Home > Uncategorized > 2012/03/05: You better have ‘game’ prior to Friday… Perspective from Weekly Calendar

2012/03/05: You better have ‘game’ prior to Friday… Perspective from Weekly Calendar

© 2012 ROHR International, Inc. All International rights reserved.

Our full calendar is available through the link in the right hand column. There is also a bit more intense than usual influence even prior to Friday’s US Employment report this month. With due respect for all that’s going on early in the week, it’s Thursday into Friday this week. All weeks tend to have a bit of natural bias toward late week decisions, due to the degree to which the weekly Close is more telling than early week activity.

However, due to the intense concentration of major economic data, central bank rate decision meetings and statements Thursday (including the ECB post-rate decision press conference), it is more intense this week that at any time in recent memory. That is due to a major decision on the European Sovereign Debt Crisis which must be finalized by Thursday. That’s right, as incredible as it may seem after all of the success the powers-that-be-in Europe have achieved in kicking the can down the road, we actually have a bona fide critical decision horizon on the Greek Debt Deal on Thursday…

And that looming Thursday deadline is for the Greek Debt Deal PSI (Public Sector Involvement) agreement. It is a major inflection point in whether that all continues in a reasonably orderly fashion after hitting more than a couple of speed bumps along the way, or degenerates into a default debacle based upon either a partial or massive failure of Greek debt into to the major €14.4 billion bond rollover on March 20th.

Last Tuesday we did chapter and verse on the connected German and IMF issues on funding the Greek bailout which revolve around successful completion of the PSI. Paraphrasing Churchill’s praise for RAF defense of England during the early phase of World War II, “Never in the course of capital markets arrangements has so much been dependent upon the cooperation of so few.” Rather than expound at length on what it takes on various levels, the bottom, bottom line is a bare minimum of 66% participation by the private sector bondholders in order to prevent a major default debacle. The best brief explanation we’ve seen of that was in this morning’s Financial Times article noting the “Greek deal on a knife edge…”

Which is not to say the early portion of this very robust week is lacking influences. Yet in the context of what is coming later in the week, even Euro-Zone Retail Sales, US Factory Orders, Euro-Zone GDP and German Factory Orders are going to be significantly superseded by the more intense influences Thursday into Friday.

 General Market Observations

All trend indications remain very much consistent with the view we have noted for a couple of weeks: March S&P 500 future 1,367 is the extreme trading high from last May. As the NASDAQ 100 and DJIA have already been above equivalent highs over the past couple of weeks, any convincing escape of the lead contract S&P 500 future would represent a more decisive indication of bullish momentum. Also noted recently was the fact that the short term aggressive up channel trend support (from the mid-December selloff low) has worked its way up to just about 1,369 today.

Along with the fact that the daily MA-9 is also right around that area, there is ample reason to see where the weakness at the top of this week is creating an additional focus for whether the short-term trend decides to remain UP in the context of what is a far more important intermediate-to-longer term trend decision area.

EXTENDED TREND IMPLICATIONS

That just injects that much more tension into a decision that will affect the other equity markets (like the laggards in Europe), and undoubtedly the primary government bond markets. The latter sold off markedly for a while last week prior to recovering.

And it is the case that significant discounts in second month European govvies futures (i.e. June contracts) are telling as March contracts head toward the quarterly expiration cycle. Those second months have already been down toward far more critical supports, and the full discussion of that is also available on page 2 of last Tuesday’s TrendView BRIEF UPDATE. We refer you back to that for the full discussion, especially regarding the March Bund future that expires this Thursday.

As we noted at the top of the week the US Dollar Index failure back below (i.e. Negation of) its .7950 UP Break on the Fed’s recent endless liquidity indications was nearing lower interim support of some substance into.7800 area. That was also consistent with reversal of the euro on a fresh EUR/USD 1.2925 UP Break out of its downward channel (from the major 1.4248 October high) pushing above its initial resistance at 1.3400-1.3360; and yet, as we have noted for some time, the major resistance remained 1.3460-1.3500.

That also fit well with that US Dollar Index .7800 support. And if all of the higher equity activity is indicative of so much economic improvement on the back of de facto central bank quantitative easing, why has EUR/USD failed so sharply from that resistance back below next support in the 1.3360 area? Of course, that’s in line with the US Dollar Index pushing up from .7800 to its next important resistance in the .7950 area once again. Even allowing that EUR/USD has interim support in the mid-1.3000 area, it is all a bit incongruous from the standpoint of the bullish equities narrative. We shall see.

Thanks for your interest.

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