Home > Uncategorized > 2012/05/29: Quick Post: Weekly Calendar and Perspective now available

2012/05/29: Quick Post: Weekly Calendar and Perspective now available

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

The Weekly Report & Event Calendar is still available through the link in the right hand column. The focused comments below it are now also available as well in the calendar section as the now regular weekly Summary Perspective on Key Influences. We hope you find that useful as well. It also has the Concise Market View at the end.

For those of you who have not already seen it, there is a lot of emphasis again this week on the later part of the week. While beginning just a bit on Wednesday, the real intensity picks up from Thursday into Friday, with a twist…

 

 

…insofar as there are no scheduled official speeches by financial luminaries or meetings on Friday. The silence would seem to be deafening. Of course, that doesn’t preclude ad hoc announcements, or outright central bank and finance ministry activity if the situation in Europe should become disorderly. In that regard it is very important to note that Spanish 10-year bond yields are already above the important 6.0% level early this week.

Yet things will already be very interesting on Thursday due to German Retail Sales and French Consumer Spending. Yet even those are likely to be overshadowed by the Irish Stability Treaty Vote. Could it be with the Greeks sounding more amenable once again to making the sacrifices to stay in the euro that the Irish will effectively opt out? While we don’t consider it very likely, it is going to be a major influence into the late day in Europe on Thursday. And in that regard it may well affect all asset class trends throughout the balance of the US trading day.

And also of course, the sheer economic data on Friday is also very important, beginning with the global Purchasing Managers Indices of Manufacturing hitting first in Australia, and rolling through the rest of the world as the day progresses. Of course, the US data that wraps up the week includes the important Employment report and associated data, Construction Spending, and US Domestic and Total Vehicle Sales that will unfold throughout the session.

General Market Observations

However much technical repair seems to be underway after last Wednesday’s ability of the June S&P 500 future to recover from its retest of the 1,297 DOWNside Objective, it doesn’t mean much unless it can also exceed key resistances at 1,338 and 1,350-55 area. We appreciate that seems like kind of a broad berth. Yet, how many times have we cautioned in volatile equity markets that any near-term support or resistance might be easily overrun; and it has indeed been obliterated on the sharp swings between the major levels.

EXTENDED TREND IMPLICATIONS

▪ Primary government bond markets: Upside leader June Bund future has backed off from its 144.50 area oscillator resistance, even if it did finish last week above its 143.70 long-term weekly chart topping line. Due to the continued rise of weekly MA-41, it will need to Close the week nicely above 144.50 in order to escape that key oscillator resistance (MA-41 plus 6.00) for a possible additional two point extension of its rally. Initial lower support is now the 143.70 level at which it escaped the topping line last week.

The same goes for June Gilt future that stalled around the high end of its similar 119.00-.40 topping line and oscillator resistance prior to escaping last week. However, on psychological grounds it seems escaping the psychological resistance at 120.00 will be necessary to assist it in pushing for that additional two point extension. Near-term support there is also back into the very prominent upper-mid 117.00 area. And in its way June T-note future is a bit of a weak sister right now, never even quite making it to its equivalent 134-00 resistance.

▪ Foreign Exchange: This had appeared to be more of a churn of late, yet has now turned back into a very dynamic trend arena. Dramatic swings include the rather sharp Japanese yen rally and break in such a brief time span from a week ago Thursday into early last week. Whatever the reason, stalling no better than USD/JPY 80.25-08.50 UP Break and congestion leaves it in a near term Declining Wedge (from the 84.18 March high.) Until it can push back above those levels it might still work its way down to a retest of the significant .7850 major Wedge UP Break on any further weakness. And that will be the far more major test of congestion, long-term moving averages and overall UP Break psychology.

More meaningful in our view is the combined recent weakness of the euro and the Australian dollar, with the latter testing critical AUD/USD .9800-.9700 support. Given the importance of the Australian dollar’s role as a commodity currency, that decision is also likely going to be a bellwether of general global economic tendencies.

The US Dollar Index is also very interesting insofar as it has stalled after its recent strong run to exceed the .8178 high from back in January. That said, there is important Fibonacci resistance at .8250 which might be restraining the market temporarily; much as the historic congestion at EUR/USD 1.2500 seems to be underpinning the euro for now. And it would seem likely that any US Dollar Index escape above .8250 does not leave any further resistance until the mid-.8300 area; which is also very important as the last resistance this side of .8500. Yet, even if it should set back below .8178, it should also have very good support on any selloff near .8000.

The euro has been rightfully quite weak again since the ‘disconnect’ in the wake of the ECB press conference three weeks ago. As such, no real surprise that the EUR/USD weakness below both 130.00 and the January 1.2925 UP Break has led to a failure back below support in the mid-1.2600 area also last seen in January. The retest of the 1.2500-1.2450 area noted above is also fairly critical.

▪ July Crude Oil future not only failed hefty 95.50-94.50 range congestion, it was also dropped below important lower support (December pullback lows) in the 93.00-92.50 range on its way to test further significant 90.50-89.50 congestion support. Yet the significant UP Break from last October is not until down at 84.50; which is probably the ultimate downside support if equities weaken once again in the near-term.

▪ And the June Gold future finally capitulated after its previous ability to hold its major 1,615-1,600 support. And that should also be fairly scary for the equities bulls, as the only time the Gold heads down this heavily with the equities is during a potential for a significant deflation scare. Back below the low-1,600 support last December’s 1,526 low is the initial key lower support, with extended levels not again until the lower end of last summer’s range in the 1,480-70 area.  

It is of note that industrial metal July Copper future remains weak below both 3.65 and has recently been significantly challenged in even getting back above critical lower support at 3.50. Next lower support is not until the 3.20-3.15 area, which will be very critical as the completion of a major top. Whether it holds or Breaks DOWN will be a most interesting economic indication.

 Thanks for your interest.

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