The last time I posted about AmerisourceBergen Corp. or ABC in the New York Stock Exchange was when it was still creating new highs (kindly check here). However last week, it had broken down from the support of its 16-month ascending channel (indicated by the red circle) and tapped the $30.31 support. If the price completely drops below the $30.31 price mark, the next support could be $29.50. In case the ABC stocks get back on track and start to ascend, the current resistance could be the broken ascending channel’s support. If that hurdle gets cleared out, the next resistance could be $32.67.
ABC Stocks Running Out of Gas? – July 6, 2010
Amazon Stocks Turning Sour – July 6, 2010
Last time I posted about Amazon.com, Inc. (kindly check here) or AMZN in the New York Stock Exchange, the head and shoulders formation (may look like double top for some) was still being set up. However last week, the Amazon stocks breached the neckline of the said formation and dropped around the $110.62 support. If the price continues to fall, the next support could be the $100.00 psychological level. If it further slides below that psychological area, the next support could be $90.00. On the upside, in case a pull back up occurs, its immediate resistance is the neckline of the head and shoulders. If that gets cleared out, the next resistance could be $129.15.
The US Dollar’s Comeback – July 6, 2010
Hello there forex friends! today’s I present to you an update on US dollar index which I last posted back in June 24 (kindly see my previous entry here). As you can see, the index has retraced back to the [Read more...]
Euro, Euro Stocks: Poised For a Move Lower – July 6, 2010
Good Tuesday everyone! On today’s canvas is the daily chart of the Euro Stoxx 50. For those who do not know, the Euro Stoxx 50 is a stock index of the 50 biggest blue-chip companies in the euro zone. Like the Dow of the US, the Stoxx 50 can also be used as a leading barometer of the euro zone’s economic health. Unlike the DAX (kindly see my colleague’s earlier post here), the Stoxx 50 is a couple of steps away from breaking down already. Its price action is actually very similar to FTSE, which my partner also posted earlier today (kindly check it here), since it is also showing a head and shoulders formation. But as mentioned, the Stoxx has not breached its neckline yet unlike the FTSE. If and when it breaks below the 2,200 level and the neckline, it could plunged all the way down 1,850. In fact, a couple of indicators suggest that it could indeed do so. First, the RSI has fallen below 50, suggesting that the index’s downward momentum is increasing. Second, the 50-day moving average has also crossed over below the 200-day MA, indicating a likely move downwards. Moreover, the MACD has also recently turned negative. On the upside, if buying interest returns and the neckline holds, the index could once again aim at least for the peak of its right shoulder. With the index now trading below the 50 and 200 MAs, however, it would need a lot of buying support to push itself upwards again.
With all the debt concerns that has been happening around the euro zone, particularly in Greece, it is understandable why a lot of investors have been losing faith in investing in euro stocks and even bonds. Just recently, Spain was also placed under the watch list by the international ratings agency, Moody’s. Several countries including Greece, Portugal, and Spain have their sovereign debt already downgraded. If this contagion spreads among the other member countries, investors will all the more pull out their money from the Europe. And it is not as if the euro zone has been growing on a big scale as well. the euro zone only grew by a meager 0.2% during the first quarter of this year. With a drop in the retail sales in the months following and a continued lose of investor confidence, its growth for the second quarter will likewise be weak as well.
So how will a drop in equity demand affect the euro? Remember that most of the investments in the euro zone, the equities and bonds, are priced in euros. One has to exchange their money into euros first before being able to invest in these instruments. A slide in equities due to a lack of demand, therefore, will also cause a dip in the demand for the currency. In short, if and when the euro stoxx index sinks, the valuation of the euro currency would likely decline as well.
