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 ASX – 5754 ( +8 or +0.14% ) The ASX spent the majority of last week in a sideways range only to finish up 8 points higher. VOLATILITY ALERT: Building Approvals on Tuesday, Private Capex and Retail Sales on Thursday. For a continued move higher we would like to see the ASX hold above 5746, followed by a strong break and close above 5777. A break of this level may result in a retest of 5823, and if momentum is very strong this week we will could see a strong rally into 5875. If the ASX cannot hold above 5746, we will look for moves down to 5705 and 5690. A strong break and close below this level could see the ASX test 5606 and if momentum is strong we could easily see further losses down to 5589 this week.
EUROPE DAX – 12598 ( -41 or -0.32% ) The DAX all but found resistance at our key level 12714 before falling lower. This week 12714 will again be the key level we watch. VOLATILITY ALERT: Draghi testifies on Monday, German Prelim CPI on Tuesday, German Retail Sales and Annual Euro-Area Core CPI on Wednesday. For a continued move to the upside we must see the DAX close and hold above 12714. Should this occur we could see a strong move 13110, and if momentum is very strong to the upside we cannot rule out a move to 13205. If the DAX fails to close above 12714, we will look for a move back down to 12536. A strong break below this level is likely to see a push further down into 12384. If momentum to the downside remains very strong and selling pressure increases we cannot rule moves to 12198 and 12044.
US SP500 – 2414 ( +32 or +1.34% ) The S&P continues to be the best house in the world of equities pushing up against our 2418 level. We will be discussing this market in more detail in the LIVE CHAT ROOM this week. NOTE: Monday is a bank holiday in the US (Memorial Day). VOLATILITY ALERT: CB Consumer Confidence on Tuesday, Chicago PMI and Pending Home Sales on Wednesday, ISM Manufacturing PMI on Thursday, Trade Balance and NFP on Friday . For a move higher we would like to see the S&P hold strongly above our key level at 2400. Should this occur we anticipate further upside over the following week. Our next upside targets are 2432 and 2465. If we cannot hold above 2400, we will look for a move back down to 2386 and 2378. Below this we have medium-term support at 2360.
FOREX AUD/USD – 0.7445 ( -11 or -0.15% ) A volatile week in the AUD ended with the Aussie dollar closing just slightly down for the week. We will be covering this market in more detail in the MEMBER PORTAL this week. VOLATILITY ALERT: Building Approvals on Tuesday, Private Capex and Retail Sales on Thursday. For a move higher we would like to see the AUD close above 0.7447, followed by a break and close above 0.7489. A strong break and close above this level could see a quick move to 0.7561 before a pause; and if momentum remains strong we will look for a move into 0.7617. If we cannot close above 0.7447, we will look for a move back down to 0.7364. A strong break below this level may result in a move back down into 0.7282 before another potential pause. Any subsequent breaks of this level however may result in a very fast move down to 0.7229.
EUR/USD – 1.1177 ( -30 or -0.27% ) The EURO is now at a critical point. Either we rally very strongly from here or we could see this market fall significantly. We will discuss this in the MEMBER PORTAL in more detail this week. NOTE: Friday is a public holiday in Italy (National Day) VOLATILITY ALERT: Draghi testifies on Monday, German Prelim CPI on Tuesday, German Retail Sales and Annual Euro-Area Core CPI on Wednesday. For a sustained move higher we would now like to see the EURO hold above 1.1201. Should this occur we will then look for a move to 1.1248 before a pause. However a strong break above this level could see a quick move into 1.1347. Should momentum remain strong to the upside, we cannot rule out a move into 1.1380 this week. If the EURO cannot hold above 1.1201, we will watch for a move back down to 1.1117. A break below this level could see this market trade quickly down 1.1083 cannot be ruled out; and if momentum remains very strong we could see a sharp move down to 1.1033 and 1.0977.
GBP/USD – 1.2803 ( -232 or -1.78% ) Last week we spoke about the Pound being at a critical area and we can see on the charts how this market failed to break through the important 1.3035 level. It since fallen over 200 points. NOTE: Monday is a public holiday (Spring Bank day). VOLATILITY ALERT: Inflation Report Hearings on Tuesday, quarterly Prelim Business Investment on Thursday. For a move to the upside we would like to this market hold above 1.2720. Should this occur we will look for a retest of 1.2868, and if momentum remains very strong we cannot rule out a move to retest 1.3035. If the GBP cannot hold above 1.2720, we will look for a move back down to 1.2571. A close below this level could result in a strong move back down to 1.2480 and thus a full fade of the snap election rally.
USD/JPY – 111.32 ( +5 or +0.04% ) The YEN has remained flat since last week and as such our levels are unchanged. For a move to the upside we will look for this market to hold above our key level at 111.09, followed by a strong break and close above 111.73. Should this occur we will look for a move back up to 112.22 before a pause. If momentum remains strong to the upside, we may see a very strong move to 113.87 – 114.08 before the week’s end. If we cannot hold above 111.09, the YEN may see further downside into 110.10. A strong break and close below this level could spell trouble for the YEN, with a very fast move down to 109.94, and further downside could see this market sell-off back down to 109.21.
COMMODITIES GOLD – 1266 ( +11 or +0.88% ) A strong pop on Friday saw a breakout of a narrow weekly range, and we are now not to far away from a very key area between 1276 – 1278 For a continued move higher we would like to see this market hold above 1257. Should this occur we will look for a continued rally into the key 1276 – 1278 area, and if momentum is very strong to the upside we could see a move to 1294. If Gold cannot hold above 1257, we will look for a move back down into 1247. A strong break below this level could see a move down into 1235, and if momentum is very strong to the downside we cannot rule out a move to 1222.
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