro zone economic data while it continues on its road higher, trying to breach the historic highs set back in 2007. The SPX is only 2 points off these levels and we expect to see this level breached this week.
We have been talking a lot recently for a market correction to take place, and we are standing by this idea, however it is going to take something a bit bigger than Cyprus to make this happen. It will be interesting to see what the SPX reaction will be when it makes its new high, this coupled with a potential Italian downgrade may be the catalyst we have been waiting for, however as we well know its a dangerous game to try pick a top and the last thing you want to do is stand in the way of the FED and Mr Bernanke, so wait for the set-up and trade your plan.
I would been more focused on the US equity market for the coming days buying any dips while keeping and eye out of the European markets.
@lowkeycapital
Its looks as though the weather we are experiencing over here in Ireland is similar to the mood amongst European investors. We start the day off in the usual negative territory, something we have become accustomed to over the last few weeks. As the old saying goes when it rains its pours and we have seen negative news multiply around the euro zone over the past couple of days. It started off with Cyprus, and the markets do not seem to happy with the deal that has been reached between the Cypriot Lawmakers and the ECB full details are to be disclosed during the course of the week. On top of this the Italian election has taken over the spotlight again and itr should dominate the headlines as the struggling nation is without a leading government. To add fuel to the fire there has been unconfirmed talk of an Italian downgrade which will come as no shock to investors, but it will undoubtedly compromise confidence within the euro zone.
All of this bad news flow has hit the Euro hard and the pair has come under increased pressure now trading down around the 1.28300 handle.
Over in the US things are very different the US equity market continues to grind higher disregarding all the poor euro zone economic data while it continues on its road higher, trying to breach the historic highs set back in 2007. The SPX is only 2 points off these levels and we expect to see this level breached this week.
We have been talking a lot recently for a market correction to take place, and we are standing by this idea, however it is going to take something a bit bigger than Cyprus to make this happen. It will be interesting to see what the SPX reaction will be when it makes its new high, this coupled with a potential Italian downgrade may be the catalyst we have been waiting for, however as we well know its a dangerous game to try pick a top and the last thing you want to do is stand in the way of the FED and Mr Bernanke, so wait for the set-up and trade your plan.
I would been more focused on the US equity market for the coming days buying any dips while keeping and eye out of the European markets.
@lowkeycapital
Tuesday, 26 March 2013
Morning Update
Who let De-Boom off!!
A complete Market Meltdown after a loose lipped Dijsselbloem claimed Cyrpus was a template for Eurozone Bank Restructuring! This caused a 150 pip drop in the EUR/USD and closer to 300 in EUR/JPY! Then a few hours later he retracted his statement which caused a 10 pip pop in EUR/USD! So the Damage was already done! After the Cyprus deal went through early on Monday morning we saw a rally to 1.3050, combined with the DAX over 8000 and the S&P 500 in the high 1560's, It looked risk on. But from the open of the European markets we saw a steady decline in Risk Assets and a lot of Japanese Yen strength as investors sought Safe-haven flows. Financial and Bank stocks took a hammering with some Italian Banks having to halt trading for periods during the day!
The Dax was down over 200 points from its highs at one stage yesterday after Mr Dijsselboems comments, but recovered some losses after he retracted his comments. USD/JPY sold off from 95 to lows of 93.57 on risk off sentiment, Tripping some huge stops just below the 94 handle, But recovered to close above 94.
The S&P 500 took a nose dive from close to all time highs to reach session lows of 1545, but recovered and closed above 1550.
Yesterday's volatile day just proved how much of a disaster the Eurozone is and that the crisis is far from being resolved. All of the can kicking has resulted in a complete mess and at this rate it looks highly likely that some countries may be forced out of the Eurozone or their good be a realistic break up of the single currency. From a trading perspective a sell the bounce strategy has to be adopted because this nonsense looks like carrying on for a significant length of time with some analysts calling fair value of the EUR/USD at 1.15. That's a 1400 pip drop from the level we trade at now.
The American economy looks very resilient and the S&P 500 looks extremely well supported by Quantitative easing and an abundance of a good economic data. However they cannot avoid the chaos in the Eurozone as the global Financial system is all interlinked and we fear a deeper correction in the American bourses may be inevitable with this ongoing chaos.
Some levels to sell EUR/USD at today are 1.2881, which is the 200 day moving average and if it gets higher the 1.29 handle would be a great sell entry point.
If we see more Yen strength today a firm break of 94.00 in the USD/JPY pair could lead to a deeper correction towards 90 as the pair is extemely overbought and looks set for a correction.
Good luck in the markets!
Lowkey
A complete Market Meltdown after a loose lipped Dijsselbloem claimed Cyrpus was a template for Eurozone Bank Restructuring! This caused a 150 pip drop in the EUR/USD and closer to 300 in EUR/JPY! Then a few hours later he retracted his statement which caused a 10 pip pop in EUR/USD! So the Damage was already done! After the Cyprus deal went through early on Monday morning we saw a rally to 1.3050, combined with the DAX over 8000 and the S&P 500 in the high 1560's, It looked risk on. But from the open of the European markets we saw a steady decline in Risk Assets and a lot of Japanese Yen strength as investors sought Safe-haven flows. Financial and Bank stocks took a hammering with some Italian Banks having to halt trading for periods during the day!