FTSE 100 Head and Shoulders Breakdown – July 5, 2010
Hey guys, I got you here the chart of the FTSE 100 Index. In case you do not know, the FTSE 100 consists of the 100 most highly capitalized UK companies listed on the London Stock Exchange (LSE). This is also considered as the London Stock Exchange’s main index. Anyway, its chart is very similar to the charts of the US stock indices as there is also a breakdown from the head and shoulders formation (indicated by the red circle). In addition to that, their values move in almost the same direction daily. As the head and shoulders breakdown occurred recently, the FTSE 100 could now be on its way to the 4,675.70 support. Once a further slippage takes place, the next support could be 4,520.80. On the upside, the current resistance I’m looking into is the 5,000.00 psychological level. If that psychological level gets cleared out, the next resistance could be 5,331.50.
DAX Technical Outlook – July 5, 2010
The German Index or the DAX consists the 30 major German companies trading on the Frankfurt Stock Exchange. Chart-wise, it looks like the German stock index does not share the same fate as the Dow Jones Industrial Average, Nasdaq Composite, S&P 500 and the FTSE 100 as we do not see any head and shoulders in its chart. The value currently moves in a trading range and is pointed downwards. The immediate support of the trading range could hold on to DAX from further falling. If it does not and a slippage takes place, the next support could be 5,607.68. If the index starts going up, it could encounter some selling pressure at the 6,000.00 psychological level. If that hurdle gets cleared out, the next resistance could be 6,341.52.
Technical and Fundamental Look on Japan – July 5, 2010
Good day forex and stock fans! Earlier today I presented my commentary on the recent price action of Shanghai Composite Index (kindly see my previous post here). Now, it’s Japan’s turn to be heard so here it is. On today’s canvas is the daily chart of the Nihon Keizai Shimbun Stock Market Index or the Nikkei 225 Index for short. In case you do not know, the Nikkei is the leading stock market in Japan which comprises the top 225 companies that are listed in the Tokyo Stock Exchange. The index gives a good indication of financial and economic conditions in Japan, as well as Asia. The Tokyo Stock Exchange, by the way, is ranked number 2 among the largest t stock exchanges in the world in terms of market capitalization behind the NYSE. For a long time, Japan had also been the second-largest economy in the world behind the US. Though, the Land of the Rising Sun had been overtaken by China in 2009 when the latter posted a whopping 11.9% jump in its GDP during the fourth quarter of the year. In any case, the Nikkei is still one of the most followed indices in the world.
So looking at the Nikkei’s daily chart, it seems to be on the verge of breaking down from a head and shoulders formation as well. The index is now hanging by a thread as it trades just above the 9,200.00 psychological number. The index would easily fall down to 9,000.00 if 9,200 breaks. But if the support at 9,000.00 gives way, it could further slide until it meets its minimum downside target of 7,750.00. The 50-day moving average has just crossed below the 200-day MA, suggesting a likely move downwards. The MACD has also made a bearish crossover signal with its histogram recently turning negative. On the upside, if the 9,000.00 holds, then the index could continue with its sideways movement.
Fundamentally, despite being ranked as the number 3 largest economy in the world, Japan has also been plagued with many heartaches. To top the list is its problem regarding deflation. In May, Japan reported a 1.3% year-over-year decline in the Tokyo core CPI. With the country’s household spending also dipping by 0.7% during the same month, it is pretty obvious that domestic demand in Japan is nowhere near to pull its CPI back in the positive territory. While falling prices may sound good at first, it indicates a lack of consumption in the country which by the way takes up about 57% of the country’s GDP. In fact the Bank of Japan is anticipating that the country will stay in this environment for at least five more years.
The appreciation of the yen due to the risk aversion in the market is also not helping Japan’s cause. Japan is also an export-based country. And as the yen gets stronger Japan’s exports become relatively more expensive as well, placing a downward pressure on demand. With the debt crisis in Europe and the recent weak economic showing of the US and China, the market has been covering a lot of their short yen positions. Remember that the Japanese yen, due to its low interest rate of 0.10%, is used to fund investments in equities and other higher yielding assets.
