Home > Uncategorized > 2013/09/26 Early: TrendView VIDEO Analysis: Equities, Fixed, FX

2013/09/26 Early: TrendView VIDEO Analysis: Equities, Fixed, FX

© 2013 ROHR International, Inc. All International rights reserved.

VIDEO ANALYSIS & OUTLOOK: Early Analysis for Thursday, September 26, 2013.

130926_EQ_FIXED_0630

EQUITIES & FIXED INCOME

The video timeline begins as always with the S&P 500 future and the other equities analysis begins at 06:20, with some of the key macro (i.e. fundamental) factors behind why the equities have been stuck the past couple of sessions at 08:20. The govvies analysis commences at 10:50, with the fresh addition of the far forward (June 2015) short money forwards from 13:50 and a brief return to the key short-term factors for the December S&P 500 future at 15:20.

FOREIGN EXCHANGE Analysis and Outlook below.

 

VIDEO ANALYSIS & OUTLOOK: Early Analysis for Thursday, September 26, 2013.

 130926_FX_0730

FOREIGN EXCHANGE

The video timeline begins with some of the key macro (i.e. fundamental) factors behind why the foreign exchange has also been stuck the past couple of sessions (substantially similar to the equities) followed by the US Dollar Index at 04:00 and European currencies vs. the US dollar at 05:40. The analysis and outlook for Asia vs. the US dollar begins at 07:10, moving on to some key cross-rates at 09:30, and a brief return to the US Dollar Index at 13:35.

General Market Observations

The video analysis highlights the macro-technical aspect of the slide in the December S&P 500 future (which has already fallen from 1,723.50 to the 1,685 area) is somewhat interesting around 1,690-88 area. Whether it sustains its near term recovery to push above the low-1,700 area or erodes further for a more major failure below the 1,682 area will be an important decision not just for other equities but likely for other asset classes as well.

That is because (as we have already noted repeatedly) it will be much more critical into the 1,682 area (with a buffer to the 1,678 level.) That is because 1,682 was the Close on Friday the 13th. That turned out to be more bad luck for equities bears than bulls, as over that weekend was the Larry Summers’ withdrawal from the race for next Fed Chairman.

And the psychology which was exacerbated last Wednesday on the FOMC ‘No Taper’ Surprise was only a radical extension of the major accommodative psychology generated by the Summers’ announcement. As such, it would be surprising to see December S&P 500 future back below 1,682 if the Fed QE is still a big determinant of the strength of the economy and equities… or not!!

And on current form, the weakness of indications from low-end retailers on middle and lower-middle class spending bring the effectiveness of the whole Fed QE program into question. However, that is being countered in the near term by the US Congress being infected with a bit of temporary sanity (it rarely lasts very long.) Texas junior Republican Senator Ted Cruz has decided to end his ‘Pholibuster’ (it was never going to fully stop the bill like a full filibuster) of the Republican (that’s right, his own party) House bill to continue to fund the US government without funding for Obamacare.

Of course, that was because the Senate Democrats are going to restore the healthcare reform funding as part of passing the bill. While a modest waste of time (except for the clarification of the Republican positions), he ceded the floor early enough to likely (never sure of these things in the US) avoid a partial US government shutdown from the beginning of next week. And that’s the good news for the equities. Will it be enough to surmount the consumer spending concerns for a December S&P 500 future push back above the low-1,700 area? We shall see.

EXTENDED TREND IMPLICATIONS

The return to more counterpoint in the equities and govvies trends after last Wednesday’s mutual explosion reinstates more of a classical tendency. And a December T-note future that had dropped so much further than the Gilt and especially the Bund in mid-June, has traded back up above failed congestion and major Fibonacci support in the 126-00 area. As it happens, there is extended resistance on the lead contract (December as of last Thursday) chart anywhere up into the 127-00 area as well. So proper assessment of that split resistance likely requires a clear idea of how the equities decision is proceeding. It is already weakening a bit in the face of the December S&P 500 future improvement this morning, but that is not as yet trend decisive (see above.)

Similarly the previously stronger December Bund future that had played downside ‘catch up’ in the wake of the (typically early) September contract expiration three weeks ago managed to rally back above its 138.41 violated major lead contract low from September 2012. It has now tested the extended resistance it neared last week at major failed congestion in the 138.60-140.00. And if equities should fail, extended resistance is up into the 141.00 area.

As is the case for weak sister December Gilt future that is suffering under the perspective from last week’s upbeat BoE minutes and discount in December future (lead contract after September expires today.) Under the extended influence of the continued US QE (even though the BoE is done) it has rallied back above the 119.15 violated major Fibonacci and congestion support. Yet it also has further resistance in the upper-109.00 to mid-110.00 area (congestion and violated Fibonacci supports.)

▪ The foreign exchange remains more of a muddle, yet where the weakness of equities has reinvigorated a US Dollar Index which had sunk to the (long-anticipated) test of the .8000 area in the wake of last Wednesday’s FOMC Surprise. That neither makes it a bull trend right away, nor completely reverses the strength of other currencies against it. However, it is reasonable to believe the other currencies might take a bit more of a breather after doing well in the context of the improving global economic view that is a more problematic. Especially note the EUR/USD slippage below and rebound into the 1.3500 area (next support 1.3350-00), and GBP/USD slippage below and rebound back above the 1.6000 area (next support 1.5750-00.)

AUD/USD is also back down to violated resistance in the .9350-00 area after testing .9500 resistance on last week’s US dollar weakness, with admittedly more important support in the upper-mid .9200 area. The only outlier is the strength of the Japanese yen on USD/JPY slipping below 98.80 once again, even if that is very much a trading range affair of late with greater support into the 98.00 area. There is much more discussion of the dynamic of the equities, govvies and foreign exchange that includes review of the cross rates and specific technical indications in the current TrendView videos above.

Thanks for your interest.

p.s. As we are just back to blogging after a lengthy hiatus, some of the information on the blog is a bit dated. We will be clearing that up soon, and all of the current critical information (Calendar, Perspective, Technical Projections) is up to date.

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