The Dax was down over 200 points from its highs at one stage yesterday after Mr Dijsselboems comments, but recovered some losses after he retracted his comments. USD/JPY sold off from 95 to lows of 93.57 on risk off sentiment, Tripping some huge stops just below the 94 handle, But recovered to close above 94.
The S&P 500 took a nose dive from close to all time highs to reach session lows of 1545, but recovered and closed above 1550.
Yesterday's volatile day just proved how much of a disaster the Eurozone is and that the crisis is far from being resolved. All of the can kicking has resulted in a complete mess and at this rate it looks highly likely that some countries may be forced out of the Eurozone or their good be a realistic break up of the single currency. From a trading perspective a sell the bounce strategy has to be adopted because this nonsense looks like carrying on for a significant length of time with some analysts calling fair value of the EUR/USD at 1.15. That's a 1400 pip drop from the level we trade at now.
The American economy looks very resilient and the S&P 500 looks extremely well supported by Quantitative easing and an abundance of a good economic data. However they cannot avoid the chaos in the Eurozone as the global Financial system is all interlinked and we fear a deeper correction in the American bourses may be inevitable with this ongoing chaos.
Some levels to sell EUR/USD at today are 1.2881, which is the 200 day moving average and if it gets higher the 1.29 handle would be a great sell entry point.
If we see more Yen strength today a firm break of 94.00 in the USD/JPY pair could lead to a deeper correction towards 90 as the pair is extemely overbought and looks set for a correction.
Good luck in the markets!
Lowkey
Monday, 25 March 2013
Morning Update
Good Morning Traders
So we have finally come to an agreement the game of cat and mouse between the ECB and the Cypriot government seems to be over. The deal was announced early this morning, the deal will hopefully free up aid for the nations ailing finances and the countries banking sector will begin a deep restructuring process. Cyprus will be granted €10bn of emergency loans, and individuals with less than €100k in bank deposit accounts will receive protection under their European principles.As we mentioned last week we were always expecting a deal to be reached and as we saw towards the end of the trading week last week that markets had already priced in a deal, assuming that a solution will be found. On the back of this news we have seen all the European equity markets move into the Green, and the EURUSD traded up at 1.3048, its highest level in two weeks.
We expect to see a rally of some sort in the equity markets on the back of the good news from Cyprus, this will be positive for stocks in the short term and it will put an end to any speculation that we might see the turmoil spill over to other struggling European nations. We expect to see S&P breach its high this week as data from the US has continued to support the strong move we have seen since January. As we mentioned last week, we are beginning to see news headlines out of Italy as they continue in an effort to form a new government, I would expect to see Italy take over the headlines as Cyprus will now be a thing of the past.
Happy Trading
@lowkeycapital
So we have finally come to an agreement the game of cat and mouse between the ECB and the Cypriot government seems to be over. The deal was announced early this morning, the deal will hopefully free up aid for the nations ailing finances and the countries banking sector will begin a deep restructuring process. Cyprus will be granted €10bn of emergency loans, and individuals with less than €100k in bank deposit accounts will receive protection under their European principles.As we mentioned last week we were always expecting a deal to be reached and as we saw towards the end of the trading week last week that markets had already priced in a deal, assuming that a solution will be found. On the back of this news we have seen all the European equity markets move into the Green, and the EURUSD traded up at 1.3048, its highest level in two weeks.
We expect to see a rally of some sort in the equity markets on the back of the good news from Cyprus, this will be positive for stocks in the short term and it will put an end to any speculation that we might see the turmoil spill over to other struggling European nations. We expect to see S&P breach its high this week as data from the US has continued to support the strong move we have seen since January. As we mentioned last week, we are beginning to see news headlines out of Italy as they continue in an effort to form a new government, I would expect to see Italy take over the headlines as Cyprus will now be a thing of the past.
Happy Trading
@lowkeycapital
Friday, 22 March 2013
Irish Weather Technical Foracst
Due the recent downturn in the Irish weather we have compiled the below chart to see exactly what is going on over the last two months in terms of Irish weather. In the below chart we can see the actual precipitation highlighted by the (Green) line and the 5 year average precipitation seen by the (Blue) line. We saw the massive spike up in January as significant rainfall fell across the country. Analysts have stated that this was a short squeeze as the majority of the market were in fact short 'Irish rainfall'. The rainfall was met with warmer and drier conditions around the .65 level and the rainfall retraced back to its normalised levels over the following few days.
Towards the end of January we saw the rainfall consolidating in normalised ranges, with resistance seen by drier spells at the 23.6% retracement from the January high, and the white resistance line overhead. The rainfall spiked a few times during the period however we were unable to get a daily close of rainfall above these levels.
