Wednesday, May 22, 2013
Tuesday, May 21, 2013
SPY Equity Put Call Ratio (EPCR)
The Equity Put Call Ratio (EPCR) is currently at an extreme low. This can be thought of as an indication of a pending reversal for the broad stock market (SPY). Over the past year, the EPCR has been a more productive tool for bulls than bears as we have illustrated on the chart below..
The results showed six successful bullish signals out of eight, but only three successful bearish signals out of eight.
There are a number of conclusions that can be drawn from this, but the two most important observations we see are; (1) timing indicators, such as this, are much less useful in trending markets, particularly those signals that conflict with the predominate trend; (2) the strength of the predominate trend can be confirmed by more frequent violations of indications contrary to the trend. Concerning today's market, five out of five bearish indications have failed since December. This speaks to the strength of the current rally which translates to the difficulty of timing a reversal or pullback.
Dollars & Cents
Dollars & Cents
Equity futures edged higher again. The slight rise was accompanied by a large
POMO day from the Fed and comes as no surprise. The markets are coiling and we
are watching for a correction after the Chairman’s statement. Any hints of a
slowing in the Fed’s purchases in the near future could send the markets into a
correction.
The EUR/USD rallied today with the weakness of the dollar in anticipation of Ben Bernanke’s statement on Wednesday. Thought he bounce was solid today, we expect the trend to continue lower. In the event there is a major shift in monetary policy from the Fed, the trend could change dramatically. (see EUR/USD below)
The USD/HKD pulled back but we still expect to see a higher low carved out followed by a breakout through the resistance level. If we don’t break resistance this next move, we will take profits. (see USD/HKD below)
The AUD/CAD continued to edge higher. Oil prices bounced off of resistance and gold is slowing at support which would add to this pairs strength. If oil prices continue to fall, this pair will probably jump higher. (see AUD/CAD below)
The EUR/USD rallied today with the weakness of the dollar in anticipation of Ben Bernanke’s statement on Wednesday. Thought he bounce was solid today, we expect the trend to continue lower. In the event there is a major shift in monetary policy from the Fed, the trend could change dramatically. (see EUR/USD below)
The USD/HKD pulled back but we still expect to see a higher low carved out followed by a breakout through the resistance level. If we don’t break resistance this next move, we will take profits. (see USD/HKD below)
The AUD/CAD continued to edge higher. Oil prices bounced off of resistance and gold is slowing at support which would add to this pairs strength. If oil prices continue to fall, this pair will probably jump higher. (see AUD/CAD below)
Market LookBeck II
(Reuters) - The U.S. dollar fell against the euro on Tuesday after comments from
Federal Reserve officials dented expectations the U.S. central bank may taper
its bond purchases anytime soon.
But the dollar rose against the yen, a day before the Bank of Japan concludes a two-day policy meeting. Traders widely expect the yen to fall further on expectations Japan will continue its aggressive monetary easing.
The euro rose 0.2 percent to $1.2906, having reached a session peak of $1.2933 and moving away from a six-week low of $1.2795 touched on Friday, according to Reuters data.
Against the yen, the dollar was up 0.2 percent at 102.48 yen , coming off a session peak of 102.88 yen.
Investors scrutinized Fed comments after speculation grew that it is edging closer to tapering bond buying as the labor market improves. Focus now shifts to Fed Chairman Ben Bernanke's testimony to Congress at 10 a.m. 1400 GMT) on Wednesday.
St. Louis Federal Reserve Bank President James Bullard told an event in Frankfurt the Fed should continue quantitative easing, adjusting the pace of bond buying according to incoming data, and said U.S. inflation has recently been below target.
New York Fed President William Dudley said the economy's ability to weather lower government spending and higher taxes in the coming months will be key to the Fed's decision on whether to reduce bond purchases. Both are voting members of the Fed's policy-setting committee.
"Our view remains that Bernanke will not favor near-term 'tapering' at tomorrow's testimony and he will not support 'tapering' before he steps down as Fed Chair in January 2014," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York.
Analysts said if Bernanke reiterates his ultra-loose monetary policy stance, the dollar could give back some of its recent gains, but any suggestion of the Fed winding down asset purchases later this year would give a huge boost to the dollar.
"Bernanke may not be that direct and therefore I would look for implicit clues," said Paresh Upadhyaya, director of currency at Pioneer Investments in Boston. For example, if Bernanke talks about the strength of the U.S. economy or that policymakers are less concerned about the economy, markets may take that as a sign the Fed is closer to an exit, analysts said.
Also on Wednesday, the Fed will release the minutes of its April 30-May 1 policy setting meeting.
