Global Currencies React To Chinese PMI & Japanese Tankan Results

Global Currencies React To Chinese PMI & Japanese Tankan Results
Global Currencies React To Chinese PMI & Japanese Tankan Results
Global markets are slowly reopening with Europe remaining closed today for the extended Easter holiday. Most global exchanges were shuttered on Friday for the Good Friday holiday. There was little volume on Friday and very little news flow over the weekend. This morning the release of Chinese and Japanese data are weighing on the marketplace. Chinese PMI data reported under expectations but remained in an expansionary mode. Asian stocks fell, led by Japanese shares, after a central bank survey of sentiment among the country’s largest manufacturers missed estimates. U.S. stocks rose for the week, sending the Standard & Poor’s 500 Index to a record, as data bolstered confidence in the world’s largest economy while concern over Europe’s debt crisis faded. China’s manufacturing expanded at a faster pace last month, indicating a recovery in the world’s second-largest economy is sustaining momentum. The Purchasing Managers’ Index was 50.9; the National Bureau of Statistics and China Federation of Logistics and Purchasing said an 11-month high and up from 50.1 in Feb. The lackluster data weighed on the euro this morning seeing it tumble by 43 points to trade at 1.2777 while the AUD fell to 1.0397 and the kiwi tumbled to 0.8354

On Friday a report showed that US personal income increased by 1.1 percent in February after tumbling by 3.7 percent in January. Economists had expected income to increase by about 0.9 percent. Disposable personal income or personal income less personal current taxes, also jumped by 1.1 percent in February compared to a 4.0 drop in the previous month which continues to show that US recovery remains on track. This week traders will closely watch the central bank meetings ranging from the RBA to the BoJ and the dual meetings on Thursday of the BoE and the ECB and the prime data event of the week will be the US nonfarm payroll report due on Friday. The Great British Pound is trading at 1.5185

At the close on Thursday, the last day of trading for most markets due to the holiday, the leading American indices like Dow Jones Industrial Average, NASDAQ index and the S&P 500 ended in green. Dow was up by 0.36% and closed at 14579; the S&P 500 gained by 0.41% at 1569. European indices ended in green. The FTSE was up by 0.38%, the DAX gained by 0.08% and the CAC 40 was up by 0.53%.

Japanese business sentiment improved in the first three months of 2013, a central bank survey showed, after Prime Minister Shinzo Abe’s aggressive monetary and fiscal policy prescriptions helped to weaken the yen and bolster share prices. The survey comes ahead of the Bank of Japan’s first policy-setting meeting under new Governor Haruhiko Kuroda this week, when the board is set to expand monetary stimulus and debate an overhaul of its policy framework. Large manufacturers’ mood improved after two straight quarters of deterioration; with the headline sentiment index rising 4 points to minus 8, the BOJ’s closely watched tankan quarterly survey showed on Monday. That was roughly in line with a median market forecast of minus 7. The manufacturers expect business conditions to improve in the three months ahead with an index gauging the outlook at minus 1, signaling that prospects for the world’s third-largest economy were turning up. Both reports while an improvement missed expectations. The JPY continued to strengthen to trade at 93.94 ahead of the BoJ meeting which could send the yen tumbling to a new low.

 

 

DAX forecast for the week of April 1, 2013, Technical Analysis

The DAX had a negative showing this past week, closing below the €7800 level. However, there is a substantial amount of support just below going all the way down to €7500, and because of this we think we’re just simply in the middle of a pullback as we continue to grind higher. In fact, we would have to close well below €7500 in order to consider selling this market. Although we think that money will continue to flow out of various parts of Europe, Germany will probably fare better than most of the other markets, making the DAX a bit more resilient.

 

DAX forecast for the week of April 1, 2013, Technical Analysis
DAX forecast for the week of April 1, 2013, Technical Analysis

DAX Forecast April 1, 2013, Technical Analysis

The DAX didn’t trade on Friday, but the Thursday candle was very interesting. We think this candle can tend towards the future direction of the market as it formed a shooting star. The shooting star sits just above a large cluster from the month of February, so while we think this market is probably going to fall from this level, back cluster should offer enough support that we feel that buying is probably the better route to go. With this being the case, we are going to be very patient and wait for some type of supportive candle all the way down to the €7550 level as we think this is simply a pullback, not some type of massive downtrend waiting to happen.

