Weekly Technical Comments – “Mkts Overbought On All Timeframes” 1st July14

 

Its that time of the week again for the Swiss team’s usual technical run through. What is evident across the technical community is that almost all technical commentators starting to forecast weakness across equity markets. The Swiss team remain fairly bullish on the medium term but are forecasting a near term set back. AG are sticking to their bearish guns and Goldman’s have withdrawn their bearish positions and bearish conviction on gold. They do remain high conviction euro bears as does Fitzpatrick though his jpy shorts are looking very dangerous here in spite of the nik225 strength.

For my own book i remain a nq bear but general equity market bull, for now. Having said this my net exposure is the lowest its been since end q3 last year. My exposure to commodities has risen as my conviction has increased but I do still expect some weakness in a short term correlation move with equities. In the medium and longer term i expect commodities to out perform general equities with the underlying commodities out performing their producers as end user volume demand may be light relative to the monetary driven paper trading demand for these asset classes. FX wise the gbp has been an overweight vs the euro for some time across my book alongside a defensive high yield uk equity set of positions. Its been an excellent trade given I measure my book in euros. The macro trade may be soon coming to an end so some contrarian consideration of strategy will be needed very soon. (GBPNOK is at new extremes but has momentum which, given the above comments on commodities out performance and the “stretch”, makes me take note).

On trading practice its also worth making one clear point here about this narrow highly concentrated current market.

As a couple of examples, across the sp500 10 stocks out of the 500 make 42% of the net margin income of the entire 500 company index.

http://www.zerohedge.com/news/2013-02-18/these-10-stocks-account-over-20-sp-500s-market-cap

The very same dynamic is true for the nas100. The largest 3 stocks in the nas100 make up nearly 25% of the index cap value! The top 10 40%. I realize this is not the place to discuss why this sort of market dynamic is occurring here but this sort of data should certainly be feeding into all our practice on a strategic and tactical level. In my own view.

Accepting the above here a chart on the entire sp500 and its very clear weakening breadth situation. The health of the nasdaq100 is dependent now almost entirely on a hand full of large cap momentum stocks. The risks are very clear.

Without more delay here the Swiss team’s report:

wklytech-1-7-14

And here AG:

ag-1-7-14

And here GS:

gs-1-7-14

Much more to come.

All the best

Rich

 

Weekly Technical Analysis – “Sp500 Toppish, 1925 Key Support” 25th June14

Its Tuesday so time for the Swiss team’s regular technical weekly analysis of the major asset markets.

Market breadth improved on last week’s breakout but on a longer term basis remains weak. Sentiment has been reaching extreme levels on the AAII and the put call ratio. Whilst a few weeks ago there did appear a reasonable probability of price running on that probability gets smaller the higher she goes as the move’s breadth/internals narrow.  Inter market we can see the cheer leading sectors like the SOX, Heathcare, Oil and Gas & Utilities are heavily over bought, have price momentum divergence and are at price trend extremes. They are due a pull back and given the distance to their 200dma’s it could be quite a severe pull back and a leap in volatility and volume which opens the door perfectly to medium term asymmetric trade positions.

The team pick up on the euro, sterling, aud & the precious metals. The detail i’ll leave to the tea but suffice to say the commodities per se are attracting a bid here and cyclically speaking this fits perfectly with tired equity bull theme.

Its also worth repeating that, course, price can diverge for long periods from their long term mean averages but eventually they always do reset and the further away from their long term mean average with weakening momentum and breadth the greater the probability for a sell off becomes. We operate in a game purely of probabilities and for our p&l’s that’s just fine as this is enough!

For my own book I’ve been a seller today into strength in the oil and gas sector. (Its been a wonderful ride).  Healthcare and also diluting some reit holdings. The probability of equity price weakness grows. Most stocks have paid their annual dividend so the rational of holding over the summer a large allocation of stocks, given the technical problems is unconvincing.

