Seven Days Ahead - Free Market Updates

Is the S&P a bull rally or a correction? IG

Fri, 30 Jul 2010 00:00:00 CEST

Is the S&P a bull rally or a correction?

Fri, 30 Jul 2010 00:00:00 CEST

[scribd id=35112583 key=key-2awsl1qfdgs46i1pd1f4 mode=list]

Is the S&P a bull rally or a correction?

Fri, 30 Jul 2010 00:00:00 CEST

After two months of heavy selling throughout May and June, the S&P has enjoyed a rally that has extended through July with only one minor setback driven by optimism...

Initial Bull Signs in EUR/JPY Now in Place

Thu, 29 Jul 2010 00:00:00 CEST

Spreadex

Initial Bull Signs in EUR/JPY Now in Place

Thu, 29 Jul 2010 00:00:00 CEST

Initial Bull Signs in EUR/JPY Now in Place

Thu, 29 Jul 2010 00:00:00 CEST

The FX Specialist view -

MONTHLY CHART: See how, so far, the 76.4% pullback level has provided good shorter term support.

What type of recovery can now be seen is unclear.

WEEKLY CHART: On the Weekly chart we have now marked in certain retracement levels.

The 23.6% mark just below 115.00 has now been tested, and note how higher 38.2% nicely coincides with the 119.63 Feb low.

DAILY CHART:

In the Commodity Specialist Guide we have been waiting for violation of the 113.41 21-Jun high to provide a bull signal, now given.

S/term pullbacks should be temporary - ideally support comes at/above the 110.00 area now - a chance for buyers on dips.

Beyond the 114.83/115.17 dual Fibo retracement area our main focus would centre on the 119.63 Feb low, just below which is 38.2% from the Weekly chart and just above a 61.8% level on this chart - resistance is likely here, a chance for some profit-taking.

Philip Allwright

Mark Sturdy

Seven Days Ahead

Short Term Gold Losses Confirm Bear Scenario

Thu, 29 Jul 2010 00:00:00 CEST

Spreadex

Short Term Gold Losses Confirm Bear Scenario

Thu, 29 Jul 2010 00:00:00 CEST

Short Term Gold Losses Confirm Bear Scenario

Thu, 29 Jul 2010 00:00:00 CEST

The Commodity Specialist view -

WEEKLY CONTINUATION CHART: For some weeks we have been noting in the Commodity Specialist Guide that the whole recovery from 2008 low looked like a type of 5-wave/ impulsive structure, a third/final upleg presumed commencing from the 1045.20 Feb low.

Our latest Fibo projection had been reached, and the subsequent slip back has now given a further bear signal on the Daily chart.

Here, keep in mind the 23.6% pullback level, at 1127.

DAILY CHART - AUG-10:

After earlier failure to hold onto higher levels above the previous 1230.70 peak, latest weakness has, after recent violations of small channel base support and 38.2% retracement, breached the 1170 support area.

This provides a bear signal,

The fact that the Feb/Jun chart structure was similar to that on the Weekly chart (impulsive, but could have run its course) served as a bearish warning too.

Now, the first downside target is the 1133 61.8% pullback, which nicely coincides with 23.6% on that Weekly chart.

Perhaps more important from the point of view of medium term momentum is the lower support implied by the bull channel base projection at 1080.00 currently.
now favouring sellers on rallies.

Philip Allwright

Mark Sturdy

Seven Days Ahead

Irrepressible Eurodollars

Fri, 23 Jul 2010 00:00:00 CEST

Irrepressible Eurodollars

Fri, 23 Jul 2010 00:00:00 CEST

Spreadex

Irrepressible Eurodollars

Fri, 23 Jul 2010 00:00:00 CEST

The Macro Trader's view: -

But more recently data has begun to weaken.

At first this didn't seem too big a problem as certain key reports continued to hold up well:

- The housing market showed signs of recovery,

- Non-farm payroll, for several months, reported an improving labour market,

- The ISM manufacturing report showed solid growth in that sector, and

- Businesses began to restock.