 

DAX Forecast April 1, 2013, Technical Analysis
DAX Forecast April 1, 2013, Technical Analysis

DAX Forecast March 29, 2013, Technical Analysis

The DAX had an interesting session on Thursday, as it tried to rally but gave back almost all of the gains. We are currently sitting on top of an area that should be supportive, so this sets up for real fight. The €7750 level offered resistance previously during the month of February, so it should now be support, at least in theory. With that being said, the shooting star that formed looks very weak, and we could be setting up for a fight in this area. We think that any break down from the bottom of the candle could signal trouble, but there is obvious support down at the €7600 level. In general, we believe it’s probably safer to simply wait for some type of supportive candle to print below, answer buying then.

 

DAX Forecast March 29, 2013, Technical Analysis
DAX Forecast March 29, 2013, Technical Analysis

 

Italian Politics and Cyprus Banks Weigh on Equities and the Euro

Italian Politics and Cyprus Banks Weigh on Equities and the Euro
Italian Politics and Cyprus Banks Weigh on Equities and the Euro
Wall Street recovered from earlier weakness yesterday to end mixed as investors continue to monitor the situation in Cyprus. The S&P 500 fell 1 point to end just below its all-time high of 1,565.15 from October 2007. The Dow Jones industrial average fell 0.2%. The NASDAQ rose 0.1%. Asian equities are taking cues from Wall Street yesterday trading in the red. The Shanghai Composite declined by 2.3% and Hong Kong’s Hang Seng last 1.2%. Japan’s Nikkei tumbled 1.2%. The losses came as the trading week wound down for many markets, with Australian, Hong Kong, Indian, and Singapore bourse, among others, all due to close Friday, along with most of those in Europe and the U.S.

European bourses were the hardest hit on Wednesday as Cyprus and Italy weighed on traders’ minds. Equities in France lead the region with the CAC 40 is down 1% while reports showed that President Hollande’s rating hit a historic low. Germany’s DAX was down 1.2% and London’s FTSE 100 ended lower by 0.2%. Reports from the European Union highlighted the gloomy economic and business outlook in Europe. The EU business climate indicator fell 0.14 points in March, extending a downturn that goes back to Sept. 2011. A separate survey showed that economic sentiment in Europe fell in March, while consumer confidence was little changed

On the US economic front, the National Association of Realtors said pending home sales, a measure of purchases that have not yet closed, fell 0.4% in February. Economists had expected the index to have risen 2%, according to a consensus of economist forecasts.

The US dollar traded on a strong note on Wednesday holding above the 83.40 level and continues to remain in this range in early morning trading on Thursday. The euro was the worst performer declining to trade below the 1.2775 level and closing at 1.2779. This morning the euro remains flat.

The euro dropped to a new four-month lows against the U.S. dollar yesterday, as fears over a potential fallout from a last minute bailout for Cyprus and growing concerns over political deadlock in Italy continued to dominate market sentiment. Banks are scheduled to reopen today in Cyprus with capital restrictions, which seem to be separating Cyprus euros from the shared currency. Many analysts are predicting this is the beginning of the end of the eurozone and the shared currency as we know it. There seems to be no way for Cyprus to survive but at the same time there seems to be a widening crack in the banking system of the eurozone with a lack of confidence and trust. Businesses and depositors are now looking for new alternatives and safer methods of storing their funds. While not far from Cyprus it seems that the Italian government is unable to form a government. Wednesday’s turnaround was sparked by comments from Italy’s Democratic Party leader Pier Luigi Bersani, whose effort to win support for a center-left government from the anti-establishment Five-Star Movement fell on deaf ears. Bersani ruled out forming a grand coalition with Silvio Berlusconi’s center-right alliance and said “only an insane person would want to govern this country, which is in a mess and faces a difficult year ahead.”

DAX Forecast March 28, 2013, Technical Analysis

The DAX had a negative showing during the Wednesday session as fears over European banks continued. We managed to break down below the €7800 level, right where we expect see significant support. If we do not get some type of supportive action in this general vicinity, we think this could be a very bad sign for German stocks in general. However, we do see support all the way down to €7550, and as a result we would need actually breakout level start selling. At this point time though, it does look like this market needs to go sideways and catch its breath.

 

DAX Forecast March 28, 2013, Technical Analysis
DAX Forecast March 28, 2013, Technical Analysis

Dax June contract Daily Forecast – 27th March 2013

Dax June contract Daily Forecast - 27th March 2013
Dax June contract Daily Forecast - 27th March 2013
Dax outlook is weakening & rallies now may be best used to sell in to shorts. There is a little obstruction at 7912 but if we beat yesterday’s high of 7927 we meet resistance at 7945. We could possibly stretch to 7965/75 with a top expected here so we can try shorts with stops above 7987 for 8000/05 & another selling opportunity with stops above 8015

Support is 7888 but failure to hold here risks a retest of the 7864/58 area. A bounce from here looks less likely today & a break could target strong support at 7820/10. It should be worth trying longs here looking for a low today with a stop below 7785. Next target below is 7764/54 with a good bounce expected but use stops below 7735.