Profits over the last 18 months have been stellar but the issue, as always in this game, is what next? and how this equity topping out phase will play out exactly. Will it be a low volatility equity consolidation, in a replay of periods of the 70s, or will it be explosive to the downside to enable more ‘policy action’ to fuel the monetary commodity super bull? (Note China has been using the copper price weakness to warehouse considerable stocks of copper. The LME stores, as one example, have sufficient for 3 days of global supply). We cannot know yet how this will all play out, nor do we need to. We must take what is given to us indicators and price will show the way.

Index wise the nasdaq100, until today, has struggled but today, thus far she has found some momentum. In terms of probability she remains a sell and i maintain my short hedging allocation to the sector. Ive been increasing options and fully funded precious metal allocations and picked up, off a very low level, my allocation to industrial metals especially copper and platinum producers due to the latest price moves and inflation data points

Here then the usual report but also please find the AG report from Friday below as well as a number of excellent reports from CS, DB,Barcap, ML and more. Commodities are regaining some focus.

wklytech-25-6-14

And here AG with their technical run through:

ag-wktech-22-6-14

And here Commerz with various tech views:

cb-wklytech-20-6-14

cb-wklytech-24-6-14

And here Commerz on the commodities:

cb-commodities-24-6-14

And here the CS core perspectives

cs-core-24-6-14

CS-coretech-24-6-14

And here the CS on FX:

cs-fx-23-6-14

And here a couple of excellent commodity reports from CS:

cs-commodtech-21-6-14

cs-commodities-24-6-14

And here a great ML h2 view:

ml-h2-14

And here an ml allocations report:

ml-allocations-24-6-14

And here DB with an FX view:

db-fxtech-23-6-14

And here JP with their FX take:

JP-fxtech-24-6-14

And here Barcap with their technical view:

barcap-tech-23-6-14

I strongly suspect h2 2014 could see a leap in volatility. One way or another asset price and correlation means need to revert. Usually, from such an equity price height, it happens quickly! And gold the inverse i suggest.

Lets see. All the best

Rich

Weekly Technical Analysis – “Gold Bottom In Place” 18th June14

I’m traveling so I must cut short this post. In summary we still have sufficient technical pillars of strength that this market can press on a little more but the “wheels” are starting to fall off this bull market one by one as a greater number of indexes failed to confirm the recent US major indexes higher high. The mean reversion catch up trade now looks in danger and some indexes like the nasdaq 100 and smaller cap indexes look to be close to breaking down technically.

I’ll leave the detail to the team for their usual excellent weekly run through here:

wklyteh-18-6-14

All the best Rich

Sunday Technical Analysis – “We Are in Stoppage Time” 16th June14

Apologies for the slight delay in posting my Sunday reflections. Please find them below.

Since the last breakout its been a time of number crunching and questioning this most recent rally. Below is my analysis.

But first some reports.

First up the uber bearish AG

ag-wklytech-16-6-14

And here the equally uber bullish fitzpatrick:

citi-wklyytech-16-6-14

And here CS wealth

cs-wealthwkly-16-6-14

and here cs on equity sectors and allocations:

CS-equities-16-6-14

And here JP on fx:

jpm-fxtech-16-6-14

Next up my own propriotary comments and technical view.

In summary, its a story of SP500 and Dow tech and price strength vs everything else’s weakness.

We got a decent price breakout inc momentum (lead sector index breakouts) and reasonable internal breadth and strong technical indications of the bears throwing in the towel en mass on the US large cap stocks sectors and indexes. Headlines aside, the devil is always in the detail on these issues and so this weekend was a time for detailed analysis of sub indexes sectors and indicators. Unfortunately for market bulls, the evidence is much more mixed than the sp500 and Dow alone indicate.

The small cap indexes are struggling and have not confirmed the breakout by the large caps. The NYSE is showing huge negative divergence as is the sp600 small caps as is the nasdaq100 as are the Cac40 and DAX. Price non confirmation was also wide spread with almost all world indexes failing to confirm the major US index breakout. Whilst the Nik225 did score momentum she failed a higher price high. She’s inconclusive as yet and the inverse jpy is showing relative strength not weakness as she should. It also appears likely that European indexes have price topped out already and the divergence in momentum and breadth is confirming this.

