Weekly Multi Market Technical Analysis Update – “Euro A Viable Funding Currency” 22nd May14

I’m still playing catch up here but the quick view from yesterday on the forum “markets” pages wasn’t a bad summary, for those that caught that.

Here the swiss team’s latest report:

wklytech-20-5-14

Here an excellent chart pack from cs

cs-techcharts-17-5-14

Here GS

GS-mmwkly-17-5-14

Here MS FX

MS-FXwkly-16-5-14

“We believe the stage is set for EUR to finally emerge as a viable funding currency.”

If MS are correct then kiss good bye to the inverse correlation between the US$ and commodities. If the EURO is on the cusp of becoming a global funding currency this has significant trading cross asset implications!

Here Cs on the commodities

cs-commodities-17-5-14

Note oil over 103.5 and the oil sector breakout which preceded the underlying asset’s strength. The aud is still a cloud over the commodities, for now.

Here CS wealth.

CS-mmwkly-16-5-14

And with a latest update..

cs-mmwealth-21-5-14

And here DB on the latest CFTC data. Note the oil longs are significant, and relentless in their accumulation.

db-cftc-20-5-14

Much much more to come inc AG tomorrow.

It is already another bank holiday in the UK on Monday. We have half of London coming to stay with us in Ibiza.

All the best

Rich

 

Cross Asset Price Chart Technical Analysis – “The Coming Decline” 9th May14

Its a wise trader/investor that knows how best to allocate his time at different stages of a market. Effective time allocation is a great part of mastering trading practice.

We have a low volatility lull here as directional and indeed cross asset spreads stretch and fail to comply to historical means. Whats more these spreads are failing to return to the mean. In essence this bull market is already breaking down and the majority of active traders lose money as direction chops up and spreads fail to return to their means.Volatility is getting ready to explode, in my view. Of course timing is everything in all trading matters.

For now, its a hard environment this unless you are really on top of your game and have time. What is the best allocation of our time during this process? I’d advocate narrowing the number of stocks and instruments you are trading for a start. Keep deal size small and leverage even smaller or better yet raise cash!

Much of my little time for my own book is spent looking at the key instruments of AUD, Copper, WTI, Gold, Brent, EURUSD, Materials and oil and gas equity sectors vs major indexes.

Why? As these are historically end cycle performers. Its far from a high conviction trade this but its a historical market hypothesis that must be tested and allocated to in some way. The AG price chart based tech analysis is exactly the sort of technical approach i take for my own book. I would like to see some more multi instrument charts to track relative performances but nonetheless a very useful pack.

Check the WTI, Brent pattern. The AUD pattern. The CCI at her 200 dma. The bullion higher high, hopefully. Why is the ftse recently performing more strongly? Check also the low volatility on the 6 month time frame and 3 month even better 9n some instruments! Check the nickle breakout. Check the material and oilers sectoral out performance. In my view its starting to firm up the conviction that capital is starting to flow to her old historic patterns again, like the text books say she should.

If you are familiar with asymmetric instruments start to dust off those charts and price books. Options on the eurusd playing off the recent low volatility as one example. Examine the respective historic volatilities across time frames and consider what sort of move and pay outs would occur on the various strike points.

This is how a wise investor with some knowledge will apply himself now rather than chasing chop to seek out relentlessly disappointing directional trades.

Here below the AG analysis. They are right to stick to their guns but don’t work on short time frame instruments and load up as the evidence is close but not their quite yet on the shorter timescale. Sentiment has shifted also. Id like to see it more bullish than it is. ECB talking (always talking June for action). Lets see.

Here the report:

ag-09-05-14

Please recall i am holiday at present so comments and the number of proprietary and third party reports will be more limited until the 19th of May. Thanks for your patience.

Please recall as you look at the AG work the countering work of Fitzpatrick.

He is a mkt heavy weight technical director with a world wide reputation so we see once again, it takes two to make a market. He is in danger on his jpy position here. Practice wise we must always remind ourselves, there are no rights and wrongs in trading. We will get direction wrong but your practice must get yo in time when you are wrong and keep you in winning trades long enough. This is the challenge.

Here Fitzpatrick

cb-mm-9-5-14

The bulls have some life left in them most likely though they are having to work much harder now and super nimble to eek returns.