The yen had rallied from a 4-1/2-year low against the dollar on Monday after Japanese Economy Minister Akira Amari suggested the yen's strength had been largely corrected.
But on Tuesday, he said he hoped the yen settled at a level justified by fundamentals and at which the impact on imports and exports was balanced.
"It appears that Mr. Amari has been reprimanded by Japanese policy leadership, not a small coincidence considering that the Bank of Japan is meeting and will announce its latest measures, if any, tomorrow," said Christopher Vecchio, currency analyst at DailyFX in New York.
The BOJ, which began a two-day meeting on Tuesday, is expected to keep policy unchanged but could tinker with its bond-buying plan to curb a recent rise in Japanese yields.
The dollar index, which measures the dollar against a basket of other major currencies, rose 0.1 percent to 83.824, not far from Friday's peak of 84.371, its highest since July 2010.
The index has gained 5 percent so far this year on speculation the Fed may start winding down its stimulus sooner than expected.
Some analysts said any near-term dollar weakness would be temporary. The U.S. economy is growing while the euro zone is in recession and the Bank of Japan is committed to flooding the market with liquidity to boost Japanese inflation to 2 percent.
The euro reached a four-month high against the Swiss franc on Tuesday at 1.2529 francs, according to Reuters data, and was last up 0.5 percent at 1.2518 francs. The dollar rose 0.3 percent to 0.9699 franc.
But the dollar rose against the yen, a day before the Bank of Japan concludes a two-day policy meeting. Traders widely expect the yen to fall further on expectations Japan will continue its aggressive monetary easing.
The euro rose 0.2 percent to $1.2906, having reached a session peak of $1.2933 and moving away from a six-week low of $1.2795 touched on Friday, according to Reuters data.
Against the yen, the dollar was up 0.2 percent at 102.48 yen , coming off a session peak of 102.88 yen.
Investors scrutinized Fed comments after speculation grew that it is edging closer to tapering bond buying as the labor market improves. Focus now shifts to Fed Chairman Ben Bernanke's testimony to Congress at 10 a.m. 1400 GMT) on Wednesday.
St. Louis Federal Reserve Bank President James Bullard told an event in Frankfurt the Fed should continue quantitative easing, adjusting the pace of bond buying according to incoming data, and said U.S. inflation has recently been below target.
New York Fed President William Dudley said the economy's ability to weather lower government spending and higher taxes in the coming months will be key to the Fed's decision on whether to reduce bond purchases. Both are voting members of the Fed's policy-setting committee.
"Our view remains that Bernanke will not favor near-term 'tapering' at tomorrow's testimony and he will not support 'tapering' before he steps down as Fed Chair in January 2014," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York.
Analysts said if Bernanke reiterates his ultra-loose monetary policy stance, the dollar could give back some of its recent gains, but any suggestion of the Fed winding down asset purchases later this year would give a huge boost to the dollar.
"Bernanke may not be that direct and therefore I would look for implicit clues," said Paresh Upadhyaya, director of currency at Pioneer Investments in Boston. For example, if Bernanke talks about the strength of the U.S. economy or that policymakers are less concerned about the economy, markets may take that as a sign the Fed is closer to an exit, analysts said.
Also on Wednesday, the Fed will release the minutes of its April 30-May 1 policy setting meeting.
The yen had rallied from a 4-1/2-year low against the dollar on Monday after Japanese Economy Minister Akira Amari suggested the yen's strength had been largely corrected.
But on Tuesday, he said he hoped the yen settled at a level justified by fundamentals and at which the impact on imports and exports was balanced.
"It appears that Mr. Amari has been reprimanded by Japanese policy leadership, not a small coincidence considering that the Bank of Japan is meeting and will announce its latest measures, if any, tomorrow," said Christopher Vecchio, currency analyst at DailyFX in New York.
The BOJ, which began a two-day meeting on Tuesday, is expected to keep policy unchanged but could tinker with its bond-buying plan to curb a recent rise in Japanese yields.
The dollar index, which measures the dollar against a basket of other major currencies, rose 0.1 percent to 83.824, not far from Friday's peak of 84.371, its highest since July 2010.
The index has gained 5 percent so far this year on speculation the Fed may start winding down its stimulus sooner than expected.
Some analysts said any near-term dollar weakness would be temporary. The U.S. economy is growing while the euro zone is in recession and the Bank of Japan is committed to flooding the market with liquidity to boost Japanese inflation to 2 percent.
The euro reached a four-month high against the Swiss franc on Tuesday at 1.2529 francs, according to Reuters data, and was last up 0.5 percent at 1.2518 francs. The dollar rose 0.3 percent to 0.9699 franc.
