Market Report Tuesday 28 of June

Full pdf version with links

Risk on yesterday and seems like it will continue today, at least that the moment with the S&P 500 emini futures trading up 8.50 points at 1284.75. That is well of the low we saw Friday at 1261.25. So it appears that we have once more bounce off that 1250 to 1260 support zone. The key level to get above now in my opinion to open for a larger rally is 1294, as that would make a higher low and higher high on the daily chart. Last week’s high was also 1293.75.

The market is very much news driven and the market is closely following the developments in Greece. We will have the austerity vote as the major event this week. My view for some time has been that the only likely outcome of the Greece story will be a structured or outright default. I just don’t see it possible for Greece to pay back the mounting debt they are accumulating within a reasonable timeline.
The US debt limit discussion is also another event risk on the horizon to keep an eye on going forward.
I also see there has been another bank failure in Denmark over the last days, Fjordbank Mors, a regional bank.
http://www.independent.ie/business/european/bondholders-face-losses-as-another-danish-bank-fails-2806921.html


Back the markets and what I am looking at this week.
Gold is looking interesting I think for a possible rebound


Looking at a few interesting points in the markets trading wise:
- Looking for a rebound in Gold towards 1520 over the next few sessions
- US 10 year futures is looking overbought and downside target is 123’20
- Euro has key resistance at 1.4496 that I think will be difficult to take out this week
- EURCHF looking very attractive to get long for a move back above 1.22
- Crude oil looks interesting to buy on dips above 89.50 for a move back to 93.80
- Corn looks oversold, first upside target is 690

Today’s calendar:
16.00 US consumer confidence
18.45 Bank of Canada Dep. Gov. Cote speaks
19.00 Fed's Fisher speaks
01.50 Japan industrial production

POMO, at 16:15 to 17:00, scheduled of $4 - $5 billion to be bought by NY Fed.

Interesting headlines:
Finance Minister Seeks Votes for Greek Austerity Plan - The WSJ -
http://online.wsj.com/article/SB10001424052702304314404576411462370052974.html?mod=WSJEurope_hpp_LEFTTopStories


Extent of local debts in China laid bare - The FT -
http://www.ft.com/intl/cms/s/0/1e47d528-a092-11e0-b14e-00144feabdc0.html#axzz1QQh2MtL3



Five biggest threats to the US economy - The Telegraph -
http://www.telegraph.co.uk/finance/economics/8601623/Five-biggest-threats-to-the-US-economy.html
Greek minister warns of 'catastrophe' if parliamentary revolt leads to austerity bill being blocked - The Telegraph -
http://www.telegraph.co.uk/finance/financialcrisis/8600703/Greek-minister-warns-of-catastrophe-if-parliamentary-revolt-leads-to-austerity-bill-being-blocked.html
A Greek debt buyback would avoid the dreaded default - The Telegraph -
http://www.telegraph.co.uk/finance/financialcrisis/8599992/A-Greek-debt-buyback-would-avoid-the-dreaded-default.html
China is building a better future for all - The Telegraph by Wen Jiabao
http://www.telegraph.co.uk/news/worldnews/asia/china/8601734/China-is-building-a-better-future-for-all.html
Greek Debt Talks Widen - The WSJ -
http://online.wsj.com/article/SB10001424052702304314404576411730186291402.html?mod=WSJEurope_hpp_LEFTTopStories
Greek Bond Buybacks Discussed at Meeting - The WSJ -
http://online.wsj.com/article/SB10001424052702303627104576411891577670756.html?mod=WSJEurope_hpp_LEFTTopStories
Gold Can't Hold $1,500 - The WSJ -
http://online.wsj.com/article/SB10001424052702304447804576411391861041346.html?mod=WSJEUROPE_hps_LEFTTopWhatNews
Euro Makes Gains on Greek Hopes - The WSJ -
http://online.wsj.com/article/SB10001424052702304447804576410682053899822.html?mod=WSJEUROPE_hps_sections_markets
U.K. Only Semi-Detached From Euro Zone's Troubles - The WSJ -
http://online.wsj.com/article/SB10001424052702304447804576411690944730546.html
Dollar seen losing global reserve status - The WSJ -
http://www.ft.com/intl/cms/s/0/23183a78-a0c6-11e0-b14e-00144feabdc0.html#axzz1QQh2MtL3

EU ‘Brady bonds’ plan for Greece - The FT -
http://www.ft.com/intl/cms/s/0/7c1a1f94-a0a6-11e0-b14e-00144feabdc0.html#axzz1QQh2MtL3

Give Greece time to prove it can do the job - The FT - By George Papaconstantinou
http://www.ft.com/intl/cms/s/0/fc16c638-a0f2-11e0-adae-00144feabdc0.html#axzz1QQh2MtL3

Obama Targets $72 Billion Business Tax Break - Bloomberg -
http://www.bloomberg.com/news/2011-06-27/obama-targets-72-billion-business-tax-break-republicans-balk.html

Technical’s and comments

Euro: The next level of key resistance is 1.4380 to 1.44, with 2 week high of 1.4496 as the big level to the upside for now. To the downside we have followed by 1.4230 and key support at 1.4150. This pair is very choppy and not my favorite market to trade at the moment. If I had to pick direction I would still look to sell rallies.
Cable: Prefer to sell rallies in this pair at the moment with 1.6040 as the first level that I see as a potential entry level.
USDJPY: Very tight range over the last sessions. I remain longer term bearish on the JPY as the fundamental factors in Japan looks ugly, with huge public debt and unfavorable demographics going forward. However the risk off over the last days has taken us below 80 again. Not sure if we see any intervention unless the move picks up in speed and magnitude. Buy on dips for the brave.
Swissy: I expect the CHF to underperform Euro as the 1.20 EURCHF looks very rich in CHF terms. So maybe better to play Euro is negative on USD. Swissy is bearish below 0.8500 for now, looking for 0.8300
AUDUSD: Buying on dips above 1.04 looks the most interesting for now. Look out for any stock market sell off as a trigger to get out of longs.
USDCAD: Still favor selling rallies for a move back below 0.9700. If we break above 0.9900 this view would be wrong I reckon.
S&P Future (ES): Good upside momentum yesterday and this morning, but I reckon we must see a daily close above 1294 to really get bullish. A daily close above 1294 would give us a higher low and higher high on the daily chart, which should open for more upside. Key support is 1260, followed by 1250 now.
Gold: Looks interesting to be long above 1490 with relatively tight stop.
Crude oil: Buy on dips above 89.50 I reckon for now and looking for a rally towards the resistance at 93.80 near term. Need to see a daily close above 95.50 to open for an extension to 98.50 near term. A daily close below 89.50 would be negative and would not hold long if we break below this level.
________________________________________
Risk Warning: Any information in this report is based on data considered to be reliable, but no representations or guarantees are made by Avantage Financial GmbH with regard to the accuracy of the data. This information is provided on condition that we accept no responsibility, legal or other for its contents. We, including our directors, officers, employees or publishers, disclaim all liabilities. Any statement constitutes only current opinions, which are subject to change. Neither the information nor any opinion expressed shall be construed to be, or constitute an offer to sell or a solicitation of an offer to buy any investments mentioned herein. Regardless of the account type you choose, there are risks inherent in trading, including the risk of loss greater than the original investment. The opportunity for profit creates a corresponding risk of loss. Anyone wishing to invest in any of the products mentioned should seek their own financial or professional advice. Prices can go down as well as up. Past performance is no guarantee of future results.