Rich

 

Weekly Technical Analysis Full Update – “Gold Bullish” 06 May14h

I’ve finished my travels for now so I’m able to make some more pertinent comments on this market and bring you the usual Tuesday analysis a day late.

The Swiss team forecast a near term weakness possible until end may. This is on the basis of momentum divergence and weak internals. They don’t forecast anything more serious as a correction so long as the sp500 level of 1814 holds. From a pure price analysis they are of course correct. The sp500 bull trend is intact so long as 1815 holds.  They maintain market sentiment is not bullish enough to merit a major correction as yet. Mid cap weakness comments = perfect! And I agree and whats more this fits with the macro again perfectly, in my view. Ie higher earnings by the large cap is not coming alongside revenue gains and main street continues to fail to benefit from the falling junk bond yields, zero interest policy and share buy back strategies that the majors can employ! Sector wise bank weakness is a good indicator this market is topping out.

Fixed income wise they stick to their guns for the bonds to sell off soon. UST to possible 1.375 as a completion of the false break? From a macro perspective the bonds are a safe heaven usually unless risk off comes alongside rising inflation ie stagflation. US inflation has bounced a little but there is little to suggest,as yet, a spike. Its a brave (and worrying, as implies no safe heaven bond assets though this would be good for gold!) . For my book no conviction on this one, as yet.

Gold they are looking for this price area to provide the higher high to allow a breakout of the bear trend.  Price discovery at present and a battle therefore but inconclusive as yet i suggest.For my book low conviction but a bias towards gold in my trading plan and therefore i hold a little leverage here and an over allocation of funds to the asset class. Aside from last year im generally over allocated to the class.

Euro indexes wise, agreed re the ftse100 and plays into the end cycle commodity strength issue. The oil and gas sectors display much relative strength whether bad or good days for the wider risk markets. There are signals for commodity bulls here but its not conclusive as yet. This simply determines the level of allocation, and instruments used. Ie no wmd (futures ) yet! Out of money options yes.

Its a useful report but needs to be seen alongside others at present is my view. We have plenty of chop here and confusion across sectors is starting to be the theme. Hedge funds are losing money generally in 2014. Market trends and correlations are weakening across asset markets and sectors. Risk becomes harder to manage in this sort of environment and profits are stalling. Sentiment via put call ratio to its 20 day moving average stands at +1 std to the mean. Its not a overly bullish level its true. Certainly recent price weakness, reduced correlations and reduced profits for participants is playing into more hedging and less conviction.

When you put it all together you see the Russel2000, Nasdaq and NYSE have all topped out. The Nik225 appears weak and the Shanghai is not bouncing as she should. Things are not all as they should be in the world of risk but price can confound and chop up here before markets really correct meaningfully. Its one thing not being a buyer but are there meaningful net sellers yet?

Recall this now infamous quote from the hedge fund manager Hugh Hendry end Nov13.

“I may be providing a public utility here, as the last bear to capitulate. You are well within your rights to say ‘sell’. The S&P 500 is up 30% over the past year: I wish I had thought this last year.”

Indeed.

With this quote ringing in our ears, here their latest report:

wklytech-07-05-14

On the FX side as a note-able move the gbp continues to look very strong though a over bought here. A move to her aug 2009 high vs the usd looks likely at 1.705 and a breakdown of the euro vs gbp of the .82 level. For now its strong sterling which from the macro side will not derail the uk economic recovery as its domestic consumption based, for now.

To add to the technical comments here Yardeni charts. The put call non averaged is around the mean. AAII remains strong but not overly strong. The Citi economic surprises index spread to sp500 price is still very wide however. A useful set of charts.

yardeni-tech-6-5-14

All the best

Rich

 

 

Weekly Technical Strategy Update – CS,GS,CB,JP,MS,Yardeni – 3rd May14

Another Holiday in the UK today but time again for a technical run through here. I’m going to update this through the day so please keep referring to this doc as i will continue to add reports.

Following on from last week’s technical confusion we see the theme continue this week as conviction levels for a continuation of this bull market continue to diverge between the major institutional participants.

We have had a raft earnings in the last week which has also been inconclusive in either direction. Here a comment from the CS wealth team summing up earnings so far:

“What can be said is that the familiar picture of earnings growth outpacing sluggish revenue growth continues to be intact. Despite strong leading indicators and firming economic growth, companies have not yet been able to grow their revenues commensurately. Revenue growth has been barely positive, while of the companies that have reported, only slightly more than 50% beat sales expectations.” CS Wealth.

