Home > Uncategorized > 2013/10/07: TrendView VIDEO Analysis: Equities, Fixed Income, FX

2013/10/07: TrendView VIDEO Analysis: Equities, Fixed Income, FX

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TrendView VIDEO ANALYSIS & OUTLOOK: Monday, October 7, 2013.

131004_EQ_FIXED_WKNDEQUITIES & FIXED INCOME

While the TrendView Videos are from after Friday’s US Close, they remain very relevant for the trend decisions into early this week based on the influence of the US budget impasse. The timeline of the Equities and Fixed Income video opens with the typical short-term and intermediate-term view of the S&P 500 future, the other equities from 04:40, with govvies analysis beginning at 06:40, and short money forwards from 10:30.

The Weekly Report & Event Calendar is available via the right-hand sidebar link

FOREIGN EXCHANGE Analysis and Outlook below.

 

TrendView VIDEO ANALYSIS & OUTLOOK: Monday, October 7, 2013.

131004_FX_WKND

FOREIGN EXCHANGE

The Foreign Exchange video opens with a brief mention of macro factors, moving on to the US Dollar Index at 02:15, then Europe at 05:05, Asia at 08:50, and analysis of the cross-rates at 11:15 prior to a brief return to the US Dollar Index at 16:10.

General Market Observations

Not a big surprise that the NIKKEI and European equities weakened this morning to reflect the disappointment from no movement toward the US government budget Continuing Resolution. And as we among many others expected this to be based on entrenched ideology on both sides (but especially the Republican right), this is now rightfully evolving into fears over the US ability to extend its Debt Ceiling by late next week. With House Speaker John Boehner saying that he is going to avoid a government default left the equities feeling pretty good on Friday.

Yet he also said he and his party are going to “stand and fight” over the weekend, which was consistent with what he told the Sunday talk shows. As he noted on ABC television’s This Week program yesterday, “We are not going to pass a clean Debt Limit bill.” And as that is where he left it, there is no reason for the equities or asset classes to believe the room for compromise has arrived… at least not yet. And as the calendar notes, all US economic data releases are tentative (just like the postponed Employment report last Friday) pending resolution of the impasse in Washington DC.   

As such, it was very interesting that the December S&P 500 future rallied back so well, yet also only made it back up to last Tuesday’s 1,685 Negated UP Break. That was a sign the tale had not yet said anything technically definitive about a reverdal of the down trend. That would require the market to push above the top of the recent 1,688-1,695 weekly Exhaustion Gap Top. Otherwise it might be more likely to sink back for a retest of the old 1,669-73 area (which is pretty much what we have this morning) or even lower levels as far down as the mid-1,640s or even 1,630-25 once again. It all dependes on how far the intractable positions play out.

EXTENDED TREND IMPLICATIONS

All of which is as telling for the other asset classes as we had expected. After some weakness late last week, the govvies have benefitted from a bit of ‘haven’ bid returning this morning. And just to be clear, both the strength of the govvies and weakness of the US dollar may be subject to sharp reversal if and when the goofiness in Washington DC gets sorted out. And as far as the govvies have rallied, it has only left them nearer key resistances in the context of a bear trend… kind of a US government gift to the bears who profited out on the early September selloff.

The stronger December US T-note future (likely due to it being the direct target of the Fed’s ‘no taper’ surprise) has pushed above 126-00, with latitude to hit the low-mid 127-00 area as more critical resistance. Lower near term support remains 126-00/125-21.  The December Gilt future slipped back into its 110.20-109.84 support after pushing into the upper-110.00 area last Thursday. Yet much like the T-note, its more critical higher resistance is up into the mid-111.00. Same for the other strong sister December Bund future pushing above its 139.60 violated support on an attempt to escape 140.10-.30. However, here as well the more critical resistance is up into the hefty interim 141.00-.30 ragne that was tested so many times since August 2012 prior to giving way (along with the 140.00 area) early this September.

And the foreign exchange seems to be influenced by the equities activity as well, yet is likely at least as much the fact that the problem is emanating from Washington DC. As we have noted quite often of late, the weakness of equities weighing on the US Dollar Index only tends to occur when the US is the source of the problem… like now!! After an initial ‘dead cat’ bounce from our long-anticipated test of the .8000 area in the wake of the FOMC Surprise, it failed modestly below it last week; yet not yet below the .7950 Tolerance of that area. If it does, then a test of the .7860 September 2012 low is likely in order.

The euro and sterling have benefitted from the stronger global economic sense of things (more so that any really across-the-board bullish data), yet even more so the weakness of the US dollar. And even as that wanes for now as compared with a freshly stronger Asia, it doesn’t help the greenback that the Japanese yen is perceived as a short term ‘haven’ now. USD/JPY churning below key 97.00 area support (much more in the video on that), leaves room for another several points slippage. Even the previously damaged AUD/USD held a retest of the violated trend resistance in the .9300 area after its several month sharp fall based throughout August. And the manner in which it held so well at the top of 92.80-.40 at the top of last week is all reviewed in the Foreign Exchange video as well.   

The balance remains much the same as last week’s Current Rohr Technical Projections – Key Levels & Select Comments available via the link near the top of the right-hand column. Those will be updated after the US Close today in preparation for what may be a very interesting finish this week if there is no CR compromise.

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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