Regarding Japan’s GDP, it’s no secret now why the country contracted by 5.0% for the whole of 2009. Consumption was bleak as evidenced in the country’s inflation numbers. Japan’s exports had also been receiving a lot of downward pressure due to the rapid rise of the yen. Now, without those massive spending by the government, the country would have sunk by more. Of course, the government’s huge spending caused its public debt to surge to 192.1% of its GDP in 2009. Despite the already high level of debt, the government was still pushing for a record ¥92.3 trillion budget for the next fiscal year. In my opinion, if the country does not improve its consumption and organically grows, it could be a good candidate for a debt downgrade down the line since it needs to pay off whenever part of their debt comes due.
China was the First to Slide! – July 5, 2010
Happy fourth of July everyone! I hope you guys enjoyed your weekend. Me and my esteemed colleague had just presented to you the major indices in the US and how each of them portrayed a breakdown. We also showed you a look on one of the emerging markets in Asia, the Philippines, and how it appears to have decoupled from the major economies in the West. So to start the week, let’s take a look on the daily time frame of the Shanghai Stock Exchange Composite Index ($SSEC), the 3rd largest stock market in the world by market capitalization at US$3.07 trillion as of May 2010. The SSEC is one of China’s three stock exchanges, alongside the Hong Kong Stock Exchange and the Shenzhen Stock Exchange, that is in operation in China. The former, however, is not yet entirely open to foreign investors due to the tight money flow controls by the Chinese officials.
Looking at its daily chart, you can see that it had broken down from an ascending triangle back in mid-April only to break down again from a smaller descending triangle just last week. In my opinion, the index has still some room to cover south since its minimum downside target, which is computed by projecting the height of the symmetrical triangle from the point of breakout, just above 2,200 has not yet been met. The MACD is showing some bearish sign as well with its histogram recently turning negative. Though with the RSI in already in the extreme level, the index could move sideways for awhile or even rebound a bit before falling again. If it exceeds this target, the next obvious supports would be at 2,000 and at 1,800. With the index now trading below its 200 and 50 MA, it would need a great deal of buying interest to keep itself above water again.
As reported in our latest blogs, the US’s major indices (DJIA, Nasdaq Composite, and S&P 500) have started to reverse and head south again. The Shanghai index, on the other hand, had already fallen 2 and a half months ahead of the US. How is this possible? Did not China just post a stellar 11.9% GDP growth during the first quarter of 2010? Did not China’s export industry rise by a year-over-year gain of 50% the other month? If so then why would a lot of investors “lose confidence” by selling off Chinese equities in spite of the country’s bullish economic data? Well, it is important to know the economic data such as the country’s GDP, retail sales, etc. are mostly lagging indicators. Those “smart investors” may have already priced these upbeat results back then. The actual stage of the economy, which is yet to be reported in numbers to the public, though, is already exhibited in the index’s price action. The index, as we are told, is a leading indicator of the respective country’s economy. So if this is the case, then we are up for a downside surprise regarding China’s economy. Hmmm. This then might be correct since last week’s financial drought was started by the weak showing of China’s leading indicator which only posted a 0.3% growth after printing a 1.7% rise the other month.
According to recent reports, China is already considering to unpeg its currency, the Yuan, from the US dollar. For a long time, China has pegged the Yuan against the USD, making its exports cheaper as a result. By moving the country’s currency policy to a more market oriented one, China’s exports sector, which saw recently saw a whopping 50% jump, would surely take a hit. And since the country is at present highly dependent on its exports, it economy would likewise hit a bump. Is this scenario already ‘priced in’ by the market? Would the Chinese economy dip some more? Quite possibly.
If so, then the rest of the world instead of being pushed up could be pulled down if China’s economy dips further unless of course a decoupling among the economies in the world occurs. As of now, it seems that the emerging markets in Asia have their own lives but if the condition in China, US, and Europe worsens, expect the emerging markets to get shocked as well. How hard will the impact be? We have yet to see it. In any case, better be on the guard!