Last week:

cs-wealthwkly-26-4-14

This week:

cs-wealthwkly-2-5-14

On a macro level we have commented on these issues over and over again in recent years as this bull market has powered on. Whilst central bank action has increased MS consumer and corporate action has lead to ever declining MV. The two have been offsetting to create very slow revenue growth. Share buy backs, cuts to capex and employment have sustained higher earnings as revenues barely change. Whatever political leaders tell us this is not an encouraging trend if it sustains.

This is a not a macro post so back to the tech.

Tech wise the theme this week again has been falling volatility in bond and fx markets. No wonder GS’s price chart is looking so weak. Market participants, including your truly, cannot sustain high returns unless charts move. FX markets had always provided a good tail wind to returns since the 2008 credit crisis but in the last year or so fx volatility has died a death and returns are becoming much harder to generate.  Across asset markets this is becoming a strong theme. Equities are at the same price as they were 5 months ago or so so are fx instruments and so are the bonds. The exception are the commodities and that could be telling us something if we care to listen to price.

Trading practice comment here, when MS growth is high and multiple asset volatility declines capital holders reallocate to those instruments that offer volatility for speculative purposes. Correct and this is why the macro economic demand for commodities is of lesser importance than MS growth vs relative volatility across asset classes. On a relative basis commodities are becoming more appealing to speculators that need to make a living. This will likely continue to drive capital to the asset class. This also fits perfectly with their end cycle out performance history.  Of course, if equities crash this would negatively impact the commodities as fx and bonds would then move in concert with the equity moves, inversely so for the bonds. The commodity bull case rests on other asset markets consolidating therefore.

That said, to the reports.

First up id like to present the AG report.They are absolutely sticking to their guns that this market is about to crash, not simply correct. They present their price charts below. Seeing them together it makes for an un nerving set of charts, for bulls

Here report

ag-gts-2-5-14

The Russel2000 &  nas100 are already in price breakdown which mirrors the nyse ‘disastrous’ technical picture we saw last week from the market breadth issues and nasdaq100 issues several months ago.

These issues are continuing to unfold. We are close to a significant correction, of this i also have no doubt but market speculation is all about timing! Option contracts time expire. Futures can be extremely expensive, very quickly, if you get the direction wrong. Increasing allocation to cash is wise here and replace cash longs with guaranteed price book liquidity cfds is a wise move. Hedging some longs is also wise as is selling covered calls. Limit leverage. This is all good trading practice house keeping, in my view.

Here GS repeating their concerns on various asset classes but remaining in the camp of a soft patch and nothing more with an uber bullish medium and longer term sp500 view.

gs-ctm-2-5-14

And here, as the perfect counter weight here Fitzpatrick that has transformed into a super bull across most asset classes.  Dow Jones 20,000 plus by 2015? He has allocated 70% of his fund at present vs many who seasoned pros who have cut risk allocations at present.

This is technical price trading note so its totally consistent to state this dow target and in the very next para say this:

“Rising trend line support around 15,800 and the 12 month moving average at 15,728 are important “trailing supports”. A monthly close below there, if seen, would sharply alter the positive dynamic.”

Many PIS fail to ever grasp the 360 degree turn that professional traders are able to do at, on signal, note.

Note the trending lower vix scores. This is bullish commodities if it plays out as Fitzpatrick hopes.

EM markets with their strong correlation to commodities is a key plank of the commodity bull case. As yet there is little in their price charts to lend support to that case at present. The indian index USD adjusted is constructive but inconclusive as yet.

Here his report

citi-mmwkly-1-5-14

To my mind this is all part of a mature bull market for risk. Price and correlations are breaking down. Volatility is in decline. This is not a sell signal in itself but it is evidence that the easy money has left the table. There is still plenty of money to be made but not by running the prior correlating charts of yesteryear buying under performing assets and waiting for the longer time frame correlation mean to reassert.

As commented the fx markets are becoming as complicated as equity markets directionally here. The big event is the ECB later this week. Inflation under performed market expectations once again last week.