Dax -2

Dax -3

DAX Forecast March 27, 2013, Technical Analysis

The DAX had a relatively quiet session on Tuesday as we continue to hover just above the 7850 level. This area is bound on top by the obvious 7900 level, and as such – there wasn’t much room for the market to move during the day. However, out of all of the European indices, we trust the DAX the most, as will most traders. Because of this, we are looking for a supportive candle to start buying again, and not interested in selling. The market has far too much in the way of support down to the 7550 level.

 

DAX Forecast March 27, 2013, Technical Analysis
DAX Forecast March 27, 2013, Technical Analysis

Dax June contract Daily Forecast – 26th March 2013

Dax June contract Daily Forecast - 26th March 2013
Dax June contract Daily Forecast - 26th March 2013
Dax hit sellers at 8039/45 resistance & we plunged to retest last week’s low in the 7864/58 area & bottomed exactly here as expected. The outlook is weakening & rallies now may be best used to sell in to shorts. Resistance is at 7912 today but above here look for 7945, possibly 7965/75 with a top expected. We can try shorts here with stops above 7987 for 8000/05 & another selling opportunity with stops above 8015

Support is 7888 but failure to hold here risks a retest of the 7864/58 area. A bounce from here looks less likely today & a break could target strong support at 7820/10. It should be worth trying longs here looking for a low today with a stop below 7785. Next target below is 7764/54 with a good bounce expected but use stops below 7735.

Dax -2

Dax -3

DAX Forecast March 26, 2013, Technical Analysis

The DAX fell drastically during the session on Monday as European indices on the whole lost. There is a lot of concern out there about the banks in Europe right now, mainly because of the bailout conditions that have been agreed to for Cyprus. A lot of bondholders are suddenly being wiped out, or at the very least taking massive hits. With that being the case, people were concerned that it becomes a template of sorts for bailouts on the continent. Because of this, European indices lost across the board during the session on Monday, but the DAX should be a bit stronger than the rest of Europe as German companies and banks are on the whole much stronger than the rest of Europe.

 

DAX Forecast March 26, 2013, Technical Analysis
DAX Forecast March 26, 2013, Technical Analysis

DAX forecast for the week of March 25, 2013, Technical Analysis

The DAX gapped lower at the open of the week, and then bounced above the €8000 level only to turn back around and form a shooting star closing the week at €7911. With that being the case, this looks like a very negative turn of events, but when looked at in the whole and the entirety of the last couple of months, it looks like we could fall just far enough to find support in this cluster of noise. We also could start buying this market on a break above the recent high from two weeks ago, but as things stand right now, we have no interest in selling this market at all.

 

DAX forecast for the week of March 25, 2013, Technical Analysis
DAX forecast for the week of March 25, 2013, Technical Analysis

DAX Forecast March 25, 2013, Technical Analysis

The DAX had a slightly negative session on Friday, as we tested the €7900 level. However, we still see quite a bit of noise and support just below, and as a result we think that even if we do continue to fall, it will simply be a buying opportunity. After all, if you are going to invest money in Europe in tumultuous times, Germany is without a doubt the first choice. We are looking for supportive candles going forward, and then at that point time we could be convinced start buying again. As far as selling is concerned, we have no interest in doing so.

 

DAX Forecast March 25, 2013, Technical Analysis
DAX Forecast March 25, 2013, Technical Analysis

DAX Forecast March 22, 2013, Technical Analysis

The DAX fell during the session on Thursday, but found plenty of support at the €7900 level. This level has offered support several times before, as well as resistance before that. Because of this, we believe that the area should continue to offer support, and as a result we would not hesitate to start buying supportive candles down in this general vicinity. We do not have one at the moment, but one has to believe that Germany will be one of the favored markets in the European region as the drama continues to unfold in places like Rome and Nicosia. Because of this, we are buyers, but need that supportive candle first.

 

DAX Forecast March 22, 2013, Technical Analysis
DAX Forecast March 22, 2013, Technical Analysis

DAX Forecast March 21, 2013, Technical Analysis

The DAX had a slightly positive session as we continue to bounce around the €8000 level. Of all the indices in Europe, Frankfurt certainly would be one of the most trusted ones in this very uncertain environment. Because of this, we feel that there will be a bit of a bid underneath this market going forward as the uncertainty continues to plague markets in Europe overall. We think that the 8000 level is now the equilibrium for this market, and as a result would buying this market on the dips down to the 7900 level, or a breakout above the highest from the Wednesday session as that candle did in fact hug the equilibrium all day.