But the warning signs were there; the ISM non-manufacturing survey, which reports on the most important part of the economy, had already begun to weaken back in the late 1st quarter. This should have rung alarm bells, but as Fed officials began talking about how and when they would judge it right to begin withdrawing their monetary policy stimulus, traders focused on the positives.

Not until the housing market turned weak again as a buyers tax credit expired, and a recent non-farm payroll report seriously disappoint, did traders start to consider that all was not well. Now most data releases are flashing amber, as even those that previously proved resilient are losing vigour.

The Fed has now acknowledged the economy faces an uncertain period, and Bernanke has pledged the Fed will take additional policy measures if the recovery weakens from here. So the long rally in the Eurodollar market has received a new lease of life.

The Fed is unlikely to begin tightening policy until well into next year, even if data were to begin improving from now. They would want to see a sustained period of strength that displayed strong signs of being self sustaining.

The recent FOMC minutes saw the Fed reduce its growth forecast going forward, and with inflation expected to stay low, and perhaps too low, as some policy makers fear, the Fed is under no pressure at all to begin a tightening process.

What also makes US policy makers nervous is the Euro zone. The recent crisis there may have come off the boil, but it still simmers and policy makers are unsure of the eventual impact a cooling Euro zone economy would have on the US.

So how far can Eurodollars rally? We think 100.00 is possible in the current environment, unless data suddenly turns stronger.

Mark Sturdy

John Lewis

Seven Days Ahead

Another 76.4% Level Looms in USD/CHF

Wed, 21 Jul 2010 00:00:00 CEST

Spreadex

Another 76.4% Level Looms in USD/CHF

Wed, 21 Jul 2010 00:00:00 CEST

Another 76.4% Level Looms in USD/CHF

Wed, 21 Jul 2010 00:00:00 CEST

The FX Specialist view -

WEEKLY CHART: The 2010 recovery found clear resistance from the 1.1735 76.4% level of the whole 2008-09 downmove.

Subsequent pullback has been decisive, but the detail on the Daily chart is interesting now...

DAILY CHART:

The pullback from that 76.4% resistance has drawn nearer to the 1.05340 76.4% retracement.

We wait to see if support emerges near here, but already note that the s/term chart structure could be showing signs that bears are beginning to tire. This is supported by the relatively oversold nature of the RSI indicator.

We await reaction with interest - support is expected.

Philip Allwright

Mark Sturdy

Seven Days Ahead

Silver Closing in on Key Support

Wed, 21 Jul 2010 00:00:00 CEST

Spreadex

Silver Closing in on Key Support

Wed, 21 Jul 2010 00:00:00 CEST

Silver Closing in on Key Support

Wed, 21 Jul 2010 00:00:00 CEST

The Commodity Specialist view -

WEEKLY CONTINUATION CHART: Earlier resistance from the 19.40 area was challenged recently, but the will wasn't there to break through.

Meanwhile note the 23.6% pullback level at 17.20 -key, pivotal support when combined with the 17.15 level on the Daily front month chart below.

DAILY CHART - SEP-10:

The current consolidation continues here, with key support remaining at the 17.15 05-May low, so far avoiding momentum loss.

Note how this low nicely coincides with 23.6% on the Weekly continuation chart -a break below would be a clear s/term bear sign.

Meanwhile the higher Fibo projection, around 20.80, stays out of reach for now.

In the Commodity Specialist Guide we have maintained a bullish stance, but are ready to change.

Philip Allwright

Mark Sturdy

Seven Days Ahead

Cable perks up: can it be sustained?

Fri, 16 Jul 2010 00:00:00 CEST

link for shorts and longs

Cable perks up: can it be sustained?

Fri, 16 Jul 2010 00:00:00 CEST

link for spreadex

Cable perks up: can it be sustained?

Fri, 16 Jul 2010 00:00:00 CEST

link for IG

Cable perks up: can it be sustained?