Here MS from last week.

ms-fxwkly-25-4-14

Here Ms from this week:

ms-fxwkly-1-5-14

Here Barcap on fx

barcap-fxtech-30-4-14

Here cs with a macro fx view

cs-fxmacro-30-4-14

Here commerce with fx weekly

commerz-fxtech-wkly-30-4-14

Here JP with their tech strat usual

jp-fxtechstrat-1-5-14

And here with some equity picks barcap

barcap-equities-28-4-14

And here s&p with their h2 projections and concerns on this market especially from an earnings perspective. H1 2014 has been very weak but this has not dented the equity markets that remain at their highs in general. Internally there are more worrying signs ie defensives out performing and the usual breadth issues.

sp-h2-2014

And here CS on the commodities. Various houses are turning bearish on the commodities. Note many expected the bounce and even more are expecting the bear continuation. I have low conviction expectation the commodities may surprise these players to the upside but other than a price breakout of the indexes there is little in terms of correlating instruments to support the trade. Nonetheless very much worth closely monitoring the asset class!

cs-commodities-26-3-14

Here wf reviewing the inflation data:

wf-inflation-3-5-14

 

 

 

 

Weekly Multi Market Technical Analysis – “Upside SP500 1920 to 1970” 29th April14

Here below please find the latest Swiss team’s technical analysis.

They pick up on many of the same inter market comments as we have on the forum pages.

China remains a key concern and has not bounced in the way they had hoped for. The Aud is highly correlated to the Shanghai.

There remains continued and increasing institutional + allocation towards the late cycle equity sectors, as evidenced by the breakout under way in the energy producers nonetheless.

Here their report:

Wklytech-29-4-14

All the best

Rich

 

Weekly Cross Asset Markets Technical Analysis – CB,AG,GS,CS, Yardeni,SB – 27th April14

Sunday evening so time to refresh on where we are for the week ahead across the major asset markets.

As a general comment we keep getting these sell off Friday’s that makes for bad timing between the release of the Citi report and the AG report. Take away Friday’s bar from the AG charts and they the technical picture changes dramatically. How can one day matter so much but it is for technical reasons as we are a key area of price here across many instruments. Its also worth noting here that we have many market leading chartists and guru technical and macro analysts with polarizing views between a hard sell off and a broadening of the market strength.

Fitzpatrick here below, released on Thursday. Allocation wise he is sticking to his top trade namely to the usdjpy with jpy weakness in play. He is expecting the Nik225 to rise and the currency debased.

He remains a commodity bull and a weak bull on the US S&P500, forecasting higher rates across the yield curve.

Here his report.

cb-wklytech-24-4-14

The fairly optimistic charts provided by Cti above as well as UBS are the diametric opposite of the AG house view here:

AG-26-4-14

Without wishing to be called a fence sitter on this directional issue. I want to say that the S&P500 can still achieve a higher higher up to 1925 or even 1950 with this still remaining an important distribution topping process. There is nothing in consistent with this in my mind. It is very possible some of the major indexes do not rally with her. The Russell2000 may well have already scored her high for the year. Significant market tops are formed sector and a time and they weaken sector by sector. Large bull markets are generally warn down and so this appears to be the case this time around also.

Here GS with their weekly chart pack:

GS-wklycharts-26-4-14

We can see here that GS are bearish many risk markets here.

They are bearish USD vs the JPY. They are bearish the NIK225. They are bearish the AUD. Those three trades tell you an awful lot where GS think this market is heading in the near term. But if we look inside the detail of those near trades they remain in the camp for a pretty shallow correction here ie usdjpy down to 99 before moving higher and sp500 aside from near term issues moving much higher also.

In a spectrum of bull to bear I would place Citi with UBS followed by GS followed by AG.

Here a report from the CS  investment which is also quite cautious here.

cs-allstrat-24-4-14

For sure whatever sort of trade strategy you are working with the easy money has left the table. That doesn’t mean we stop playing but it does mean we have to be pretty focused here with allocation, risk management and position monitoring.

Whether you are playing a short term trade of resumption of trend or a hedging strategy for your longs with shorts or option puts or perhaps you are playing a late cycle commodities fx and instrument strategy you need to be pretty careful on watching how your cash, margin and P&L are being affected by instrument moves.

For my own book im low conviction short term trading for a bounce. But its low conviction and its only a short term trade. This indicates im very uncomfortable with risk markets. On any strength that doesn’t come with some technical indicator improvements I’ll be hedging with put options once more especially as we are entering a weak seasonal period here.

