Equities Rise on Positive Jobless Claims and European Data; German IFO Released Today

Fundamentals:

Today we will look at bond yields as this is one of the areas that is most influenced by central bank strategies.  We did see large moves in bond yields last night and this was propelled by U.S. long rates.  In the 10 year we had a high of 3.55 and the moves in the 30 year were even more drastic.  This pushed down the Yen and led to strengthening in the Dollar.  This caused the EUR/USD to hit an overnight low of 1.3212 with minimal bounces.

European could rise today on the back of stronger than expected U.S. jobless claims.  European data released yesterday was generally positive and this should bring in some buyers to end the week.

The biggest macro release today comes with the Germany IFO figures out at 9:00 GMT.  The expectation section in the survey is expected to come in at 106 against 106.3 previously.  This would be something of a decline but we are at elevated levels.  A drastic drop in this number would drag down equities but as long as this number is close to expectations, markets will be able to maintain the idea that Germany will still be able to be the main driver in the European economy.

When looking at stock sectors to close the week, we are still in an environment that will favor defensive plays, such as health care and consumer staples.  Risk assets are more likely to attract selling given the European debt story and the proximity to holiday influence trading conditions.

Technicals:

Commodities:

Oil is maintaining its uptrend, making higher highs on the 4H chart but we are seeing momentum slow down.  That said, we still have not seen any major pullbacks from the current highs, which are in the area just below 90.  This consolidation is taking the form of a symmetrical triangle on the short term charts, so any break out of the current range should be decisive and forceful.  A break below 86.80 targets 80.20.  Resistance overhead comes in at 90.70.  Daily indicators are bullish from mid levels.

Currencies:

The GBP/USD is trying to make a bounce after its swift drop to daily support at 1.55.  Our long position is up by about 40 points but we have brought the stop to break even because the momentum here looks weak and we are expecting support to be tested again.  Resistance overhead comes at 1.5720 followed by 1.5790.  Daily indicators are starting to look positive, though, as they are bullish now from nearly oversold levels.

Stocks:

The S & P 500 is trading at its highs but momentum has absolutely slowed in the last two weeks.  Just below 1250 we have what basically amounts to a quadruple top and what strengthens the bearish argument is that these highs are successively lower, although not by much.  We need a clear break of the psychological 1250 level before we can start expecting gains to accelerate.  Support comes in at 1232 and the 4H indicator is bearish from mid levels.

Fundamentals:

Today we will look at bond yields as this is one of the areas that is most influenced by central bank strategies.  We did see large moves in bond yields last night and this was propelled by U.S. long rates.  In the 10 year we had a high of 3.55 and the moves in the 30 year were even more drastic.  This pushed down the Yen and led to strengthening in the Dollar.  This caused the EUR/USD to hit an overnight low of 1.3212 with minimal bounces.

European could rise today on the back of stronger than expected U.S. jobless claims.  European data released yesterday was generally positive and this should bring in some buyers to end the week.

The biggest macro release today comes with the Germany IFO figures out at 9:00 GMT.  The expectation section in the survey is expected to come in at 106 against 106.3 previously.  This would be something of a decline but we are at elevated levels.  A drastic drop in this number would drag down equities but as long as this number is close to expectations, markets will be able to maintain the idea that Germany will still be able to be the main driver in the European economy.

When looking at stock sectors to close the week, we are still in an environment that will favor defensive plays, such as health care and consumer staples.  Risk assets are more likely to attract selling given the European debt story and the proximity to holiday influence trading conditions.

Technicals:

Commodities:

Oil is maintaining its uptrend, making higher highs on the 4H chart but we are seeing momentum slow down.  That said, we still have not seen any major pullbacks from the current highs, which are in the area just below 90.  This consolidation is taking the form of a symmetrical triangle on the short term charts, so any break out of the current range should be decisive and forceful.  A break below 86.80 targets 80.20.  Resistance overhead comes in at 90.70.  Daily indicators are bullish from mid levels.

Currencies:

The GBP/USD is trying to make a bounce after its swift drop to daily support at 1.55.  Our long position is up by about 40 points but we have brought the stop to break even because the momentum here looks weak and we are expecting support to be tested again.  Resistance overhead comes at 1.5720 followed by 1.5790.  Daily indicators are starting to look positive, though, as they are bullish now from nearly oversold levels.

Stocks:

The S & P 500 is trading at its highs but momentum has absolutely slowed in the last two weeks.  Just below 1250 we have what basically amounts to a quadruple top and what strengthens the bearish argument is that these highs are successively lower, although not by much.  We need a clear break of the psychological 1250 level before we can start expecting gains to accelerate.  Support comes in at 1232 and the 4H indicator is bearish from mid levels.