Market report 21st of July

Risk appetite is rising further today as the stock market is flying high. It seems like there will be a solution to the Greek debt problem and US might also be moving closer to an agreement on the deficit plan. It looks like the market is currently pricing in that everything will work out ok, so maybe not that much additional upside when we actually reach agreements on those issues. However the market remains a news driven market and any form of disappointment or bad news can swing the market in the total opposite direction rather quickly, so be careful and use stops.
S&500 Emini futures have traded up to 1343.50 high so far today with about 2 hours to go n the session. Currently at 1340, up 18,75 points or 1,42%.
Euro traded up to 1,4402 high earlier, but since fallen back a bit to 1,4372. Since we have taken out 1,43 resistance, I think we will see a move higher to test the falling resistance (from May high through July high) at 1,4476 next.
Aussies really enjoys the risk on mode and is trading above 1.08 now, we have key resistance at 1.0880 that could be though to knock out on the first attempt.
US 10 Year Treasury is below 124 level, right in line with my comments last previous days.
Since I am running a bit late on the report today, I will jump right to the interesting levels section.
Looking at a few interesting points in the markets trading wise:
- Next key resistance levels in the S&P 500 Emini futures are 1344.25 gap from 8/7 and the 7/7 high at 1352.75. We failed at 1352 last up run and we really need to see increased volume and a break higher this time. Another failure would be very bearish in my view.
- Corn made a low of 670 ¾ today and reached my downside target, I also closed the 4x short 760 September calls for 2200 USD profit (ex commission)
- Crude broke above the 99.50 key resistance and I was think it would fly, but so far it just it up to 100.06. Will we fail in this 99.40 to 100 zone again?
- From last few days, spot on: “Selling the US 10 year Treasury above 125 should work well as I expect the yield to rise again when the US debt plan goes through. Should at least see a move back below 124 near term.” Trading 123’31 now.
- Yen is just not moving to the upside, very surprised to see Yen performing this well given the recent rise in risk appetite, looks interesting to try and go long below 79 in USDJPY for a move back to 80.50

Technical’s and comments

Euro: Broke above 1.43, which opens for a test of 1.4476 (falling resistance from the May high). Support is former resistance at 1.43 now.
Cable: After it broke 1.62 resistance it has been one way traffic today and has kept pace with the Euro rally. Next big resistance level is 1.64, followed by 1.6441. The interim falling resistance has now been taken out and buy on dips is my favorite as long as 1.62 support holds.
USDJPY: More up and down in the Yen, with lack of direction and focus this pair seems to be on the sideline for now. 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. I am looking for a break out to the upside of the 2 months range, which is 78.44 to 81.78. I favor going long below the 79 level for a move back to 80.50 or higher.
Swissy: I am not looking to chase this pair lower at this stage. To me it looks actually more interesting to look at buying some calls. Will update on twitter if I do anything.
AUDUSD: Amazing the 1.0550 support level once again holds. Strong resistance up at 1.0750.
USDCAD: I prefer selling rallies below 0.98 for a move back to 0.9500. My 0.9500 target hit following the BOC statement. I would not chase the price lower at this level, but rather wait for an retracement to get short again. The yearly low is at 0.9446. Minor resistance at 0.9540 today that can be used as a level to sell at.
S&P Future (ES): Moving up and testing the upper end of the recent range. Next key resistance levels are 1344.25 and 1352.75. The volume on the approach is a bit low and that worries me a bit in regards to potential upside. Are we looking at a case of buy the rumor and sell the fact?
Gold: 1606 high yesterday, the sky is the limit. The most important I reckon is the US 10 year rate, so keep an eye on that. Watch out if we break below 1580 support, could see sell stops go off.
Crude oil: The break of 99.50 was only good for 56 cents so far today and I am a bit surprised it didn’t get more power into the up move. I thought we would see a clean break higher if 99.50 was taken out. Another failure up in the 99.50 to 100 resistance zone would be big trouble for bull I think.



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