Guys Nyse market breadth is appallingly bad here.

This chart is not simply reflective of a tired bull market it is stating clearly that something is not well in the wider investment market. It could simply be reflecting the weakness in earnings and the macro data that we have seen. Equity prices never corrected to this weakening in earnings expectations nor the ‘soft patch’ in world macro growth. Equities have defied gravity for some time now. So long, in fact, that they may well have avoided the downside of this recent cycle weakness. But that still remains to be seen. Price will, of course, be the final confirmation.

The nasdaq100 has great price weakness now and technical weakness as well as does the Russel2000 but the SP500 still looks constructive in terms of 52 wk highs and also stocks above their 200 dmas and still shows support here.

This is typical of a topping process to confuse and cost market participants margin and time.This is exactly how markets top and historically, usually commodities do very well in this confusing distributive period.

The better news is that at least we have more market participants hedging here which will mitigate the downside if she comes.

A large number of nasdaq100 puts have been accumulated by participants probably to hedge their longs rather than clear directional trading, at present.

Here scotia with their cftc (mainly fx) report from friday:

scotia-cftc-27-4-14

And here yardeni with their wider report of the cftc positions. (Recall this data is always some days in arrears).

yardeni-cftc-26-4-14

Stand out instrument here from the cftc are the huge number of longs accumulated in the oil markets. We are approaching driving season but even so this looks top heavy here so dangerous which is a shame as the oil equity sector has recently scored a hard won price breakout. If oil goes through her supports the rush to reverse could create immense volatility to the down side. The Ukraine could of course come to the bulls aid here this week.

Much more to come in the next few days.

Cheers Rich

Weekly Technical Analysis – “April Low In Place, Buy Japan” 23rd April 14

The Swiss team’s latest report was delayed by the long holiday weekend but it just been released.

No wash out but a low is in place, according to the team’s analysis. They acknowledge near term the spx is over bought but fully expect a move higher to 2000 soon.

They maintain their wave five expectation for the nasdaq and technology themes to make a new highs soon to 4500+.

They remains constructive on gold and the AUD & commodities and alongside this even the eur vs the usd.

They call for new highs in the dax to 10600 and Cac40 to out perform given her prior under performance vs European equities. Overall they have not shifted their position at all and are bearish bonds into the summer which would reflect the inverse to the generally positive risk move they are forecasting. Until the UST gets back to 3% no alarm bells for risk I suggest. (Macro data wise, its very clear what fractionally higher interest rates are doing to the US housing market with very weak sales data today).

As usual they provide the key support levels which must hold for their scenario to unfold in the way they envisage. Aud 92 and Eurusd 1.367.

They have not covered the Shanghai and other Asian indexes which they were previously constructive on.

Here their report:

wklytech-23-4-14

For my own book some of option puts time expired worthless but half i took at the lows so the overall position was very profitable as the NQ puts were deeply in the money at the point of selling the puts. WTI futures were covered at close to 105 a few days before expiry so again a profitable run from 101. What happened to the correction as it ended just as it was starting. The good news for markets is that we did see hedging. We did, momentarily see signs of panic dumping and hedging in the market. This is a positive thing as it hopefully reminded participants that stocks can go down as well as up in spite of QE.

Lets not forget here in spite of the recent bullish reversal that the Russel2000, Nasdaq and Dow are all negative for the calender year. If like me you took profit on the Jan highs then then you are several percent ahead of those that stayed long and if you banked profit on both waves of the weakness in the markets then you did well indeed and beat most of the professionals in the business.  Even the strong S&P500 is almost flat for the year thus far. This is the past but for my actively run book its been a pretty impressive performance though i say so myself.

Looking ahead now as of last week I hold no meaningful hedges and I’ve added to some longs in this market as leveraged trades. My account is now back to holding some leverage therefore I do expect some more strength to come through here in risk. Its a fairly high conviction here that leading equities are likely to move higher in the next month or two.

Beyond this I have no idea but if we are to see a sustained extension of this super bull market then instrument theory suggests it will be the commodity themes that will really start to perform. If the 2006 to 2007 scenario unfolds of wave five extension in equities alongside commodities up shifting then the ftse100 will shine strongly and out perform most ‘dm’ indexes. She has a long price distribution due to em weakness.  If Europe and the US perform and China (Shanghai) stabilizes then the commodities will be the place to be and as a lower risk high yield – beta to this the ftse100 is a reasonable index for those with a lower risk appetite to hold.

