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.
Subscribe to:
Posts (Atom)