Home > Uncategorized > Brief Update: 2010/03/05: Strong German Factory Orders Pump Equities, Yet Govvies Resilient in Spite of It

Brief Update: 2010/03/05: Strong German Factory Orders Pump Equities, Yet Govvies Resilient in Spite of It

▪ Even though January German Factory Orders came in up a whopping 4.3% on the month (versus a +1.3% estimate), government bonds maintained their bid near key resistance. That is particularly important at this juncture, due to the futures contract quarterly expiration rollovers beginning with the Bund on Monday.

▪ The equities also entering a key technical zone right in front of this morning’s US Employment report (FEB.) While any bid in the equities producing a minor new high in rejuvenated upside leader NASDAQ 100 future is not much of a surprise, the fact that March S&P 500 future is above Tuesday’s high at 1,124.90 is more telling. This is due to it now pushing more aggressively into the key interim 1,125-30 resistance zone, above which it might look like it’s returning to a fully bullish trend for a push to new highs…

▪ All that said, the equity markets are also doing rather well in the wake of some sense the Greek debt crisis will not spill over into the balance of Europe. And as some sort of economic improvement is indeed necessary to assist with overcoming fiscal pressures not only in Greece but elsewhere as well, this morning’s German Factory Orders were more important than usual for the broader global economic and market psychologies. What is especially interesting on this particular cycle is the significant point-and-a.-half discount in the June Bund future relative to the lead contract. While there had been much psychological bearish anticipation in the T-note and the Gilt over the last several expiration cycles, the Bund had been able to get through the expiration rollover with only a minor negative spread into the second month future. The second interesting feature is the similarity to the technical structure in the T-note… with a now Negated DOWN Break at 123.00-122.70; which is back where we find the June contract with its major discount. Much below that level it might look kind of bearish again for a move down to 122.00-121.70…

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