Equities rebound from lows on calming dose of…reality? Bonds fall, Oil rallies.

Global Economic Calendar June 24th-25th  2013

*Actual data releases for today

Data release times are in GMT or specified US EST (Eastern Standard Time) Figures posted are estimates unless specified otherwise

Data in italics-high potential to influence markets

 

Click here to see video for weekly Economic Calendar (Use Windows Media Player for best viewing .)

* Monday– 8:00 AM German IFO (Institute for Economic Research) Business Climate Index 105.9, IFO Current Conditions Index 110.2, IFO Expectations 102.0

Tuesday-6:45 AM France INSEE Business Confidence Index 91…8:30 AM EST US Durable Goods Orders m/m 1.5%, ex defense 2.7%, ex transport -1.5%…9:00 AM EST FHFA House Price Index m/m 1.3%, S&P Case Shiller Home Price Index y/y 11.5%…10:00 AM EST US Consumer Confidence Index (73-75.2), US New Home Sales 460,000…1:00 PM US 2 Year Note Auction ($35 Billion)

 

 

 

MARKET SETTLEMENT PRICES June 20th 2013

MARKET OPEN HIGH LOW SETTLE NET CHANGE *Click for delayed update prices
Sept E MINI S&P 1583.75 1586.25 1553.25 1566.25 -17.75 E Mini
Sept US 10 YR Notes 126^070 126^080 125^005 125^315 -1^00/32 US 10yr note
August Crude Oil 93.85 95.59 92.67 95.18 +149 WTI Crude Oil

 

 

For delayed global equity index prices, click here at ft.com

*Delayed Price Updates from CME Group www.cmegroup.com

 

 

 

THIS WEEK’S MARKET OUTLOOK CATEGORIES

EQUITIES…. Sept E Mini S&P’s began the new trading week with a huge pullback that mitigated in the early afternoon session before closing down 18.00 points at 1566.00. Ongoing concerns regarding an “Apocalypse Now” economic landscape forming after the US Federal Reserve begins tapering back on asset purchases. Concern seemed to turn to outright fear today as China’s “cash crunch” which began to attract notice last week was addressed by the People’s Central Bank of China. The bank’s response seemed to indicate that the responsibility would be on lenders to properly manage their balance sheets and that China’s central bank would not take an active stance to inject liquidity into the Chinese economy at this time. Analysts & economists quickly jumped on the bandwagon to reduce China’s economic growth prospects for the coming year. This in turn helped the equity & interest rate selling cause, pushing the S&P 500 to its lowest level since April of this year.

US Stocks & Treasuries began to rebound from the worst levels of the session after comments from Dallas Fed President Richard Wright, a former hedge fund manager, seemed to offer some calm by stating what could be perceived as the reality of the situation. He stated that the markets should never have expected the Federal Reserve would seek to prop up assets prices and the economy indefinitely. A strong market reaction was expected, but markets participants should also realize that the Fed and other central banks are not planning to turn a complete blind eye to the global economic situation. Policy responses will be fluid and responsive to the needs of the economy. While this dose of educated rationality was a shot in the arm for the markets, it would not be surprising if further volatility occurs as the uncertainty of the inevitable tapering and what guidelines the Fed will begin to implement in the transition to a “stand on your own feet” economic reality.

September E Mini’s broke through a key mid term support level at 1567.00. This seemed to offer some additional technical momentum to try & further test the downside. With today’s close just below this level at 1566.00, further downside may be coming by a test of the 1548.00 level as the next downside target. If this level breaks, it is possible that the market may be seeking to test the February levels at 1518.00, but it remains early to make a clear estimate on that scenario. The market has moved into oversold territory though as this level with daily RSI at 33 and its position just below the lower daily Keltner channel. Some upside recovery in prices may occur by a move back up 1577.00, a level which could set up as an initial resistance point. A break of this level could result in a further upside move to 1583.75. Markets are extremely volatile now, so respect risk management procedures.

CLICK HERE FOR  CHART &COMMENTARY ON SEPTEMBER E MINI S&P

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Sept US 10 year notes closed another full handle lower today, though the market did rebound from its lows on an attempt at calm (or at least a reality) check from the Dallas Fed President. Yield on the 10 year notes again rose dramatically on Monday, at one point touching 2.66 % as the outward fleeing from fixed income continues in the wake of tapering expectations by the US Federal Reserve. As the revaluing of asset prices continues, recent buyers of fixed income across from sovereign to high yield debt have seen tremendous blows to the value of their portfolios in June. The one category that seems to be offering a bright spot is convertible debt, as some feel a possible disconnect between equities and fixed instruments may begin to return to historical norms, offering possible opportunities for gains.

Market participants will be closely watching the results of this weeks $99 billion of Treasury auctions. The question will be if this jump in yields will be enough at this time to entice buying, or will the “wait for a better price” sentiment continue to develop?

September 10 years closed just below a Fibonacci level whose top range point was set from the second break of 128^000. Oversold readings on the daily RSI at 19 are significant, but should be viewed with caution when considering the developing fundamental picture and market momentum. Some covering of short positions is likely though could reach an initial resistance point just above the next Fibonacci level at 126^170. A close above this level could set up a upside target move of 126^240. Downside support for the Sept contract sets up at 125^150, with a close below this level setting up a possible retest of 125^020.

CLICK HERE FOR CHART & COMMENTARY ON SEPTEMBER 10 YEAR NOTES

 

 

 

August Crude Oil defied much of the downside bias in the markets today, rallying strong to close near the highs of Monday’s session. There was some speculation that capital coming out of many of the financial markets was seeking out hard assets that could be viewed as having a reasonable (or at least supported) valuation in the near term. Some recovery pressure seemed to come on reports of Canadian pipeline closures due to flooding conditions as well as a breakdown in the spread between the WTI & Brent Crude contracts narrowing to its lowest levels in nearly two years. It may have also been as simple as market participants looking for an excuse to buy tangibles in the wake of so much asset re pricing.

Looking at a chart of August Crude Oil, the market range band has been rebounding between the lower & mid range daily Keltner channels for the last two sessions. This could suggest that the market is trying to put in a bottom and is attempting to find a breakout point for some additional upside in the near term. A possible scenario would be for the market to try & break through the mid Keltner channel and target 95.88. This upside momentum may be extremely vulnerable to pullbacks though. If this level holds, consider using it as a possible point to initiate new short positions. Downside retracement could find some support initially at the 94.05 level, with a break of this setting up a possible downside target of 93.75.

CLICK HERE FOR CHART & COMMENTARY ON AUGUST CRUDE OIL

 

 

 

Charts courtesy of http://www.openecry.com (Gann Financial LLC)

 

To open an account with me at Great Pacific Trading Company, as well as any questions or thoughts you would like to discuss, e-mail me at rroscelli@gptc.com

About the author-Richard Roscelli has been a member of the futures industry since 1994. His unique background in the Global Futures markets stems from his experience managing trading desks for major financial institutions and commodity trading advisors.

After earning an MBA in Global Business, Richard is now a co branch manager and licensed broker with Great Pacific Company of Las Vegas. He is a regular contributor to financial publications and websites focused on futures trading and alternative investments.

References

www.ft.com/research/Economic-Calendar

www.bloomberg.com

www.morningstar.com

www.cmegroup.com/trading

www.investopedia.com/terms

You can reach me at rroscelli@gptc.com for questions, comments, and information about opening an account with Great Pacific Trading Las Vegas. Follow me on Twitter @richardroscelli

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**The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options is substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results.

 

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