So we have a mixed picture but a sufficiently compelling mixed picture that hedging via the weaker indexes and sectors that show weak breadth, negative momentum divergence seems a wise policy here and now. There is sufficient technical concern to merit hedging up to half the long portfolio.

Detail wise the Sp500 and Dow are showing the best technical strength since early march. This has produced a near wash out of shorts in the market via put call ratios. The nasdaq100 saw a total wash out of shorts.

Here the Sp50052 week highs. 2 sds to the mean on a breakout, pretty healthy.

And here on the 3r time frame of 52 week highs.

Less compelling but no conclusive. The declining strength of breadth merely indicates a mature bull market. Its not a pull the trigger short indicator yet.

Here the sp500 to her 200dma.

Again, on the latest breakout by price she showed the strongest breadth since march and scored a reasonable level.

And here the sp500 to her 200dma on a 3 yr time frame.

Again, weakness but not pull the trigger weakness im afraid.

And here the dow..

Best breadth since 2013 indeed.

And here on the 3yr..

The dow is the most easily manipulated of indexes but even here we see relative weakness on the longer time frame.

And beyond these two we then hit problems.

Here the nas100

Whereas the Dow and Sp500 nearly convince the nasdaq100 doesn’t convince at all on market breadth internals. The price breakout was not matched at all by market breadth strength.

And on the 3yr view

And here the nas100 stocks above their 200dma..

And here stocks above 200dma on the 3yr view..

There exists large unresolved technical problems inside the nasdaq100.

The nas100 also failed her stocks above the 100dma test (the last price high was within 100 days so it is very relevant).

We can see here that the nasdaq100 is 1 std above her 50d mean average or the highest level above her 50dma for all of 2014. In terms of short targets the best indexes to short are those with breath divergence, momentum divergence, record low volatility, wash out put call levels and a higher high price.

Here nasdaq100 volatility index vs price.

Record low vxn levels for the nasdaq100 indicating the attractiveness of asymmetric trade strategies in the nasdaq100 folks.

Below the market put ratios.

The wider nyse shows a very similar, though less dramatic weakness.

And here nyse stocks above their 200 dma.

And here the nyse stocks above their 100 dma as the last higher high was within 100 days.

Demonstrating near term weakness, unless this recent move sustains quickly, we got negative divergence to the last 100 day higher high by price. Not good!

And hereto her 50dma that is better so some near term nyse strength should be evident. But if/when she fails a sharp reversal by price could occur for the nyse.

Here next the smaller cap sp600.

Its compellingly unconvincing for the smaller cap stocks.

And looking internationally, here the cac40 that cs recommends buying on a report below. I would hold fire on that allocation for now!

And here the DAX which also confirms the weakness in the major euro indexes.

And here the important total put call ratio.

And here equities put call

The issue on market internal issues is that are not good indicators for near term trade entries. For this we must use other methods. The most common are price bar patterns alongside technical price indicators most commonly momentum indicators. Charts below for this detail on the nas100 because there is momentum divergence at present.

Here a longer term divergence and shorter term divergence issue inside the nasdaq100 from earlier today.


In summary, for my own book i can’t recommend an overall market short position as yet but i say i have taken some shorts via the nasdaq100 on today’s earlier price strength. Until the technical picture improves for the nasdaq100 she looks the best short target near term. Medium term the small caps sp600 and nyse also look reasonable short allocation targets. Meanwhile the sp500 and Dow show some technical strength. Until they show compelling weakness, still inside this impressive bull market its unwise to short these two indexes prematurely. Its very possible that we still see higher highs in these two before a high probability hedging trade shows.

Geopolitics is always a wild card and things are certainly heating up in this respect.War is generally very good for commodity prices.

A closer look at the sectors and wider asset classes inc commodities to come.