Market LookBeck
| Dow Jones Industrial Average | 15387.58 | 52.30 | 0.34% |
| S&P 500 Index | 1669.16 | 2.87 | 0.17% |
| Nasdaq Composite | 3502.12 | 5.69 | 0.16% |
| Nasdaq 100 | 3026.45 | 5.47 | 0.18% |
| Russell 2000 | 998.78 | 0.80 | 0.08% |
| Spot Gold | 1378.68 | -8.54 | -0.62% |
| Crude Oil | 95.83 | -0.74 | -0.77% |
| NYSE Overall Volume | 3,481,215K | n/a | 6.61% |
| Nasdaq Overall Volume | 1,768,022K | n/a | 2.08% |
| NYSE Breadth | 1.18 : 1 | positive | |
| Nasdaq Breadth | 1.5 : 1 | positive | |
| NYSE Breadth Ratio | 54.12 | ||
| Nasdaq Breadth Ratio | 59.99 | ||
| NYSE Advancers/Decliners | 261 | ||
| Nasdaq Advancers/Decliners | 109 | ||
| NYSE Trin | 1.01 | ||
| Nasdaq Trin | 0.73 | ||
| $VIX | 13.37 | 0.35 |
MONTHLY - Bullish - Fifth consecutive bullish monthly bar close with higher high.
WEEKLY - Bullish - Fourth straight week with large body candle.
DAILY - Neutral - New high again with flat close.
|
|
| |
| Value Area High | 1671.25 | 3032.50 |
| Point of Control | 1668.00 | 3026.50 |
| Value Area Low | 1665.50 | 3020.00 |
| R3 | 1679.58 | 3054.00 |
| R2 | 1675.17 | 3043.00 |
| R1 | 1669.83 | 3032.00 |
| Pivot | 1665.42 | 3021.00 |
| S1 | 1660.08 | 3010.00 |
| S2 | 1655.67 | 2999.00 |
| S3 | 1650.33 | 2988.00 |
ShadowTrader Sector Trend Scores
ShadowTrader Sector breadth closed mix for the second straight day on Tuesday. Thirteen closed higher while twelve ended lower. No sectors are overbought or oversold by our measure at this juncture.
Support and Resistance Levels
SUPPORT AND RESISTANCE LEVELS
To see updated SUPPORT AND RESISTANCE LEVELS for the Majors, visit Technical Analysis Portal
To see updated PIVOT POINT LEVELS for the Majors and Crosses, visit our Pivot Point Table
CLASSIC SUPPORT AND RESISTANCE
EMERGING MARKETS 18:00 GMT
|
SCANDIES CURRENCIES 18:00 GMT
| |||||||||
Currency
|
USD/MXN
|
USD/TRY
|
USD/ZAR
|
USD/HKD
|
USD/SGD
|
Currency
|
USD/SEK
|
USD/DKK
|
USD/NOK
| |
Resist 2
|
15.0000
|
2.0000
|
9.8365
|
7.8165
|
1.3650
|
Resist 2
|
7.5800
|
5.8950
|
6.1150
| |
Resist 1
|
12.9000
|
1.9000
|
9.5500
|
7.8075
|
1.3250
|
Resist 1
|
6.8155
|
5.8300
|
5.8620
| |
Spot
|
12.2971
|
1.8408
|
9.4403
|
7.7626
|
1.2541
|
Spot
|
6.6562
|
5.7841
|
5.8336
| |
Support 1
|
12.0000
|
1.6500
|
8.7750
|
7.7490
|
1.2000
|
Support 1
|
6.0800
|
5.6075
|
5.5000
| |
Support 2
|
11.5200
|
1.5725
|
8.5650
|
7.7450
|
1.1800
|
Support 2
|
5.8085
|
5.4440
|
5.3040
| |
INTRA-DAY PROBABILITY BANDS 18:00 GMT
\Currency
|
EUR/USD
|
GBP/USD
|
USD/JPY
|
USD/CHF
|
USD/CAD
|
AUD/USD
|
NZD/USD
|
EUR/JPY
|
GBP/JPY
|
Resist. 3
|
1.3000
|
1.5380
|
103.56
|
0.9770
|
1.0325
|
0.9914
|
0.8276
|
133.53
|
157.85
|
Resist. 2
|
1.2971
|
1.5348
|
103.24
|
0.9745
|
1.0304
|
0.9888
|
0.8251
|
133.09
|
157.38
|
Resist. 1
|
1.2942
|
1.5317
|
102.91
|
0.9721
|
1.0284
|
0.9863
|
0.8226
|
132.64
|
156.92
|
Spot
|
1.2884
|
1.5254
|
102.27
|
0.9672
|
1.0242
|
0.9811
|
0.8176
|
131.76
|
156.00
|
Support 1
|
1.2826
|
1.5191
|
101.63
|
0.9623
|
1.0200
|
0.9759
|
0.8126
|
130.88
|
155.07
|
Support 2
|
1.2797
|
1.5160
|
101.30
|
0.9599
|
1.0180
|
0.9734
|
0.8101
|
130.43
|
154.61
|
Support 3
|
1.2768
|
1.5128
|
100.98
|
0.9574
|
1.0159
|
0.9708
|
0.8076
|
129.99
|
154.14
|
Economic Data
ECONOMIC DATA
GMT
|
Currency
|
Release
|
Survey
|
Previous
|
Comments
|
JPY
|
Bank of Japan Rate Decision
|
0.10%
|
0.10%
|
Low interest rate has boosted productivity and is expected to be steady
| |
0:30
|
AUD
|
Westpac Consumer Confidence
|
-5.10%
|
Fell to the lowest level since 03/12. High unemployment and low inflation weighted on consumer confidence.
