Inter Market Analysis 13th July

Equity

Risk On

  • Reach a Greement – positive reaction
  • Asian stocks rally continues as ban short selling
  • China export sales rose – giving tepid confidence of gaining traction

Risk Off

  • Saudi led air strikes continues

Outlook: Remember there are GAPs remain to be filled but with the agreement priced in – expect volatile price movement

Biased: Let the dust settle first but the overall sentiment should be RISK ON but wary that current price action has discounted this and we could well see technical play out for lower prices.

Currencies

  • Dollar took a dive on the news of a Greek deal
  • Euro and in general dollar basket currencies spiked higher (Bunds sell off continues)
  • Expect a reversal trade on the known unknown

Outlook: Yen long unwinding their positions while the dollar continue to hold strong

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

  • Price failed to hold above 151.25 and it broke lower on a Greek deal to test the lower Bollinger band as written in last week analysis

Outlook: A stronger EURO it is and Bund sell off continues

Biased: Expect the market to stabilise and Bunds are looking attractive again for a swing long but we shall let the dust settle first. There could be more selling if the EURO continue higher.

Commodities

  • Expect a retest of previous low for support before any meaningful counter rally?
  • With a deal will we see demand picking up in commodities?

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

Gap filled and as mentioned before that post Greek deal – the dollar remains attractive to hold and buyers continue to show up.

German Bund

We have the selloff we envisaged as 151.25 failed to act as support post Greek deal. Selling could continue further and it is best to let the dust settle first before taking on the Bunds.

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. Otherwise, if price can find support at 2487 then we could look to swing long with a tight stop.

German Dax

Price broke out of 11400 and the 100 dma remains the potential target. Post Greek deal euphoria has set in and the current price action is in favour of a swing short as we respect the technical setup. The upper Gap has been filled and technically, the 100 dma could act as a strong resistance or 11615.

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