This market brief is an overview of the week ahead and some of the events we see as being important to the markets.
Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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INDICES
AUSTRALASIA
ASX – 5810 ( +77 or +1.34% )
As we hinted to last week the ASX has posted further gains. We have been saying this for 2 weeks: We are in RALLY MODE; and now find this market right up against our level. We will will be discussing this market in the LIVE CHAT ROOM.
VOLATILITY ALERT: Monetary Policy Minutes on Tuesday, Wage Price Index on Wednesday, Private Capex on Thursday, RBA Governor Lowe testifies on Friday.
For a continued move higher we would like to see the ASX break strongly and close above 5823. Should this occur we will look for a move to 5875, and if momentum is very strong this week we could see a blow-off move to 5985.
If we cannot break and close above 5823, we will look for a retest of 5777. A break and close below this level may see the ASX head lower to 5746; and below that 5714-5705 is a key area. If momentum to the downside is very strong, we cannot rule out a sharp move down to 5608.
EUROPE
DAX – 11783 ( +121 or +1.04% )
Once again the DAX has failed to break out of a sideways range, gain failing right at our levels. The longer this continues, the larger the break we anticipate. We have some unique analysis we will be posting in the MEMBER PORTAL this week.
VOLATILITY ALERT: Flash PMI on Tuesday, German IFO Business Climate on Wednesday.
For a continued move to the upside we must see the DAX close strongly above the 11755 – 11790 area. Should this occur, we will look for a retest 11875. If momentum is strong, a break and close above this level could see another push higher into 12054, and above this we have a key level at 12198.
If the DAX fails to close above 11790, we will look for a move back down to 11592; and if there is a complete reversal of the breakout, a strong move down to 11340 cannot be ruled out.
US
SP500 – 2349 ( +34 or +1.47% )
Our comments from last week remain the same – the US continues to lead global equities as the S&P continues to posts all-time highs, coming into our 2350 level before falling off slightly.
NOTE: Monday is a public holiday (President’s Day).
VOLATILITY ALERT: FOMC Meeting Minutes on Wednesday, New Home Sales on Friday.
For a move higher we would like to see a the S&P hold above our key 2334 level. Should this occur we continue to look for a move higher into 2386.
If we cannot hold above 2334, we will look for a move back down to 2312. A strong break and close below may result in a move down to 2292. Should momentum to the downside remain strong, a sharp move into 2270 cannot be ruled out.
FOREX
AUD/USD – 0.7668 ( -8 or -0.1% )
For the second straight week the AUD has consolidated sideways, after an initial break higher early last week. Last week we mentioned our key level of 0.7677 and you should now see why!
VOLATILITY ALERT: Monetary Policy Minutes on Tuesday, Wage Price Index on Wednesday, Private Capex on Thursday, RBA Governor Lowe testifies on Friday.
For a move higher we would like to see this market break strongly through 0.7677. Should this occur we will look for a move to 0.7729 before a pause. However- if we break above this level we could see very fast moves into 0.7765 and 0.7833.
On the downside, a failure to close above 0.7677 could see a move back down to 0.7617. A strong break and close of this level may result in another leg down to 0.7561, and if momentum is very strong we cannot rule out a sell-off into 0.7489 and 0.7447.
EUR/USD – 1.0609 ( -29 or -0.27% )
The EURO was weaker into the close last week as growing concerns about the Euro area continue.
VOLATILITY ALERT: Euro region Flash PMI numbers on Tuesday, German IFO Business Climate on Wednesday.
For a sustained move higher we would now like to see this market break and close above 1.0631. If we can hold above this level we will look for a move back into 1.0738, and should momentum remain strong we will be watching the key area between 1.0977 – 1.1000.
If we cannot close above 1.0738, we could see continued chop back and forth around the 1.0631 level. However should we remain below this level, our next level down is 1.0525. A strong break below that could see 1.0462 very quickly, and if momentum is strong we cannot rule out a move to 1.0424.
GBP/USD – 1.2409 ( -77 or +0.62% )
Like the DAX, Cable also remains in a sideways range and is ready for a breakout. We will be discussing this market in more detail in the MEMBER PORTAL.
VOLATILITY ALERT: Quarterly GDP on Wednesday.
For a move to the upside we would like to this market break above 1.2480. A strong break and close above this level should see a retest of 1.2622, and if momentum remains strong a move to 1.2720 is still very possible.
On the downside we now have a very important level at 1.2384. A break below this level may see this market head lower to 1.2297, further breaks to the downside may result in a move to 1.2100. As previous- the downside may be swift and sharp.
USD/JPY – 112.89 ( -33 or -0.29% )
The Japanese YEN failed to close above our key level at 114.52 and has since retraced to close lower for the week.
For a continued move to the upside we must now see this market break and close strongly above 113.87 – 114.08. A close above 114.08 could see this market retest 114.52; and if we see a reversal to the upside this week, we cannot rule out a move to 115.54.
If we cannot retest 113.04 this week, we may see a quick move lower into the key 111.72 level. Should break this level, watch out for a sharp move down into 111.09; and if momentum is strong a sharp sell-off to 109.94 is possible.
COMMODITIES
GOLD – 1234 ( +1 or +0.08% )
GOLD has closed the week virtually flat, after again retesting our key 1218 level before a bounce higher mid-week.
For a continued move higher we want to see this market now hold above 1233. Should this occur we will continue to look for a move to 1247, and if momentum to the upside is strong we could see a further move higher into 1257
If Gold cannot hold above 1233, we may see a retest of 1222-1218. A strong break and close below these levels may result in a move back down to 1206; and should this level break we may see Gold trade back down to 1187-1181 area quickly.
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