Looking forward, we have seen some increased rainfall over the last 48 hours and last night we got our first daily close (Continued rainfall throughout the course of the day and night) last night. Analysts predict this rainfall to continue characterised by the (Green dotted line), it will be interesting to see if we can break about the 38.2% retracement of the January high. However there is notable drier weather above these levels so levels above here should be seen as genuine selling opportunities with stops positioned above .40 inches.
Happy Trading
@lowKeyCapital
Towards the end of January we saw the rainfall consolidating in normalised ranges, with resistance seen by drier spells at the 23.6% retracement from the January high, and the white resistance line overhead. The rainfall spiked a few times during the period however we were unable to get a daily close of rainfall above these levels.
Looking forward, we have seen some increased rainfall over the last 48 hours and last night we got our first daily close (Continued rainfall throughout the course of the day and night) last night. Analysts predict this rainfall to continue characterised by the (Green dotted line), it will be interesting to see if we can break about the 38.2% retracement of the January high. However there is notable drier weather above these levels so levels above here should be seen as genuine selling opportunities with stops positioned above .40 inches.
Happy Trading
@lowKeyCapital
Morning Update
Good Morning,
Another day of Market Turmoil driven by rumours and rhetoric from every party involved in the Cyprus saga. Yesterday morning saw the release of some Eurozone data in the form of the Manufacturing and Services PMI's. These came in very poorly with France and Germany missing their estimates. This saw the EUR/USD take a leg lower towards the 200 Day Moving Average, the area around 1.28800 is extremely well supported but the bounces are getting shallower and at this rate some more bad developments from Cyprus may have the ammunition to take it out. Expect heavy stop loss selling on a break of this level. On Wednesday night we mentioned a potential trade selling EUR/JPY at 124.3. I hope some of you listened as you would have bagged 230 pips by this stage. The developments in Cyprus have caused the Yen to strengthen significantly against all currencies as traders are using the Yen as a safe haven. Along with an uninspiring speech from Kuroda and the end of Financial year repatriation in Japan we have seen a heavy sell off in EUR/JPY and USD/JPY.
EUR/JPY sits at the 122 handle as i type and USD/JPY at 94.50 just ahead of some large bids.
GBP/USD couldn't add to its strong retail sales results yesteday and sold off with Risk as yesterday progressed. Cable bounced to its first daily fibonacci retracement at 1.5209 and sold off perfectly after this. This was the 23.6% retracement of the drop from 1.6377 to 1.4844 and was always going to be sold on the first touch of this important resistance. This morning cable is approaching the 1.52 handle again and some Dollar weakness may give it a boost in the short term and a break of 1.521 will allow cable to get to 1.54330 fairly quickly as it is only fresh air between these two levels.
Quite a quiet day on the Economic calendar, we see the release of the German business expectations for March at 9 GMT and the details of the LTRO repayments at 11 GMT. A strong reading may give the Euro a bounce but the market is revolving around Cyrus so expect it to be short lived.
The S&P 500 had a big down day yesterday closing at 1546, trades at 1544 as I type having been as low as 1541 in overnight trade. It has been stuck in a range between 1538 and 1563, and a break of 1538 would open up 1530 and 1519 on the downside.
These markets are extremely choppy and working off news and rumours so we would advise stops to be kept very tight as the swings are extremely volatile. Find well supported area's and take a position accordingly.
Good luck in the Markets and enjoy your weekend.
Lowkey
Thursday, 21 March 2013
Cyprus In Comparsion
We have all heard headlines about Cyprus over the last few days, but what do we really know about the Cyprian stock exchange and its components? Below are the individual equities that make up the index including weightings, umber of shares and share price. It is a relatively small index due to the small size and population of the economy itself. The stock index is going to come under increased pressure the longer the discussions take place.
The Greek stock index is down 82% over the same period.
The Portuguese stock index is down 46% over the same period
The Irish stock exchange is down 39% over the same period
From the above charts it is quite clear that Cyprus is lagging behind the rest of the struggling eurozone regions. Although the stock index is not a clear indication of the performance of an economy it does have some significance and it should be noted. Without the help of the EU I am not sure how Cyprus could survive. It is now up to the EU to decide if it is prepared to keep funding the situation in Cyprus, as it has in Greece, Ireland, Portugal and Spain. That decision we will inevitably find out over the coming days.
If we look at the performance of the index going back to its high in June 2008 the index itself is down by 97.3% illustrated by the (pink) price change in the below graph. We will put this in comparative terms with a few of the other struggling eurozone states.
The Greek stock index is down 82% over the same period.
The Portuguese stock index is down 46% over the same period
The Irish stock exchange is down 39% over the same period
From the above charts it is quite clear that Cyprus is lagging behind the rest of the struggling eurozone regions. Although the stock index is not a clear indication of the performance of an economy it does have some significance and it should be noted. Without the help of the EU I am not sure how Cyprus could survive. It is now up to the EU to decide if it is prepared to keep funding the situation in Cyprus, as it has in Greece, Ireland, Portugal and Spain. That decision we will inevitably find out over the coming days.
Subscribe to:
Posts (Atom)