Daily Market Briefing

Fundamentals:

The data calendar is light to start the week and we only have earnings from Texas Instruments, so the market is using this lull in activity to sell the US dollar and push risky assets higher.  Over the weekend, G-20 met but no market-moving statements were made.  The discussion of Chinese currency manipulation was rescheduled for next meeting.  U.S. Treasury Secretary Geithner proposed a limitation for current account surpluses but this was largely ignored during the meeting.

Existing home sales will be released today, with consensus estimates at 4.1%.  If this number is accurate, yearly home sales would show an increase of 4.3 million for September. We will also see the Chicago Fed Activity index, which is used by many as a way to gauge potential GDP projections.

Honeywell raised their sales forecast for the end of this year after seeing European demand for auto parts.  If these projections prove to be correct, we can expect this to have a positive influence on risk assets, and pulling the US dollar downward.

At the end of last week, we saw a strong earnings report from Verizon, showing that consumers are still buying smart phones at relatively impressive rates.

Swedish industrial companies Alfa Laval, Husquarna and Atlas Copco reported better than expected earnings on Friday.  These results bode well for the general level of demand that we can see from the industrial companies and help confirm the longer term validity of the positive report from Honeywell.

Technicals:

Commodities:

Gold remains at elevated levels on the daily charts but we did see something of a pull back on the hourlies in recent days.  Prices dropped to trendline support at 1314 before printing a high of 1350.  These prices are still extremely rich on a historical basis so waiting for deeper pullbacks (first to 1265) before entering into new buys is the prudent plan of attack.  Daily indicators are at mid-levels, key resistance overhead rests at 1386.

Currencies:

The USD/CAD really requires a look at the weekly charts to see what is happening and currently we are watching long term support come back into focus at 0.9935.  Consistently lower weekly high during this past year suggests that this level will ultimately break and below here support comes in at 0.9815 and 0.9710.

Stocks:

The S & P 500 spiked above the previous resistance of 1185, as expected, to print a high above 1192.  Prices have seen a mild pullback to the previous resistance level at 1185, giving the nearly overbought hourly indicators a chance to unwind.  Putting on new buys at these elevated levels is risky and pullbacks to support at 1175 offer much better opportunities but the overall bias is clearly upward so it remains to be seen if those buying opportunities will actually present themselves.  Longer term target is above 1200.

Fundamentals:

The data calendar is light to start the week and we only have earnings from Texas Instruments, so the market is using this lull in activity to sell the US dollar and push risky assets higher.  Over the weekend, G-20 met but no market-moving statements were made.  The discussion of Chinese currency manipulation was rescheduled for next meeting.  U.S. Treasury Secretary Geithner proposed a limitation for current account surpluses but this was largely ignored during the meeting.

Existing home sales will be released today, with consensus estimates at 4.1%.  If this number is accurate, yearly home sales would show an increase of 4.3 million for September. We will also see the Chicago Fed Activity index, which is used by many as a way to gauge potential GDP projections.

Honeywell raised their sales forecast for the end of this year after seeing European demand for auto parts.  If these projections prove to be correct, we can expect this to have a positive influence on risk assets, and pulling the US dollar downward.

At the end of last week, we saw a strong earnings report from Verizon, showing that consumers are still buying smart phones at relatively impressive rates.

Swedish industrial companies Alfa Laval, Husquarna and Atlas Copco reported better than expected earnings on Friday.  These results bode well for the general level of demand that we can see from the industrial companies and help confirm the longer term validity of the positive report from Honeywell.

Technicals:

Commodities:

Gold remains at elevated levels on the daily charts but we did see something of a pull back on the hourlies in recent days.  Prices dropped to trendline support at 1314 before printing a high of 1350.  These prices are still extremely rich on a historical basis so waiting for deeper pullbacks (first to 1265) before entering into new buys is the prudent plan of attack.  Daily indicators are at mid-levels, key resistance overhead rests at 1386.

Currencies:

The USD/CAD really requires a look at the weekly charts to see what is happening and currently we are watching long term support come back into focus at 0.9935.  Consistently lower weekly high during this past year suggests that this level will ultimately break and below here support comes in at 0.9815 and 0.9710.

Stocks:

The S & P 500 spiked above the previous resistance of 1185, as expected, to print a high above 1192.  Prices have seen a mild pullback to the previous resistance level at 1185, giving the nearly overbought hourly indicators a chance to unwind.  Putting on new buys at these elevated levels is risky and pullbacks to support at 1175 offer much better opportunities but the overall bias is clearly upward so it remains to be seen if those buying opportunities will actually present themselves.  Longer term target is above 1200.