Inter Market Analysis 17th July

Equity

Risk On

  • Short selling ban across all global equities
  • Chinese government provide additional stimulus to stabilise the stock market
  • 4 out of 5 days of green candles Asian shares all rose higher on the back of Greece vote Yes
  • German vote has a resounding yes vote
  • Strong US earnings + OPEX

Risk Off

  • banned from any risk off events throughout this week J

Outlook: At resistance now but pullback could provide good short term entry for a long?

Biased: Cautious as we approach end of the week 4 out of 5 days green candles – retracement due? Has all the RISK ON been priced in?    

Currencies

  • Retracement in the dollar to retest previous breakout level and still trade within an upward channel
  • Yen and other commodity currency remains weak

Outlook: Hawkish Yellen and Carney – dovish BOC / RBA / RBNZ / BOJ

Biased: King Dollar and Queen Sterling??

Bonds

  • Euro weakness should transpire with higher Bunds prices
  • Going into Germany’s Bundestag vote today will provide some volatility

Outlook: Positive outcome from Germany then expect Bunds to trade higher

Biased: Set to test higher as long as support at 20 and 50 ma holds

Commodities

  • Expect a retest of previous low for support before any meaningful counter rally?
  • Commodities remain weak as Asian stocks did not recover fully

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

Biased: Risk of further sell off before we see any meaningful reversal

Watch list

USD index

With a confirmed view that a rate hike is imminent this coming September – do not fight the FED. Dollar look set to grind higher and we cannot rule out that previous double top is acting as magnet once it cross the threshold of May high.

German Bund

We have the retracement with an inside day at the middle of the Bollinger band. More often than not, we see a continuation pattern and current price action looks ready to test higher. If the symmetrical triangle holds true, the Bunds should head higher to test resistance at the upper Bollinger band. As long as 20 ma and 50 ma hold as support today, we will not rule out a retest higher.

Copper

As we previously commented, copper may retest lower level again as it failed to take out any key resistance. A break below the symmetrical triangle, we have the 50% fib and 61.8% fib as targets and not ruling out the lower BB as target as well.

German Dax

Redrawing the trend line and channels (big thanks to ThiagoTrader) Dax hit resistance but what we want to point out is the speed of this rise has been astronomical. Call it what you want but 200 ma held and rampant buying and positioning was trade of this week. Somehow, Europe equities also ban short selling! 100 ma is minor support for now and a retracement is in the cards.

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