All the best for now

Rich

 

Weekly Technical Analysis – “Bear Capitulation” 11th June14

Swiss holidays yesterday so this week’s technical run through has been delayed slightly.

Price has pushed on from last week’s report and as a consequence some of the technical readings, according to the team are rapidly moving into a contrarian territory which is starting to signal we are moving into the zone of the medium term top in major equity asset markets. On the near term the team expect a very shallow set back before these indexes make their final summer highs ahead of a major correction.

Of course everything in markets is timing. The question I’m struggling with for my own book of asset allocations is whether we will indeed see a shallow set back prior to the final wave here. The technical evidence provides a high level of confidence that should a near term set back occur a final wave higher should, at the least, be attempted and see strong support.

I’ll run through why i have a fairly high conviction the team are correct that we will see a final move higher in a moment. But first, the implications of a final move higher for equities are meaningful for for commodities and commodity currencies, as an out performance allocation. According to the technical asset price history play books we should, theoretically, see this final summer move higher on low breadth and low momentum scoring a narrow negative divergence in abundance. The commodities should be mild out performers on this final wave (as the smart money moves into the asset class in preparation of the herd). Inverse correlation should likely then occur with an even stronger commodity out performance as equities consolidate and fall. We should expect volatility to mask and confuse these large cyclical trends.

The team devote some attention to the medium term issues with these equity markets. The medium term issue devotes some time and attention to cross check which i don’t have time to analyze here today.  The issue for most market participants is the here and now and so its worth unpicking this issue first. Aside from the putcall ratio, as the team state, we have no confirmation of a more significant pull back yet. We do have some key indexes on high rsi levels but to short on this basis is not enough. To take some leverage of the table is reasonable but to go short is a high risk trade at present. (Doesn’t mean you can’t take the trade but the target needs to accommodate the high risk vs the stop and the allocation needs to be relatively light. The expectation if running that trade needs to be for a low win/lose ratio. Its simply in the trade design).

Before i lay out the technical detail I’d just to like to remind that my own book has been twice positioned for a major correction in h1. On both occasions I was forced to reverse but the entries were sharp and the exists timely so that, on both occasions i realized a profit for the book. My only point in relaying this history is simply to remind that i have been a bear at various points in H1 guided by data and price not some bias to the market.

With this all said to the near term.

Sp500 stocks making 52 week highs

And here sp500 stocks above 200dmas.

And here the sp500 with combined putcall ratio.

Are the three charts confirming a clear market correction here? Simply and slightly annoyingly, no. The technical picture is the best it has looked for some time indeed which sits badly at odds to seasonals and also overdue nature of correction.

The major four US indexes here with Macd momentum shown.

Sector wise little in the way of momentum divergence here. Speculators are buying these stocks and buying strongly whilst AAII & even the putcall is not yet in absolute contrarian levels. 95% of the time these sort of price and momentum patterns, if on good breadth, will result in a another retest of the highs within a month of elapsed time.


In terms of correlating instruments we can see the US$ is adding weight, usually a bearish US equity index indicator. The dx is through a key level and has momentum as well as recent momentum. We can see that instruments are behaving in an unusual historic manner here from fixed income to the commodities.On the recent performance the commodities have positively correlated to the US$ and fixed income positively correlated with equities. This is extremely unusual. The mean usually reverts but given the technical recent strength in equities the answer may not be as simple as we would hope.

On the near term there are, at best, cross currents of evidence that prevent much of an allocation to the short trade.

The team don’t pick up on the Euro issue, JPY weakness & Aud strength. The euro breakdown appears significant and subject to a meaningful liquidity (QE) move by the ECB its hard to see the event as bullish risk! The euro is not a world wide funding currency, yet and until it is this move is US$ liquidity negative rather than positive, on the medium term.

Without more delay here the Swiss team’s latest comments.

Wklytech-12-6-14

And here Yardeni

yardeni-10-06-14

And here GS

gs-7-6-14

And here a raft of equity, wealth and commodity reports

cs-equity-5-6-14

cs-equity-8-6-14

cs-wealthwkly-6-6-14

cs-commodities-6-6-14

As usual more in a few days.