Here Yardeni, reminding us of some the remaining issues with this market.

yardeni-indicators-22-4-14

And here CS with some more bullish equity calls:

CS-Equities-23-4-14

And here Barcap with a technical FX run through:

barcap-fxtech-23-4-14

Of course, geopolitical shifts as well as unexpected policy adjustments can change all plans. We have a weak earnings season before us but the expectations have, once again, shifted down to such a low level that it won’t be hard for corporates to beat expectations. Given buy backs and cost cutting earnings could surprise to the upside, for all the wrong reasons!

Onwards and all the best guys

Rich

Multi Market Technical Analysis Update – SC,CS,GS,JP,CB,AG 22nd April14

Its been a long weekend of macro research for me looking to see if the data and macro trends can help illuminate the next macro trade for my book.

Practice comment wise, sometimes this sort of work provides wonderful insightful macro direction and sometimes it doesn’t.On this occasion, so far, I’m struggling to draw clear conviction trades from the data. The macro data is so mixed and unclear its almost impossible to have a clear bias on direction.

The best i can say is that, in my view, the gap between US equity capitalization vs macro economic indicator performance and corporate earning performance is at extremes currently. We have had a very macro & earnings soft patch in recent months. I don’t believe the weather can explain this. US housing remains weak as does consumer credit uptake less student and auto loans. Rates are rising and forward guidance language is altering. Capex increase expectations are seen as the savior by many with little in the way of evidence that this trend is about to commence.

Now from a risk perspective when the spread between the macro and corporate performance to stock price is wide its better to reduce and increase cash holdings. Some argue cash and bonds. This is a debatable and less of a high conviction allocation due to the Fed’s tapering. I prefer cash and even precious metal allocation increases.  From a trade perspective playing for a higher high in some sectors, especially those like banking that have been badly beaten up is a valid short to medium term trade but this is a different matter. Allocation wise better to reduce cash longs and use short term leveraged trades to cover any bounce higher. Out of money option puts on the 3 to 6 month time frame should be a part of the mix, I suggest.

As a general comment on reading macro data as follows. Looking for the next high conviction trend from macro reports can be a thank less task. As “Wild” on the forum rightly said this morning, even when you do your homework and nail the directional macro trend, policy interventions can often scupper your trade (para phrasing). Top down macro trades are only useful when price and technical indicators clearly confirm the trend is already in motion. If you enter pre price confirmation the entry has no momentum and you can easily be knocked out of a valid macro trade.

With this said its been like a breath of fresh air to return to price and market technical indicators. Price is the summation of all the economic noise in a way that no economic document can synthesize so cleanly.Price is also what we are paid on so with no more delay lets turn to price.

Here the outstanding AG report:

AG-18-4-14

They are placing a high conviction that the US equity markets have topped out already or are in the process of forming a near term distribution top and they apply the same conviction to european markets.  They place a lower conviction on EM markets and see relative strength. The commodities they don’t clearly make a case in either direction though as a late cycle instrument and (historically) often an inverse correlation to equity markets they could out least out perform here i suggest. The Euro continues to look vulnerable and the dxy triple bottom supportive. The GBP in stretch. JPY, looking for direction.

Here GS with their conviction trades:

GS-MMtech-17-4-14

Note their high conviction trades are short USD vs jpy (2), long USD vs AUD (3), long USD vs EM currencies.

They are slightly bullish sp500 so long as the 2012  bullish trend line holds. Their conviction is gradually lowering on US equities. They are bearish Nik225.

High conviction bearish stance on the pms, as usual and quite strong positive (2) conviction on the beans.

Given the high level of correlation between the AudUsd and the various commodity indexes this is bearish commodities from GS in general, no late cycle bounce in the commodities it seems.

And here Fitzpatrick who has turned bullish on US equities given the recent sell off and strong bid within trend.

I quote him here,

“Skeptical participation still seems to be the way to go”.

This is a very fair comment I believe and in line with my comments above,

For my own book the ES and NQ put options have time expired. Half the NQs I covered at their lows last week and I booked the profit on the WTI futures. Trading profits up and down have remained solid in spite of the recent choppy conditions. This is good although im still running a higher cash ratio.

