This market brief is an overview of the week ahead and some of the events we see as being important to the markets.
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INDICES AUSTRALASIA ASX – 5288 ( +14 or +0.27% ) After a turbulent week the ASX managed to edge its way higher. This market is now setting up for a big rally now that the Coalition has a (slim) majority lead. VOLATILITY ALERT: NAB Business Confidence on Tuesday, Unemployment Rate on Thursday. For a continued move to the upside we would like to see this market break up and hold above 5294. Should this occur, we will look for a move back up to 5373 – 5390. A strong break and close above this level could see the market trade to 5487, and if momentum remains very strong we could see the ASX rally to 5589 by the end of the week. If we fail to break above 5294, we will look for a move back down to 5248-5238. A break below this could result in a move back into 5161, and further breaks to the downside could see the ASX head to 5238. Should we see a complete reversal to the downside, we will watch for a move back down to 5090. EUROPE DAX – 9625 ( -133 or -1.36% ) The DAX was weaker last week however a strong Friday following US NFP number saw the DAX post a quick 300 point rally; and like the ASX appears as though it wants to go higher. VOLATILITY ALERT: Eurogroup Meetings on Monday. For a continued move to the upside we would like to see this market hold above 9620. A break above this level could see the DAX retest 9822. Should we break 9822, we will be watching further upside moves into 10013 and 10158. If we continue to rally, a strong move into 10337 cannot be ruled out. On the downside, a strong break and close below 9620 could see a move back down to 9514. A break and close below this level could likely result in a retest of 9447, and should we break below this level we will then look for a move down into 9386 and possibly 9322. If the moves to downside remain very strong, we could see a very sharp move into 9128.
US SP500 – 2126 ( +22 or +1.05% ) Last week we mentioned the S&P has its sight on the all-time highs and this should be very clear now. We have finally broken through the all-important 2112 level and closed right on 2126, another level from last week. Will we see the S&P break all-time highs this week? We will be discussing this market in more depth in the MEMBER PORTAL . VOLATILITY ALERT: Monthly PPI on Thursday, Monthly CPI, Retail Sales and Prelim UoM Consumer Sentiment on Friday. For a move higher we would like to see a the S&P hold above 2126. Should this occur we will look for a move to test the all-time highs at 2137. A strong break and close above 2137 means it will be blue-skies for the S&P. The next level above is 2150, and a strong break and close through 2150 could see this market run to 2176 very quickly. If we cannot hold above 2126, we will watch for a move back down into 2112 before a pause. A strong break and close below this level could see the S&P head back down into 2106, and a further break below this level may mean another test of the important 2097 area. If momentum to the downside is very strong we cannot rule out a move back down to 2074.
FOREX AUD/USD – 0.7566 ( +73 or +0.97% ) The AUD is rallying now that there ‘seems’ to be a clear winner in the 2016 Federal Election. If we do not have a hung parliament then one aspect of uncertainty has been removed. VOLATILITY ALERT: NAB Business Confidence on Tuesday, Unemployment Rate on Thursday. For a move higher we would like to see the AUD hold above 0.7561, followed by a break and close above 0.7617. A strong break and close above this level could then see a quick move to 0.7662 before a pause; and if momentum remains strong we will look for strong move into 0.7729. If we cannot hold above 0.7561, we will look for a move back down to 0.7447. A strong break below this level may result in a move back down into 0.7364 before another potential pause. Any subsequent breaks of this level however may result in a very fast move down to 0.7282.
EUR/USD – 1.1050 ( -89 or -0.8% ) The EURO was slightly weaker last week. With very little news this week we will watch the sentiment closely in this market given it is in a very precarious position. NOTE: Thursday is a French holiday. VOLATILITY ALERT: Eurogroup meetings on Monday. For a sustained move higher we would like to see the EURO hold above 1.1033, followed by strong breaks above 1.1064. If this market can break and close above this level we will look for moves into 1.1117 and 1.1163. Breaks of these levels may see a retest of 1.1201. A break above 1.1201 may result in a retest of 1.1248, and if momentum remains strong we could see fast moves into 1.1347 before the end of the week. If the EURO cannot hold 1.1033 we will watch for a move back down to 1.0977. A strong break and close below this level may see the EURO move back down to 1.0897, and if momentum remains very strong we could see a sharp move down to 1.0814.
GBP/USD – 1.2936 ( -334 or -2.52% ) The GBP/USD continues to carve out lower prices as the market prices in a potential BoE rate cut. This week is shaping up to be a very important week for Cable, and we will be covering this market exclusively in our MEMBER PORTAL and LIVE CHAT ROOM. VOLATILITY ALERT: Eurogroup meetings on Monday, Inflation Report Hearings on Tuesday, BoE Credit Conditions on Wednesday, Interest Rate Announcement on Thursday, Governor Carney speaks on Friday. For a move to the upside we would like to see this market break and close above 1.3035. A break above this level could see the market head to 1.3227. Should we see a strong break through this level we could see the GBP/USD test 1.3426 very quickly. If momentum remains very strong, a move to 1.3644 cannot be ruled out. If we cannot break above 1.3035, we will look for a move back down to 1.2928. A strong break below this level could see a quick leg down into 1.2720. Should we break this level we will watch for a sharp move down to 1.2510; and if momentum is very strong 1.2297 cannot be ruled out.
USD/JPY – 100.52 ( -190 or -1.86% ) Japan’s current PM Shinzo Abe- leader of the ruling Liberal Democratic Party has won a landslide in the Upper House elections. Will we finally see the $USD/JPY turn to the upside this week..? We saw signs of this on Friday and and will be covering this market in the LIVE CHAT ROOM . For a continued move to the upside we would like to see this market break above 100.76, followed by a quick retest of 101.12. A strong break and close above this level could see the USD/JPY rally to 102.29 quickly, and then 103.21 before a pause. Should we see continued upside, we will look for a move into 103.99. A strong break above 103.99 could see a move to 104.97, and if momentum remains strong we cannot rule out a sharp move higher to 106.30. If however the USD/JPY cannot break above 100.76, we will look for another retest of 99.90. A strong break below this level could see the USD/JPY trade quickly down to 99.05, and should we continue to trade lower a sharp move to 98.22 is possible. If momentum on the downside remains we may see 97.55 before the end of the week.
COMMODITIES GOLD – 1366 ( +25 or +1.86% ) Markets continue to look to Gold as a safe-haven and the rally in precious metals remains. For a continued move higher we would like to see GOLD break above 1375. A break above this level could see Gold trade to 1393 and potentially test 1400. Should we see continued strength in GOLD a move into 1416 cannot be ruled out. If Gold cannot hold above 1375, we will look for a move back down to 1355. A strong break and close below this level may result in a retest of 1335, and further breaks to the downside could find Gold at 1322. If momentum remains very strong, 1303 cannot be ruled out.
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