All the best

Rich

 

 

Sunday Tech Considerations – “Are We There Yet” 08th June14

We had some very promising price signals last week and the promising market breadth then resulted in a Thursday session breakout for most the key sectors. The Nik225 joined the move and the bull market started to move forward once again.

In spite of some key technical signals that participants had started to allocated long again the AG team are sticking to their guns in respect of forecasting an imminent market top here.  Its becoming more of a 1987 type flash crash event forecast, which some cynics might say demonstrates a desperate bear.

I’ll leave the comments to the team’s own report.My comments from last week and week before stand that i’d like to see some lines in the sand technically from the team. No matter the near term outcome here without clear reversal levels their practice is on shaky ground.

ag-6-5-14

Fitzpatrick must be happy as the US$ is rising, so is the jpy and so are the equity indexes. He has a week off this week.

The GS report i missed a copy this week but we know their conviction levels and key trades from last week. They haven’t had a bad week but Fitzpatrick takes the winner’s circle this last week.`

Here below instead are a raft of reports from CS which i’ll update on later today.

Here CS 6 month h2 view:

cs-h2-2014

And here the CS monthly:

CS-Monthly-june14

more to come.

Rich

Weekly Technical Analysis “SP500 Short Term Toppish” 06th June14

The Swiss team have reported and they have provided a near term toppish recommendation on the lead sp500 index.

The rational is a combo of:

1) over bought momentum. Correct for the lead indexes like dow transports, health  and semis although many other indexes remain with low rsi’s and relatively unloved. It is very poor trading practice to short spikes in momentum indicators team. You short the divergence not the spike and divergence is close to zero at present. If anyone wants to discuss this please pick this issue up on the forum pages. If its one lesson to write hard to the memory it is surely this one.

2) The weak market breadth is also sighted by the team although on the latest higher high it was the highest level of stocks above their 52 week highs since the first few trading days of March in fact. Stocks above their 200dma were at 80% on the higher high which again is a healthy breadth level in fact and an improvement on prior breakouts. My point here is that breadth is not in itself indicating a top here. Selectivity is unless this broadens quickly!

3) Vix new lower low. Yes volatility is unhealthily low (especially for financial speculators and underwriters of hedging products, eg Barclays latest investment nos!). If only the put call was confirming the over bullishness or AAII, then we could agree.The team themselves acknowledge this is not the case here and now.

“The 5-Day CBOE Put/Call ratio is heading to rather low levels and the AAII Bullish Consensus is
back at neutral levels, which means the sentiment anomaly has been worked off.”

My own practice found a fairly a neutral overall position on the data. In a huge bull market continuations usually occur on neutral technical data team. On the three issues raised i’m unconvinced, as yet. The strongest point is selectivity and overbought within this. If this rally, if it is to sustain, as i said above, needs to broaden! The trade is a mean reversion trade, for now. The nik225, etc alongside a broader set of US sectors needs join the party, if they don’t another set back certainly beckons.

They remain bullish gold and the euro. No mention the AUD and commodities specifically. The jury out on the asset class for now.. The AUD close to her price support.

Without any more delay here the guys own words.. Next week’s is delayed by a day due to public holidays in Switzerland!

wklytech-5-6-14

Rich

 

 

Weekly Tech Trio & Comment – “Continuation, for Now” 1st June14

First up I wish i could be more certain of near term direction here. Issues such as market breadth are very inconclusive. Lets run through it.

The bulls can point to the sp500 and % stocks above their 200 dmas as maintaining a solid bullish continuation of this 6th year of this bull market. Certainly the recent sp500 price move has been accompanied by an improvement in market breadth for this index and her sectors. To be clear this has come even as economic activity has gone negative on the quarter and earnings have sunk. The bulls suggest this is all in the rear view mirror now. We have essentially had a 6 month price consolidation as a response to the data weakness and now we are ready to move ahead again, against the usual seasonal & mid term election cycle patterns. Dow transports and semi conductors, usual historical lead indexes are showing the way and it is higher. (Both are deeply over bought!) Health care marches relentlessly onward. Interest rates are falling once again. Its never cheaper for low credit quality companies to borrow and that supports earnings, capital formation as well as M&A.