Near term trading wise, from failed moves come fast moves is one of the most useful trading adages I know of. The recent attempted correction appears to have failed from price. A fast move northward should ensue. If this fails to run then we have more weakness ahead.

Here Fitzpatrick

CB-mmwkly-17-4-14

Here the barcap team

barcap-mmtech-15-4-14

Here the SC team

SC-fxwkly-15-4-14

Here the CS wealth

cs-wealth-17-4-14

Here Barcap on commodities

barcap-commodities-12-4-14

Commodities have been the great under performer since 2011 (also the ftse100). Here is a useful chart:

I’m closely monitoring the commodity indexes here looking for a decisive breakout or not here. In price theory she has a breakout out and their is positive momentum. Near term i’m looking for weakness which would tie into the AUDUSD call by GS. On negative divergence to momentum on the sell move I would enter long as a trade to test the hypothesis that the late cycle commodity bull run is in motion. Lets see, as ive said before its not a high conviction trade as yet. The macro data is slightly supportive and price is starting to support from an em equity index basis. India and the “MINTS” Mexico, Indonesia and Turkey are looking very positive but China continues to drag for now. If china can turn we would be off to the races for the audusd, rji and ftse100 most likely.

On the ftse100 for a moment: The 100 index has currently one of lowest valued pe ratios in the major markets. On solely her pe measure she is around half the price of the sp500.

http://www.ftse.com/objects/csv_to_table.jsp?infoCode=NGUK&theseFilters=&csvAll=&theseColumns=MCwxLDIsMyw0LDU=&tableTitle=FTSE%20UK%20Index%20Series%20Values

Since April 2010 the ftse100 has increased by a dismal annualized rate of 3.3% under performing most developed markets.

Here a chart of her performance vs the sp500, dow30, dax and cac40 over the last 30 months.

Given the low unemployment in the UK and high growth rate, according the IMF the strongest g8 growth rate for 2014 her stock market under performance looks surprising. Importantly the oil and gas together with the mining sector still makes up 25% of the ftse100 weighting. This 25% has badly under performed given the cooling occurring in EM economies. Other heavy weight components like HSBC alone make up 7% of the index. HSBC is also heavily exposed to EM markets. (Worth noting the ftse250 correlation to the sp500 index is near 100% in recent years! Dollar trade weighted she is out performing).

Swiss team later today as usual.

All the best

Rich

 

Easter Sunday Macro Indicator Update – WF,MS,Barcap,DB, Commerz, Yardeni,etc..20th April14

Its Easter Sunday and hope all are having a good long weekend break here.

Below are a selection of purely macro economic and equity valuation reports along with considered comment from your truly.

Overall its much of the same old same old. An slow improving economic picture in terms of raw economic numbers but no signs of a self sustaining recovery and plenty of data points showing that the improvement has been created at a cost which will be felt at a future date.

First up here a run through of some of the macro global cross currents:

WF-globalmacro-16-4-14

And here WF’s weekly:

wf-wklymacro-18-4-14

And here Barcap:

barcap-marcoecon-12-4-14

And here MS with their global macro mm view.

MS-macromm-15-4-14

And here Danske with a global view:

danske-macromonitor-10-4-14

Here Barcap on Japan:

barcap-japanmacro-14-4-14

And here DB on the uk’s large current acc deficit:

DB-UKMacro-17-4-14

Here on KF on the miracle & perpetual wealth creation machine ie the UK housing market:

kf-ukhouseprices-18-4-14

Here hsbc on the em issues..

hsbc-em-4-4-14

Here ABN with a brighter EM view:

abn-ems-17-4-14

And here Commerz with a macro econ chart pack:

commerz-charts-18-4-14

Here a WTO report on world trade

wto-report

And here the Yardeni macro chart pack:

Yardeni-macro-18-4-14

Each chart needs a comment but i don’t have sufficient time to run through each I’m afraid. The US manufacturing index is doing well but why? Look at the credit markets inc ABS market and this explains why there is endless credit for the boom in aircraft and autos. The recent expansion in retail continues to be fed by the fed’s zero interest rate policy so consumer’s run down their savings once again. These trends are damaging and are not self sustaining.

