US dollar remains off its Friday lows ahead of the US March services ISM survey (10:00 EDT, 14:00 GMT) and the anticipated Fed Governors meeting at 12:30 EDT (16:30 GMT), which is highly expected to produce a 25-bp increase in the discount rate to 1.00%. This will reduce the spread between the discount rate and the fed funds rate to 0.75%, and as the chart shows (created 3 weeks ago). http://bit.ly/adHYEG the spread will be 25-bps away from regaining its pre-crisis level of 100-bps. Combining Friday's strong NFP, today's expected rate hike and a robust ISM report, the growth and yield case for the US dollar is expected to hold. Meanwhile, the only realistic sources for any JPY strength remain a chinese rate hike, a stock market pullback or unexpectedly strong Japanese figures. Pls see links in previous IMT to register for this week's webinars with Ashraf as part of the 3-day ITC Online Forex Conference.
Read more…
The U.S. Dollar Index [also tracked via the PowerShares DB US Dollar Index Bullish (NYSE:UUP) ] pulled back this past week after breaking out of a bullish flag pattern on the weekly chart. This pullback on the weekly chart appears to be just a normal pullback bar after a sharp move higher. However, when the dollar declines most commodity and inflationary stocks will rally. This can be seen even on intra-day charts as the dollar is usually very strong before the U.S. markets open. Once the opening bell rings at the NYSE the dollar will usually decline giving the markets a bid higher. When this type if intraday action takes place day after day it allows the dollar and the major stock indexes to gain ground and trade higher on the daily charts together. As mentioned last week the U.S. Dollar Index will have resistance every point higher as well as support every point lower.
Read more…
By ITMS News on April 4th, 2010 7:56pm Eastern Time
The S&P 500 cash [also tracked via the, SPDR S&P 500 ETF (NYSE:SPY) ] gained another 12 points this past week as the bull move continues. This rally from the March 2009 low is now 56 weeks long. The SPX has gained 77 percent from last years bottom at 666.00. By all standards this has been a rally for the ages. The remarkable fact about this rally is that the SPX has not had a single 10 percent correction since it began on March 6th, 2009. The steepest pullbacks have been for about 8 percent, and 4 weeks in length. This occurred in June 2009 and recently in January 2010. The next important weekly chart resistance levels are 1200.00, and 1225.00. Should the SPX cash pullback the 1150.00 level will now be the first important support area followed by 1120.00.
The SPDR Gold Trust (ETF) (NYSE:GLD) gained 1.67 this past week from last weeks close. This move higher in the GLD comes as the U.S. Dollar sold off and most commodities soared. The GLD is now trading back above its weekly 20 moving average. This is a technically strong picture on the charts. The last time the GLD tagged or pierced its weekly 50 moving average was in April 2009 nearly one year ago. The only negative that can be found on the GLD chart is the series of lower highs. However, this could just be a long sideways consolidation pattern before it retests the highs again. As long as the GLD stays above the weekly 20 moving average it must be given an upside bias. The weekly resistance levels for GLD are 113.00, 115.00. and 120.00. The weekly support levels for GLD are 105.00 and 101.00.
The United States Oil Fund LP (ETF) (NYSE:USO) rallied this past week gaining 2.41 from last week's closing price. This rally in the USO came as geopolitical fears got priced in, China consumption grows, and the U.S. Dollar declined sharply to give most commodities a strong bounce. The USO is very close to breaking out of a long sideways base it has been making since June 2009. The one negative for the rest of the major stock indexes will be if high energy prices bring down the markets. Remember back in July 2008 it was high oil that was a major catalyst for bringing down the economy. The current economy may not be in a position to hande $85.00-90.00 a barrel of oil. We shall see. Currently oil and the markets are trading higher together. The weekly resistance levels for the USO are 42.00, and 45.00. The weekly support levels for USO are 37.00 and 34.00.
Read more…
Courtesy of Investors Business Daily
Whenever the bearish percentage declines below 20% a correction is usually just weeks away. This has been an excellent gauge of sentiment. The current bearish percentage is at 19.1%. The current bullish percentage is at 48.3%.
Read more…
WEEK HAS ENDED with the euro failing to break above that $1.3550 level and cable not able to break $1.53 as these technical parameters prove essential in commanding the overall USD trend against European currencies. US jobs figures showed a net increase of 162K while the unemployment rate held unchanged at 9.7%. Considering the upcoming rate hike by the Fed and improved US jobs figures, these fundamentals will continue dragging down the German-US yield disadvantage. Meanwhile, AUDUSD, which rose ahead of next weeks anticipated RBA hike still fails to break above 0.9230. Although hasnt broken above 1127, oil prices have rocketed past $85 partly on signs of a stabilizing global economy (China, EU and US data).
Read more…
By InTheMoneyStocks on April 2nd, 2010 8:43am Eastern Time
The U.S. government reported the non farm payroll report for March. The S&P e-mini futures are trading higher by 2.00 points. Normally the markets will usually react in a much stronger fashion. The futures markets are closing at 9:15 am EST for the Good Friday holiday.
Read more…
By InTheMoneyStocks on April 1st, 2010 5:28pm Eastern Time
The SPY sold off for most of the day after making a first hour high. Then a late day volume surge kicked in during the final hour of the trading day. This is typical action that we have seen since the February 5th cycle pivot date.
Read more…
Strong US figures in weekly jobless claims (-6K) & ISM (59.6 from 56.5) but -1.3% in construction spending. USD weakness intensifies as GBPUSD hits $1.5260. The break of the 2 month trend line was accompanied by positive oscillator pattern. $1.5370 is the next resistance facing the rebound, which we expect to fail. The Bank of England continues to keep the door open for fresh QE and the election/fiscal uncertainties in the UK have all but disappeared. Accordingly, we expect renewed decline below $1.50. Gold to probe the 1127 resistance, a close above which could extend back towards 1137. Yen weakness may intensify further on better than expected NFP figure tomorrow. Ashraf is away on travel so updates are less frequent than usual.
Read more…
By InTheMoneyStocks on April 1st, 2010 9:25am Eastern Time
The U.S. Dollar index declines 0.20 cents at 8:30 am EST after the initial claims report. The weaker dollar will usually benefit the stock market as most commodity and inflationary stocks will rise. Oil is at a new high for the year this morning trading above 84.00 dollar a barrel as the dollar has slid more than a point this week so far. The falling dollar can be viewed as one of the main catalysts for this mornings rise in the futures.
Read more…
Dow and S&P500 consolidate over the last 7 sessions with stochastics increasingly bearish (triple top in RSI, negative crossover in MACD). Although Nikkei was the only rallying index in Asian to have rallied on Wednesday, Thursday could be an occasion for a selloff, which could be extended by further yen strength as tonights Tankan survey is released (see calendar for Tankan). AUDJPY now testing key 61.8% retracement at 85.70s, while oil closes above 83, therefore closely watch whether these gains are sustainable into the rest of the week. Remember that on Jan 11 crude oil hit a $83.95 before retreating towards 78 in that same week. Will a disappointing NFP erode risk trades in FX to the benefit of USD and JPY?
Read more…
