Its that time of the week again.
We had a high momentum, reasonable volume given a normally quiet period, sell off for equities from trading day 1 2015.
The technical issues are well flagged but price pattern wise having achieved a very recent higher high on many of the major indexes and sector indexes the probability for a sustained bear move was unlikely. The subsequent retrace of 76% (sp500 & Dow, 63% Nas) of the move was the probable event. With so many different sectors not confirming the recent higher highs there is sufficient technical damage here to, at the least suggest a distribution phase in the market.
On the plus side housing (HGX) has convincingly broken out to the upside, retail remains very strong as do utilities and Biotech (BTK). Banks aside finance looks ok with insurance and brokers still doing nicely in spite of sovereign rates moving lower, bonds higher.
Bullion has been a strong performer from 2014 in many currencies apart from the US$. Today 14-01-15 has so far finally seen dollar gold breakout of her 9 month bearish wedge pattern. Lets hope the breakout holds.
On the down side sectors like the Dow transports (usually considered a lead on the market direction did not confirm the recent highs. This is weak stuff and the support level at 8700 or so needs to be watched carefully here and now. PMs are resurgent and currencies have traded beautifully in these few few weeks of the new year providing a warm tail wind to the book.
I’m waiting for the first issue of the Swiss team’s report but as pre reading i provide a few reports here for consideration.(Therefore, expect a large update to this report later this evening, euro time).
Here to kick off, wkly report from Fitzpatrick:
And here the very useful CS tech chart pack:
And here a very useful 2015 run through of the tech charts from NR
And here the
And here the sc fx perspective for the yr ahead
And here the HSB macro house view for 2015
And here the CS fixed income view.. likely a very tricky year in FI following the blisteringly good 2014.
And here the very usual MS FX wkly report. The US$ strength theme persists. The macro data has been surprisingly strong in the last few weeks. On the longer time scale the US economy cannot exist in a vacuum of low global growth. On the short and medium term she can and has before. Housing put in a great number on the last print so this supports the domestic consumption and therefore US GDP story. The big surprise were the trade nos. Lets see if these can sustain. I doubt it but lets see. Im reminded “trade what you see not what you think.”
And here a useful set of tables and data from the JP Asia team defining their EM equity investment allocation recs:
Here the regular GS weekly technical view. Note the high conviction that the eurusd has more to run to the downside. Also cable! Until the data disappoints this trend is very likely to run also in my view. Short term sharp minor corrections aside, ride that mega trend of US$ strength.
Here an excellent, short but very sharp and succinct view of the year to come from RBC.
And here the usual CS wealth allocation weekly
Here a another instrument great tech chart run through from CS (as opposed to their macro chart run through above)
As said above expect another update later today.
Rich