Fri, 16 Jul 2010 00:00:00 CEST

The Macro Trader’s view:

The Pound suffered a steep sell-off against both the Euro and the Dollar during the financial crisis/recession as the UK’s public finances deteriorated at a faster pace than other developed economies.

Indeed, as the recession seemed to go on longer than in many other G7 economies, the Pound at one point looked at risk of breaking par against the Euro and approaching lows not seen since the mid 1980’s against the Dollar.

But a change of government in the UK with a focus on cutting the budget deficit, mainly through public spending cuts has put a floor under the currency, especially against the Dollar. The UK has set out a tough and credible plan to reduce its budget deficit and in 5 years time forecasts a structural budget surplus.

While there are fears that the medicine could tip the economy briefly back into recession, the most likely scenario is a period of slower or indeed flat growth as the Bank of England keeps interest rates at historically low levels.

Although there is some noise from one or two MPC members about the need to begin a gradual tightening process, we judge the majority on the MPC realize that the government’s plans to effectively drain spending and resource utilization from the economy will bear down on inflation and monetary policy needs to remain loose to offset what is set to be a period of aggressive fiscal retrenchment.

Compare and contrast this with the US: The US economy, which until recently looked embarked on a self sustaining recovery, now looks to be weakening. Virtually every area of the US economy is causing some concern:

· The ISM manufacturing and non-manufacturing surveys while still forecasting growth, are doing so at steadily slowing rates,

· Retail sales show consumer demand is weak,

· Non-farm payrolls and Jobless claims report not enough jobs are being created to employ new entrants to the labour market, let alone re-employ the millions thrown out of work during the recession, and

· Inflation is very low, perhaps too low?

The Fed is now concerned inflation may fall too far. And whereas only a few weeks ago the debate was when should the Fed begin to tighten policy, the latest FOMC minutes reveal policy makers are concerned enough to talk about additional easing, albeit judged not necessary quite yet.

While a slowing US economy would ultimately be bad news for the UK economy, the Pound currently benefits from the very different outlook for public spending in the two countries. As previously said the UK is on a mission to eliminate its structural government deficit, the US is still spending with alacrity and if he could get it through Congress, Obama would deploy a second stimulus racking up yet more debt and speeding the US debt to GDP ratio ever closer to 100%.

So, for now, the Pound benefits from the dynamics at work both in the UK and the US economy.

The Technical Trader’s view:

WEEKLY CHART

The market is stuck between two major levels of support and resistance.

And above the market is a critical resistance from the low at 1.5709.

Now look closer.

DAILY CHART

The downtrend was broken in June and with some volatility the market has continued to go better. The prior Highs at 1.5217 and 1.4720 should be good support on any pull-backs.

Note well the band of resistance 1.5536-1.5706.

The Pound can strengthen further, but resistance is approaching and will be powerful in resisting further advances above 1.57

Stand back,

Mark Sturdy

John Lewis

Seven Days Ahead

Fresh Support in EUR/CHF Now Visible

Thu, 15 Jul 2010 00:00:00 CEST

Spreadex

Fresh Support in EUR/CHF Now Visible

Thu, 15 Jul 2010 00:00:00 CEST

Fresh Support in EUR/CHF Now Visible

Thu, 15 Jul 2010 00:00:00 CEST

The FX Specialist view -

WEEKLY CHART: The second of two bear channel base projections was recently tested - and so far it has provided good support.

But there is little in the current chart structure that suggests bear fatigue...

DAILY CHART:

With a temporary low established we have tentatively drawn in a couple of s/term retracement levels:

- note how 23.6% has provided s/term resistance, the market currently trying to break higher. Success would be a small positive sign.

Besides the intervening 1.3731 09-Jun low, note higher resistance around the 1.4000 area - former May lows and 61.8%. In fact, with the current 1.3070 low, this looks most key, as there are other, longer term, Fibo retracements (not shown) that fall close to this area too. A recovery through this latter would look bullish.

One point of technical interest - note that the 1.3070 low was an approximate 2.618 swing target off prior 1.3997/1.4587 May rally.

Philip Allwright

Mark Sturdy

Seven Days Ahead