Here Facset on the latest US corporate earnings. Note these earning statements are relative to prior expectations. Prior participant expectations 6 months ago were for strong earnings growth in this quarter. As we got closer to the earnings statements, of course, the expectations fell and fell into negative territory note for many analysts. As Facset summarize this quarter “could be the first decrease in earnings since Q3 2012”.

Note as well how skewed some of the data can be by just one component of some equity indexes.

“Telecom Services sector is predicted to have the highest earnings growth rate at 26.1%”. Facset

But, “if Verizon is excluded, the earnings growth rate for the sector would drop to -0.1%. Facset

Here their earnings latest:

Facset-earnings-17-4-14

And here the shiller pe on the current US market:

Corporate profits have been rising as a share of gdp whilst revenues have flat lined and capex and staff costs have fallen. Tax revenues from corporates are no where near their 2008 levels whereas profits are much higher. At some point soon i suggest the US government will increase corporate taxes to correct this corporate windfall.  The effect on equity prices would likely be dramatic. Consider the Shiller mean reversion move together with a reduction in corporate earnings due to a mean reversion for the corporate tax burden. The combination would be disastrous for US equities.  Make no mistake this is not a forecast but simply a risk observation/warning.

Equities have held up in spite of the weakening macro economic surprises.

Relative to the Sp500 index some sectors have nonetheless badly under performed.

Tomorrow we turn to the technical charts & indicators on equities and commodity markets.

 

 

Weekly Techical Comments – “No Washout Yet” 15th April14

Its that time of the week for the Swiss team’s usual run through of the major international asset markets.

They expect further weakness for the major dm asset markets inc the sp500 (possible 1774) and Nik225 (13200).

We have momentum to the downside here though some sectors like the Bio techs are deeply oversold.

Ill leave the detail to the team and come back with a more meaningful post on the next few days.

Without here their latest report:

wklytech-15-4-14

All the best

Rich

 

Technical & Macro Updates – CS,DB,JP,Commerz,Nom, 14th April14

This post will be updated through the morning so please keep checking for updates guys.

Volatility has certainly increased in the last month or so and many instrument continue to look for trend direction here. Seasonally we are fast approaching the end of the inflow tail winds to equities which usually becomes a headwind once we step into the Month of May. Its a good time to take a multi-disaplined approach to reviewing where we are and how this maps against your own book of positions.

Here the CS cross asset chart pack which is the perfect way to start this run through:

CS-TechCharts-10-4-14

Note the MSCI EM index back to a 1000, no signs of a breakout yet. They remain bullish ftse mib! We have got the break of 13995 Nik225, albeit not a deep one. Its touch and go on this one as is the usdjpy.

Here the regular CS wealth team’s latest weekly report:

CS-wealthmmwkly-11-4-14

Everyone seems neutral on gold for now. If we get another range and distribution historic vol will flat line on a 6 month window. An asymmetric trade window may open up on gold if that scenario unfolds.  Lets see on that. I’ll be surprised but every cloud can have a golden lining if that’s the case.  Their stock selections are very tactical playing into Easter holiday retail strength. I may suggest a symptom of a lack of faith on the forward.

We haven’t heard from the JPCaz team for a while on the european equity markets. Here, from yesterday they provide a good update. Earnings expectations for Q1 have collapsed with yoy falls expected by analysts now. Their logic goes it wouldn’t be hard to exceed expectations. I agree but did price ever adjust to the downside on these lowered expectations? No they did not so its hard to read this too bullishly.

Anyway here their report:

JPcaz-euroequities-14-4-14

Here the regular fx weekly from CS which provides a good macro analysis across asset markets of where we are:

CS-FXwkly-9-4-14

Here a nice technical update from the CS technical team on the SP500.

cs-sp500tech-9-4-14

And here a great and new report from the DB team detailing their own technical perspectives application and trade updates.

DB-Techfx-9-4-14

Here the commerz team with a technical run through of the major fx pairs:

Commerz-tech-9-4-14

And here are commerz with a technical look at the bullion markets:

commerz-9-4-14

And here CS picking up on a specific trading pair the usdcad

CS-usdcad-9-4-14

And also here DB on the AUD and CAD with a macro side input:

DB-comfx-audcad-11-4-14

Nomura illustrating nicely the messy trading in the usdjpy. Participants are fishing for the next trend here.

nom-usdjpy