Dow Jones Industrial Average Breakdown – July 4, 2010
Here’s a weekend wrap-up of the Dow Jones Industrial Average (^DJI). The ^DJI has broken down from the neckline of the head and shoulders formation (indicated by the red circle), following the same fate of the Nasdaq Composite (kindly click here to see it) and the S&P 500 (kindly click here to see it). Its value could now decline to the 9,378.77 support. If that price mark gets breached, the next support could be the 9,000.00-9,200.00 level. However, in case the Dow Jones Industrial Average heads back up, the neckline of the head and shoulders formation could serve as the immediate resistance. But if the neckline gets cleared out, it could then rise and aim for the 10,627.20 level.
As for Danny’s comparative analysis request, this is just going to be short and straight to the point. In the chart of the Dow Jones Industrial Average, the index has broken down from the head and shoulders formation as seen in the image placed on this post and is more likely to be headed south in the coming days while the Philippine Stock Exchange index hasn’t broken down from anything yet and in fact still maintains an uptrend (kindly click here to see it). At the same time, I see no reversal setups in the PSEi as of this moment.
Note that the Philipine market as well as most of the other markets in the world follow the movement of the US since the US is the biggest economy in the world. Anything that happens in their economy, due to globalization, affects the rest of the world in one way or the other. Specifically, its trade demand from other countries would weaken if their own consumption weakens as well. Moreover, the so-called “hot money” which streams easily in and out of the world’s financial markets would flow out of the emerging markets like the Philippines since such markets are deemed “riskier” than the US.
Recently, though, there is a slight decoupling between the US market and the Philippines. Still, the PSEi could follow some of the US market drops especially the drastic ones. It could even breakdown from its uptrend but personally, I don’t think it would change its course and entirely follow the footsteps of the US indices right away. From a technical point of view, the PSEi would continue its rise as long as its uptrend is intact. What do you think? Kindly share your thoughts. Thank you!
Philippine Stock Exchange Index: PSEI – July 2, 2010
Here’s my weekend wrap-up of the Philippine Stock Exchange Index (PSEi) to supplement my previous post about it (kindly click here to see it). Despite the drop of the Dow Jones Industrial Average (^DJI), Nasdaq Composite and the S&P 500, the PSEi defied all odds by maintaining its uptrend and that can be seen in the chart provided. Well of course it dropped a bit as a reaction to the more than 5% decline of the ^DJI for the past few days but still, the PSEi didn’t follow the drastic downswings of that US benchmark. At the same time, there is no head and shoulders breakdown or merely no head and shoulders setup at all in the current PSEi chart as far as my eyes could see unlike in the 3 US stock indices I mentioned (kindly click here to see the setups: 1…2…3…).
In the chart of the Philippine Stock Exchange Index, the price is currently moving within the uptrend and the 3,360.00-3,380.00 resistance levels. As a result, if it continues to do so, the price will no longer have space to move further unless it breaks above the 3,360.00-3,380.00 resistance or break down from the uptrend. If the current resistance gets cleared out, 3,667.74 could be the next price mark. On the downside, if the uptrend gets broken, the next support could be 3,219.46. Like what I always say about uptrends, as long as the uptrend remains intact I’d stay along side with the bulls.
Are the Euro Bulls Back? – July 2, 2010
Good day euro fans! Now, if you’re one of the lucky ones who are still long on the euro then yesterday was your lucky day as the EURUSD pair surged by more than 200 pips! The EURUSD opened at 1.4957 and closed at 1.5163. Contrary its previous inclination which I mentioned in my last post about the pair back in June 21 (kindly check it here), the euro has also beaten the odds with one swift move yesterday. Now, it appears that the euro bears went back inside their caves as the bulls came rushing. Looking at its daily chart, it seems that the pair has broken out of a inverted head and shoulders formation. If this gets validated then the pair could continue its rise though it would likely meet some heavy selling pressure at the downtrend resistance. A break of this downtrend line would give the euro bulls some additional room to run. But if the downtrend holds and the euro falls again then its immediate supports would be at the head and shoulders neckline, 1.2200, and its 2010 low at 1.1876.