 

DAX Forecast March 21, 2013, Technical Analysis
DAX Forecast March 21, 2013, Technical Analysis

DAX Forecast March 20, 2013, Technical Analysis

The DAX had an inside day on Tuesday, originally falling, but bounced enough in order to in the day just 0.79% lower. However, this market does look like it’s been a bit stressed at the moment, and we believe that the €7900 level will be the beginning of significant support at the same time. Because of this, we believe that this market will simply go sideways, and of course there is always going to be a bit of headline risk as far as the whole Cypriot situation is concerned. As long as that is out there, we do not believe that the DAX can pick up significant momentum. In fact, we would be completely out of Europe at this point. However, if the situation in Cyprus is indeed contained and solved, we think that Germany will be the strongest market in Europe.

 

DAX Forecast March 20, 2013, Technical Analysis
DAX Forecast March 20, 2013, Technical Analysis

DAX Forecast March 19, 2013, Technical Analysis

The DAX index originally gapped lower at the open on Monday, in reaction to the situation involving Cypriot banks. However, we did spend most of the day rallying from that point, as the €7900 level held as support. Going forward, we think this market still looks bullish, and do expect see the DAX continue to gain overall. With that being the case, we certainly wouldn’t short this market, but we cannot buy and until we break above the recent highs again. Alternately, we think that a pullback could offer a decent buying opportunity as well, especially at the €7900 area as it’s appears to be so well supported.

 

DAX Forecast March 19, 2013, Technical Analysis
DAX Forecast March 19, 2013, Technical Analysis

DAX forecast for the week of March 18, 2013, Technical Analysis

The DAX had a positive week over the last five sessions, albeit just slightly. With that being said, it should be mentioned that the market is very bullish. In fact, we think the pullbacks are simply buying opportunities at this point in time, and recognize that the German market will continue to outperform the rest of Europe. With that being said, we are more than willing to buy at the various “handles” just below. We are particularly keen on the €8000 level based upon some type of support. If we don’t give that level, we would be more interested in the €7900 level, as it gives us the ability to buy this market “on sale.”

 

DAX forecast for the week of March 18, 2013, Technical Analysis
DAX forecast for the week of March 18, 2013, Technical Analysis

DAX Forecast March 18, 2013, Technical Analysis

The DAX fell during the session on Friday in order to test the €8000 level for support. It should be said that the market did bounce from their and formed a hammer. However, the action was very negative in the sense that he gap up slightly at the open, and went negative right away.

We still think that €8000 is a significant barrier in this marketplace, but even if we broke down below that we still see support at various levels the first one that comes the €-7900, followed very closely by €7800. With that being the case, it’s almost impossible to sell this market, and we actually prefer to buy pullbacks as they come. The market is a little bit extended for a like it at this point in time, so we are not interested in buying up at these lofty levels.

 

DAX Forecast March 18, 2013, Technical Analysis
DAX Forecast March 18, 2013, Technical Analysis

DAX Forecast March 15, 2013, Technical Analysis

The DAX had a very strong showing during the session on Thursday, as it gapped above the €8000 level. This area was one that we were worried about, and needed to see a daily close above in order to start buying. We have obviously broken out above it, and as a result we are very bullish of the DAX at the moment. As for selling, it’s obviously impossibility, as there are far too many supportive levels below current prices. We think that €8000 will continue to be a floor in this market, and as such we would be buying pullbacks as they come.

 

DAX Forecast March 15, 2013, Technical Analysis
DAX Forecast March 15, 2013, Technical Analysis

DAX Forecast March 14, 2013, Technical Analysis

The DAX did almost nothing during the session on Wednesday, climbing just shy of five points. With this being the case, it appears that the market is simply going sideways, trying to build up enough momentum in order to breakout above the €8000 level. This level seems to be rather significant, so a daily close above it would in fact mean quite a bit. With that being the case, we actually prefer to buy pullbacks in this marketplace as the recent parabolic move probably needs people to step in and support it.

There is certainly enough support below, as all of the gaps can attest to. The other possibility of course is that the market simply go sideways, and takes a breather before going much higher. With that being said, if we can break the top of the shooting star from Friday, it would be extraordinarily bullish sign as it would not only break the shooting star, but also the large round psychologically significant €8000 level.

 

DAX Forecast March 14, 2013, Technical Analysis
DAX Forecast March 14, 2013, Technical Analysis