The bears also have much evidence at their disposal inc very weak market breadth in the wider nyse which has not improved and once again shows negative divergence. Recall a clear 40% of NYSE stocks are still below their 200dmas even as the nyse breaks to all time record highs. That is not a healthy indicator of a sustainable bull market folks. The dow is better but hardly compelling. The put call averages show much bullishness remains which is highly geared from nyse margin with once again falling hedging of positions. The nasdaq and 100 are better but not conclusive as yet.

On the cross correlated instruments we have the US$ bounce (usually risk off). We have EM’s still inconclusive and EM’s inc shanghai looking weak on the bounce. We have the usdjpy pair inconclusive, the nik225 failing to join the bullish bounce. We have key sectors failing to join, as yet, inc finance in US and Euro zone. We have commodities inconclusive as yet even though they are a usual late cycle performer. Etc etc.

The usual price correlations are still not mean reverting back to historic patterns and until they do we have to be skeptical of this latest breakout by the sp500.

For my own book im playing this for a bullish consolidation, at present. This remains one of the most powerful bull markets this century supported heavily by the desire to reflate our system by monetary means. This is a government sponsored bull market. The technical picture is no longer a screaming sell and therefore given the recent momentum upward again the lowest risk and highest return trade is for a continuation of this bull, tired or not. I’m therefore positioned for a mean reversion move for the correlating asset markets and usual late cycle historic out performance sectors. A selection would include rejoin of the 2013 bull market cyclical move by the nik225 which also suggests the start of a new secular bull market for Japanese equities. (By the inverse a carry trade). Commodity related themes (inc aud) bounce and resumption of their secular move higher, inc gold.

A conviction trade is it not. We have weakness here and evidence on both sides. Playing the mean reversion is a reasonable to take at this junction but its not at a high conviction level as yet and its not therefore at a high leverage level and I would reverse these positions on evidence ie Aud breakdown, shanghai breakdown, eurusd breakdown without ecb qe, nik225 breakdown and jpy strength, sustained US finance weakness and yet more stretch (narrowing of the breakout) of cheer leading US sectors. etc etc.

I hope this is crystal clear. Without delay lets move to the trio and some yardeni cftc &  cross correlating charts that are very insightful as well the latest factset on earnings.

First up GS. Worryingly I find myself on the other side of GS in terms of Euro near term (target 1.34), I’m neutral having been bearish as we are at the trend support here, deeply over sold also vs Cad.  AUD they remain committed to the AUD bear market whereas i recently added and am playing an end cycle commodity out performance, though not at volume as yet until price provides more support. GS remains super bearish gold and is suggesting gold is trend ready for a high momentum and volume breakdown here.

gs-wklycharts-30-5-14

And here Fitzpatrick, remaining an uber bullish US indexes and the US$. He is nearly all in at 85% allocation. Long US$ vs JPY, GBP vs AUD, Short Eur vs USD. He is under water at present. The positions do not offset each other either. If i was asked to make an observation i would suggest taking some positions that are less closely correlated to ensure that the account was protected a little more from a directional move by the US$ against him. Its a win lose set of positions and win or lose that simply spells risk to me. There is no brilliance in running a risky set of “all in” correlating directional positions. (Apologies to Fitzpatrick but you understand my point).

cb-mmwkly-30-5-14

Next up here AG. And AG represent the frustrated bear here. They are not deviating from their bearish call but they are feeling the pain here.

ag-wklytech-30-5-14

Trading and investing is not a game of being right or wrong. Its a game of knowing how to determine when you are right or wrong. Ie we have all been wrong and the trick to sustaining the P&L is when to acknowledge the issue. I would therefore, like the UBS team’s practice, like to hear what the lines in the sand are for the AG team. If the aud breaks out and the Nik225 climbs above 15000 would they throw in the towel and if so how would they play the reallocation. We have to consider our moves three steps ahead and we have to always be prepared to be wrong. This is one of the first rules in trading and investing in fact.

