Its time for another technical run through of the major asset markets.
We have continued to chop up directionally across all asset classes here from equities to fx. We are looking for direction which is neatly reflected in the latest cftc report. Some profit taking and paring of positions but no trend changes, as yet.
Neither sellers nor buyers can seem to make much price progress here across markets. But we should remind ourselves that no price trends have been broken here other fairly short term ones. American equity indexes are back to where they started the calendar year. European equities are nominally much higher but euro basket adjust them and the gains are less impressive. The alpha export heavy Dax is up now 21% and the euro is down 14% this calender year, a real gain of 13%. Broader indexes are less impressive. The Euro Stoxx50 leading euro companies is up 16% for the calender year or in real terms +2%.
These are clear signals this bull market is starting to fade and that clever FX movements are doing little to sustain real growth in asset values. Macro monetary wise, for all of the ECB’s bazooka talk, the effect has been very disappointing on anything other than the euro’s value. Its worth noting that the ECB’s balance sheet remains significantly smaller than her levels 3 or 4 years ago. Data from Italy remains extremely weak. Today’s release showed Italian retail sales -0.2% month on month and private sector credit continues to contract in the Euro zone. Greek concerns rumble on but really the issue are the much larger problem children of Italy and Spain.
For my book its as was but ive also pared some physical fx positions. I’m in stead maintaining exposure to the Greek issue via near term option puts rather than heavy short euro positions. I think its wise thing to do, near term, until we get momentum back in these markets.
Here the Swiss team’s latest:
“Minor tactical top” or a consolidation at these high altitudes. Either way its not bearish yet. So long as the key supports hold this remains a buyers market. A reduction in the long US$ positions is a positive thing in terms of allowing the next US$ strength moment set up. Unless the US data heavily disappoints (which would not be bullish industrial commodities btw) any US$ weakness should be shallow which implies the door is still very much open to new euro lows which Fitzpatrick is still beating his technical drum for.
Here Fitzpatrick’s latest. Released Thursday evening for Friday but the levels and comments have not changed given the limited price action.
As a comment here i’d like to say Fitzpatrick is a much better positional directional commentator than near term precision entry commentator. Or rather that’s my observation of his practice over the last couple of years.
And here GS with their technical latest. Note the reduction in high conviction trades reflecting the issues we touch on above.
Sticking to the GBPUSD short though watch the 1.506 level, which we are very close to today. GBP reversal? Also a good entry given the choppy markets southward i suggest if we get a failed breakout of the level, which seems likely to me! Eurostoxx50 long buy the dip. USDCAD short is an interesting one. The EURCAD is right at her trend line support implying a euro bounce or high momentum breakdown conversely. Either way the cad is reaching an interesting point.
Here the latest CFTC comments from scotia
Here the CS multi market technical chart run through.
Maintaining their caution.
Here ML with their equity views:
And here MS on the fx markets:
Euro bounce but not for long is the theme and the door continues to be open to lower lows.
And here CS wealth with some good asset calls here in my view, from a macro perspective:
All the best guys
Rich