Inter Market Analysis – 10th July

Equity

Risk On

  • Ban Short selling should be legalized throughout global equity
  • Tsipras submit and waste the Greek people’s time on referendum
  • Asian equities closed mixed but China stocks market resurgence continues
  • Commodities are recovering on the back of global stimulus programme – but for how long?

Risk Off

  • Potential Grexit (not priced in)
  • Any denial or further deliberation from Greece or EZ members

Outlook: We have GAP fill but and there are a few more that need filling. Market open GAP up which might need a fill and we may get it this afternoon.

Biased: As we enter another weekend of turmoil, closing all position before the Sunday showdown is the recommendation that we can make. Watch out for headline news that could swing the market.

Currencies

  • Safe haven trade unwinding as Tsipras buckle down to demand and Greece deal look imminent (priced in)
  • Yen is weaker while the dollar remain bid going into the weekend of turmoil
  • Technically, daily chart has an inside day formation at the upper Bollinger band which send a strong signal that a reversal and pullback is very much overdue.
  • Conservative trade is to wait and sell at a break of 938 with stops at 12000 and target of 871 and 830.

Outlook: The YEN trade has a larger implication as the Greece debacle continues

Biased: Post Greece deal, holding the dollar is still the way forward but expect Euphoria rally on equities and Euro trade in the short term.

Bonds

  • Bund sell off now found support within the rising channel and it did test the 20 DMA as suggested
  • Price action need to hold above 151.25 to resume higher otherwise, we see a break to test lower Bollinger band

Outlook: A weaker BUND will suggest a stronger Euro in the short term/with imminent deal then we could expect further sell off in bunds

Biased: With equities Gapped higher, bunds sell off materialise and found support. We cannot rule out further selling due to imminent Greek deal here.

Commodities

  • Copper into resistance and other major commodities have had their relief rally
  • Expect a retest of previous low for support before any meaningful counter rally?
  • Chinese market magical recoveries but will this last?

Outlook: Remain cautious of a dead cat bounce and a final bout of selling could be in the card before any real recovery

Biased: Commodity market is no longer traded as commodity-more like financial instrument that depends on where the money flow is – expect sell off after dead cat bounce      

Watch list

USD index

Impressively resilient despite an imminent Greece deal-suggest that dollar bull is holding not as safe haven. We maintain our view of an inside day candlestick that could play out for an overdue reversal.

German Bund

We hit the target of 20 dma and current price found support at the lower channel line. With the Euro trading higher – we could expect more bund sell off unless 151.15 act as a strong support. If we see further dollar weakness – stronger Euro then a retest of previous low in Bund cannot be rule out.

Copper

With the failure to break and close above the 20 DMA, it acted as resistance again and the selling could continue. We could see a retest of previous low and will only be a confident buyer if price break and close above20 dma.

German Dax

Up down up down – the uncertainty in the global equity market has truly been a roller coaster ride. With Tsipras bowing down to the demand of creditors, a Greece bailout deal seems imminent now and DAX could rally to 11400, 100 dma and the upper Bollinger band could all be targets. Going to the weekend of turmoil, we suggest to stay flat as prices can be erratic.

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