| |
0:30
|
AUD
|
Westpac Consumer Confidence Index
|
104.9
| ||
1:00
|
AUD
|
DEWR Internet Skilled Vacancies (MoM)
|
0.10%
|
Approached previous peak on 12/11.
| |
8:00
|
EUR
|
Euro-Zone Current Account s.a. (euros)
|
16.3B
|
Previously returned to CA surplus Exported goods and net income increased.
| |
8:00
|
EUR
|
Euro-Zone Current Account n.s.a. (euros)
|
12.1B
| ||
8:30
|
GBP
|
Retail Sales (YoY)
|
1.80%
|
0.40%
|
Expected to improve with warmer weather and better consumer confidence.
|
8:30
|
GBP
|
Retail Sales w/Auto Fuel (MoM)
|
0.10%
|
-0.70%
| |
8:30
|
GBP
|
Retail Sales (MoM)
|
0.10%
|
-0.80%
| |
8:30
|
GBP
|
Retail Sales w/Auto Fuel (YoY)
|
2.00%
|
-0.50%
| |
8:30
|
GBP
|
Public Sector Net Borrowing (Pounds)
|
8.8B
|
16.7B
|
Budget deficit narrowed more than forecast, in line with less borrowing, which is pound positive as there is more capital inflow.
|
8:30
|
GBP
|
PSNB ex Interventions
|
8.5B
|
15.1B
| |
8:30
|
GBP
|
Public Finances (PSNCR) (Pounds)
|
-4.0B
|
31.3B
| |
10:00
|
GBP
|
CBI Trends Total Orders
|
-17
|
-25
|
Declined for 2 consecutive months, signaling weak demand; Selling prices rebounded slightly from 03/13 low (1Y low), competitive pricing diminished sales.
|
10:00
|
GBP
|
CBI Trends Selling Prices
|
5
|
8
| |
11:00
|
USD
|
MBA Mortgage Applications
|
-7.30%
|
Indicative of housing demand.
| |
12:30
|
CAD
|
Retail Sales (MoM)
|
0.10%
|
0.80%
|
Lower Canadian dollar may benefit offshore retail sales.
|
12:30
|
CAD
|
Retail Sales Less Autos (MoM)
|
0.10%
|
0.70%
| |
14:00
|
USD
|
Existing Home Sales
|
4.99M
|
4.92M
|
Financial institutions are likely to purchase more houses as prices remain below pre-crisis level.
|
14:00
|
USD
|
Existing Home Sales (MoM)
|
1.40%
|
-0.60%
| |
23:50
|
JPY
|
Japan Buying Foreign Stocks (Yen)
|
¥19.2B
|
Demand for foreign stocks remained in a high level as risk appetite elevated while demand for JGB decreases (yield reached April 2011 high recently).
| |
23:50
|
JPY
|
Foreign Buying Japan Bonds (Yen)
|
-¥413.5B
| ||
23:50
|
JPY
|
Merchandise Trade Imports (YoY)
|
6.9
|
5.5
| |
23:50
|
JPY
|
Japan Buying Foreign Bonds (Yen)
|
¥186.4B
|
GMT
|
Currency
|
Upcoming Events & Speeches
|
-:-
|
JPY
|
BOJ Kuroda Press Conference After Policy Meeting
|
4:00
|
JPY
|
Bank of Japan Monetary Policy Statement
|
8:30
|
GBP
|
Bank of England Minutes
|
14:00
|
USD
|
Fed's Bernanke Testifies on Economic Outlook
|
18:00
|
USD
|
Fed Releases Minutes from Apr 30 - May 1 FOMC Meeting
|
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