Next up lets take a step back and use yardeni’s research to look across asset markets to some mean reversions and spreads between instruments and indicators.

First up latest cftc report from Yardeni

cftc-yardeni-30-5-14

And here the excellent tech run through by the team,:

yardeni-tech-30-5-14

And here, least we forget the “barbarous relic”, Yardeni on gold

yardeni-gold-30-5-14

We have seen this so many times during this bear market but gold once again looks “cheap” on a fundamental basis. The 1970s bear market was deeper and so we could well see gold to that Goldman’s target of 1150 and still maintain her secular bull market. From memory, a move to 1050 would be in line with the 1970s cyclical bear mark move. We all know what occurred when that cyclical bear ended and the secular bull resumed. Aside from long term call options on the miners and the underlying i have no leverage on the asset class again having taken the leveraged profit off the table two months ago.

Lastly here the latest Factset comments on this very weak earnings season:

factset-earnings-30-5-14

All the best

Rich

 

Technical, Macro Cross Asset Market Reports & Comment – 31st May 2014

I hope all are having a productive and or relaxing weekend.

Personally I’m still playing catch up on cyclical and secular trends across asset markets here, digesting the recent price action and its implications.

Lets start with some macro reports here:

 wf-macrowkly-30-5-14

Here a useful macro equity view fro ML

ml-macroequity

Here the usual useful hart pack from CS

cs-charts-30-5-14

Here ML with their forecasts and earning projections for the sp500

ML-sp500-30-5-14

And ML here with sector allocation rational:

ml-sectors-30-5-14

And here the CS wealth team

cs-wealth-24-5-14

cs-wealth-25-5-14

And on the ecb action issue.. or not..

CS-wealth-28-5-14

cs-wealth-30-5-14

And here their equity top picks. Useful and some expected and unexpected names here.

cs-toppicks-30-5-14

And here Barcap with their usual tech weekly:

barcap-techwkly-30-5-14

Its a very divided professional forecast across asset markets at present.

Here commerz on commodities..

commerz-comm-27-5-14

And here on FI:

cs-fi-29-5-14

Here some country views :

Germany

db-germany

Romania

bnp-romania

And here on the euro ecb issues/measures.

bnp-euro

And here on FX

DB wkly fx

db-fxwkly-29-5-14

And here commerz with their weekly:

commer-fxwkly-30-5-14

And here JP with their tech strat from a few days ago:

jp-fx-29-5-14

Much much more to come.. inc the usual trio.

Rich

 

Weekly Technical Analysis – 27th May 2014 “Rotation Back into Cyclicals!”

2014 has thus far been pretty disappointing if you played for a bullish continuation from 2013.

Most sectors and intra indexes have struggled. Following on from the last 2 weeks more positive price action the Dow Jones is back to her 2014 opening price. The Nasdaq, as of yesterday, scrapped just above her 2014 open but has a trend breakout inc the Russel and NYSE. The SP500 has been a pillar of strength throughout 2014 albeit at around her opening year levels. As of the last few days she has now achieved a new higher high and has momentum. On a general level US equities remain bullishly intact with lead sector indexes like the SOX and the Dow Transports in breakout and much higher than their 2014 opening levels indicating that there is more to come for the wider market.

Hugely important sectors remain under performers and are not confirming the cyclical recovery we would expect to see. Notably the US finance sector which is still below her 2014 opening level as well as the HGX, housing sector index remain much weaker than we might expect in a normal recovery process. On the positive side both sectors have not broken down yet via price and if they can add a little weight here and see buying support and key reversals on sell off days this would provide a buy signal to reenter these sectors for a bullish continuation.

