Inter Market Analysis – 6th July

Equity

World markets

Shanghai 3,773.22 +86.31 (2.34%)
S&P 500 2,076.78 -0.64 (-0.03%)
Nikkei 225 20,112.12 -427.67 (-2.08%)
Hang Seng Index 25,078.05 -986.06 (-3.78%)
TSEC 9,255.96 -102.27 (-1.09%)
EURO STOXX 50 3,441.76 0.00 (0.00%)
CAC 40 4,808.22 0.00 (0.00%)

Risk On

  • Deal in the next 48 hours?
  • More QE is needed from China, Japan, Europe and a delay in rate hike from the Fed

Risk Off

  • Chinese stock market gave up gains (could be flushing out weak hands but good buying opportunity)
  • Asian equities all suffered on the no vote (technically has been weak)
  • German Factory orders came worse than expected (ECB may need to do more QE)
  • Greferendum voted NO – further negotiation in the next 48 hours
  • Contagion problem here?
  • Has the market priced in a Greek default? (this uncertainty continue to loom)
  • Euro Summit uncertainty and Merkel and Hollande meeting today
  • Heavy fighting in Irag and Saudi led airstrikes continue over the weekend

Outlook: Double GAPS on European stocks and until the dust settles, we will wait for an opportunity to swing long

Biased: Staying flat over the weekend was the best option and we now have an opportunity to swing long on key fib levels. For now, we are looking to buy with tight stops since we might get a deal in the next 48 hours. RISK OFF mentality but many good area to swing long.

Currencies

  • EUR/USD expect more weakness here after a brief rally should we have a deal (German dat has been very negative lately)
  • GAPs in various currencies and the dollar index broke out of the triangle but retesting and closing gap
  • in 48 hours if there is no deal then Euro could suffer more but expect rally on a deal

Outlook: As mentioned the dollar was the benefactor as a safe haven currency. However, it has meet resistance and need to fill gap and then break higher. However, we are cautious on a strong dollar with global uncertainty

Biased: Dollar could remain strong going forward even with a deal. Expect more QE programmes from ECB, PBOC and BOJ….

Bonds

  • safe haven buying but GAPs need filling and BUND onto resistance
  • Still trading within the ascending triangle and should they clinch a deal then expect Bund to test for support then higher?

Outlook: Bund buying and Euro sold hard but expect GAP filling so a reversal trade will happen in the next 48 hours?

Biased: Sell Bund should it retest 153.00 with a tight stop of 30 points to target the 20 DMA 151.13 at the time of writing

Commodities

  • Middle East heavy fighting while Oil prices tumbled lower
  • No Iran deal and No Greece deal
  • Various safe haven assets spiked higher but unable to hold on to gains
  • With more uncertainty, commodity market is under a lot of pressure unless we see more easing

Outlook: Badly in need of global stimulus to bring about a change in the landscape

Biased: Expect weaker commodities going forward but bargain hunters could come in depending on US dollar strength    

Watch list

USD index

Dollar on to resistance and GAP filled but we will need to see if the bull has what it takes to break higher. Price is currently trading within the triangle and PA has hit upper Bollinger band.

German Bund

Impressive run higher but possible double top here so the play is to short Bund with stops at previous high to target GAP fill.

Copper

Breakout from the triangle as 2650 was strong resistance and all minor support broken. With China stocks unable to recover and Greece uncertainty sending possible contagion problem has meant global recovery is put into question.

German Dax

No vote sent DAX Gap lower with support at 10744. 2 big gaps unfilled at the moment, but we shall look to swing long with tight stops – the picture will change in the next 48 hours. However, we are cautious that a low is in already – price could still attack the 200 DMA.

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