Sunday, October 14, 2018

Week Ahead 42

Equities
SP500:
- biggest dip bellow the 200d SMA since January 2015

- on Friday formed a s/t swing higher low probably due to some short covering 
- price closed just above the 200d SMA on Friday
It might retest the resistance around 2800 early next week, but a lower low is well in the cards. It could even go to 2550. Earnings season could be the main catalyst. Technically the new high is not a very likely scenario unless earnings would be very positive. The previous record was just above the January high and could not even hold for two weeks. Tax cut seemed to be the last fuel for the rally and headwinds as trade war, interest rates, emerging markets and Italy started weight on the sentiment and also on fundamentals. 

NAS100:
- Formed a double top
- Dipped bellow the 200d SMA
- June low provided support

- Closed at a s/t resistance on Friday
- 6800 is the key level to watch. Should that fail decisively things could turn very ugly.

DAX:
- double top in June well bellow the record high 
- the 200d SMA was broken in June and retested only once in July
followed by three lower highs
- March low was broken without any bounce on Wednesday
October 2015 high provided support on Friday. Actually it is a very strong level.


It is interesting to look at some sectors relative performance. It looks that defensive sectors are gathering some relative strength. This kind of asset rotation is not a good sign for the market as a whole.
- Staples: could be bottoming that is a sign of overall weakness. It is important to note that it has started in June. So market started to be more defensive well before new highs.

- Discretionary: topping, the same applies.

Technology: stalled.

Utilities: Gathering some strength.
Health Care: massive out-performance since April.
Materials: under-performance accelerated. 
 Financials: under-performance since January.
Real Estate: I think this is where interest rates bite the most, though did not under-perform since January. 
Finally Growth/Value:

Bonds
Yields retreated but bounced back on Friday.

Commodities
First of all Mr. Copper: surprisingly it was a little bit up despite the equity selloff.

WTI after the false breakout week before now retested the September high as risk-off mood prevailed. 
Brent is retesting the breakout, the bull bias is clearly stronger here.
Gold
As equity selloff accelerated gold rallied nicely on Thursday that stalled on Friday. Price broke out from 11180- 1212 range and did not retest yet the breakout.

FX
USD was not the save heaven of choice as DX is back bellow the 95.25 level.

EUR/USD broke the 1.1525 resistance and back to a range. Nice chart symmetry here as it broke out from this range in the opposite directions.

USD/JPY moved in line with equities.

Sunday, September 30, 2018

Week Ahead 40

Equities
SP500 retreated from record high and settled in the middle of a narrow range around the previous high.

Nasdaq still could not make new high but outperformed the SP500 this week. The higher 4h lows suggest a potential breakout.

European stocks were sold off Friday on the Italian budget proposal. It makes the technical picture weaker that the EU50 index did not retest the late August high. 

Bonds
US yields made new highs. German 2y spread at a new low that should put more pressure on Euro.

Commodities
Oil is up, Brent broke out. 

Gold and Silver
It seemed Friday morning that gold is about to break down the 1183 support but it bounced back sharply in the afternoon.

Silver at the same time broke 14.50 resistance. It looks it could push up further next week.

FX
DX broke out from the consolidation range on Thursday as yield differentials started to prevail. 

Euro bounced back from the 0.1575 level late Friday, but it easily could test the 0.1525 stronger support next week.

Cable broke and retested the 1.3050 support. The next strong support is at 1.2800.

USD/JPY is approaching the January level but the 115 is the very strong resistance.

CAD could strengthen further on positive trade news as it did on Friday, but be aware of buying the rumors selling the news.

NOK continued the nice trend, the next major support for EUR/NOK is at 9.40.

Sunday, September 23, 2018

Week Ahead 39

Equities
SP500 made new high whereas NQ did not follow suit and finished the week with a bearish daily candle.

DAX had a nice rally but it is facing various resistance levels.

Bonds
The US 10y yield broke the 3.00% psychological level and the curve steepened a bit.


European spreads widened. The question is how long the Euro can ignore it.



Commodities
Both WTI and Brent is struggling with resistance levels. Should the Brent break the 80 we could see some more upside there. 

Copper bounced back sharply from key level and even made a higher high on the daily chart. Cancelling the Chinese delegation trip to US might push back the momentum.

Gold
Gold is still trading in the range around 1200. Given the rise in the US yields it looks that downside breakdown is more likely.

FX
DX bounced back from key support on Friday. We should see how the 94.00 resistance will hold

Sunday, September 16, 2018

Week Ahead 38

Equities
Dip in US equities seems to be short lived as both SP500 and NQ was up in the week forming a higher swing low. We have to see new highs before declaring that the correction is over. 



European equities bounced back just before touching the March lows and now are in a supply zone that could be a bull flag or consolidation before reversal.

Emerging markets had some relief in the second half of the week, but the picture is still very bearish.

Bonds
US yields are up. The 2y-10y spread remained within the 0.20-0.25% range.

The Geman-US 2y spread widened which is not a good omen for the Euro.

Commodities
WTI is still trading within the 64-75 range, whereas Brent bounced back from the 80.00 resistance. Due to the Iran sanction the Brent-WTI spread is still going up.

Copper is at 2.60 very important support level that is the May 2017 low.

Gold
Gold climbed to 1212 but quickly retraced back to 1192.50 with a sharp move on Friday.

FX
DX bounced off sharply from the 94.00 support on Friday.