One of the great areas for market strategists allocators for 2014 has been the question of whether we will see the usual pattern of end cycle commodity out performance. The clouds to this usual pattern have been the ems, which have and still are struggling, in great part due to China. In spite of this the commodities continue to see very strong price support. In relative terms to their lead correlated indexes like the aud and like the shanghai they are very strong. So, for my own book, i remain a buyer of commodities albeit with limited cash and futures leverage exposure playing “long range” end 2014 early 2015 call options instead, for now, until the case has more price evidence.

Not a bad comparative chart to follow the sector theory allocation strategy here is the sox vs crb chart.

We can clearly see the battle between the sox (as a lead for US equity indexes) and the crb as the composite commodity index is under way. We would expect to see that if this recovery is a usual monetary lead recovery then equities will begin to drift, late cycle and the commodities will start to out perform just as they did in 2007 2008. The recent 6 month price action began to confirm precisely this. However we now have another new high in the sox, dow transports and price trend breakout for cyclical indexes so we are back into a crb bullish wait and see mode. There are plenty of non confirmations here for the commodity bulls including AUD potential breakdown, Shanghai weakness, UST making fresh 2014 highs, yield lows! etc, etc. For now, the weight of evidence, especially given the new breakouts for equities means keep the commodity allocation at a very low level. (Which i am following for my own book).

Oil Sector index and Copper sector indexes have been strong of late and rather than chase i am personally taking a little profit on these sectors to bank the profit rather than chasing although both remain in breakout and are buys upon a near term correction. Some components may show good buy signals in the next few weeks, should the indexes take a hit, inc Total as an oil and gas example of out performance and recently a corrective under performance.

Without more delay to the Swiss team.

They repeat many of the same themes we observe and comment on, which I take as a positive confirmation of our practice. To give them credit they bring to the party their cyclical model which forecast a summer peak with a target of 1970 on the sp500. This now looks very achievable to me also. purely from price and intra market work.The interesting markets remain the nik225, JPY, AUD, CRB, Shanghai, and the UST.

Without delay here their latest report:

wklytech-27-5-14

On a personal note, apologies for the delay once again. The last few weeks have been a holiday for us. The next month its back to work so expect more intensive and regular updates from here on in.I’ve been gald for the holiday but its back work and luckily for my own book my timing is likely on the money.

All the best guy and remember “make hay whilst the sun shines” is not a bad moto to follow on both sides of that trade.

Cheers Rich

 

 

 

 

 

 

 

 

 

 

Sunday Technical Trio Update – 24th May 2014

The professionals remain very divided on where we are here.

Some US equity markets reach new highs whilst others are technically struggling.

The commodities remain an answered question for now with Fitzpatrick below providing a timely update on the inflation question.

First up here AG sticking to their bearish “guns”.

AG-tech-24-5-14

And here GS with their technical chart run through

gs-techcharts-23-5-14

And here Citi

citi-techupdate-23-5-14

More to come..

Rich

 

“MM” Update – 23rd May14

A quick update of reports.

A few key instruments for my focus and book remains.

The Euro breakdown vs the GBP producing a final wave lower in her multi year cyclical bear market.

The Euro possible breakdown vs the USD. This area of the chart is vital to hold for the euro if her low momentum multi month breakout from the 1.26 level is to sustain.

The WTI and Brent possible breakout.

To the reports. (Ill also try and update this later so do please look back).

First macro:

cs-marco-16-5-14

And here with a broader and more recent run through

cs-macro-23-4-15

And here citi from last week. Latest to come tomorrow.

citi-mmwkly-15-5-14

And here cs on the commodities

CS-commodities-22-5-14

And here CS on the oil markets which are at an interesting price point.

cs-oil-22-5-14

And FX wise. Is volatility about to return. If the euro breaks down of her price trend it most certainly will have multi asset directional implications.

(Cross asset wise a euro breakdown with oil breakout would be very unusual but play into the euro as a funding currency issues. AUD continues to be crucial).

Here CS on this crucial pair

cs-eurusd-22-5-14

And here

nomura-eurusd-22-5-14

And here

cs-fx-21-5-14

Updates later.

Rich