Like what I mentioned in my other blog earlier today (see it here), yesterday’s price action is a bit off since any downbeat economic updates from the US usually leads to a sell-off in the anti-dollar currencies like the EUR. Instead of crashing after a barrage of weak reports (initial jobless claims, ISM manufacturing PMI, and pending home sales), the euro soared by its most single day gain in a year of more than 200 pips. We all know that the euro zone is still hampered with debt concerns as Spain has been recently placed into the watch list by the international ratings agency, Moody’s. Yesterday’s price action, though, indicated that investors have ‘priced-in’ the US’s lackluster fundamentals into its currency. The money flow among currencies, though, remains to be influenced by risk sentiment, where the USD and JPY are favored over the others during times of risk aversion, assuming that this trend holds. However, given yesterday’s trading, its quite hard where the currencies will head following today’s NFP report.
Speaking of the NFP report, currencies as well as the equities markets would surely experience some volatility upon the release of its June result today at 12:30 pm GMT. US firms have likely slashed about 110k workers in June which would cause the US’s unemployment rate to rise to 9.8% from 9.7%. Another drop in equities would happen if this is indeed the case or worse.
The Pound is on a Mini Bull Run – July 2, 2010
Good day forex peeps! Here’s an update on the cable or the GBPUSD pair which I last posted on June 17 (kindly see my previous entry here). Contrary to what I thought would happen, the sterling pound had risen against the odds and had broken several significant resistances during the past two weeks to place itself above high ground. Zooming closer to its 4-hour time frame, the cable is seen to have been trekking a rising channel. At present, the pair seems to be approaching the channel’s resistance after it bounced from the formation’s support. But with the stochastics in the overbought area, it could move sideways or even retrace for awhile before continuing its journey north. If it weakens, a possible downside target would be the previous high just above 1.5100 or at the channel’s support. In any case, as long as the channel remains intact, the pound would most likely move higher.
Yesterday’s price action surprised a lot of traders and investors like me as the its dollar relationship moved away from its present theme. Usually, any downbeat economic updates from any of the major economies would spark some risk aversion which then would lead the traders back to the safety of the greenback and the yen. This was not the case yesterday. The higher-than-expected weekly initial jobless claims in the US (472k vs. 454k), the worse-than-projected drop in the ISM manufacturing PMI (56.2 vs. 58.9), and the sharp slide (30.0%) in pending home sales rocked the equities markets once again, causing the major indices to lose more than 1.0%. The non-dollar currencies like the GBP, however, rallied. It seems like investors had priced the US’s weak economic fundamentals back in the USD at least yesterday. Is this a start of a new trend? May be not but we will see in the coming days and months.
Today’s non-farm employment change (NFP) report in the US would surely cause some pre-fourth of July firewoks. US firms are seen to have slashed about 110,000 workers in June, marking the country’s first job loss in four months. Such drop or worse would likely place a lot selling pressure on equities again. If the ADP’s gauge is correct then the government’s actual count could come in worse than the market’s estimate. Its impact on currencies, though, is quite blurry due to yesterday’s correlation break. Nonetheless, expect some volatility among the major currency pairs during the time of the report’s release. Stay on your toes!
S&P 500 Flows with the Dow Jones and Nasdaq – July 1, 2010
In addition to the posts of my colleague regarding his analysis on the NASDAQ Composite (kindly click here to see it) and Dow Jones Industrial Average (kindly click here to see it), I also want to point out something on the S&P 500/.INX/^GSPC. After months of monitoring the movement of the S&P (my previous posts about it: 1 and 2), the index has finally broken below the neckline of its head and shoulders formation yesterday. It could now be on its way to the 1,000.00 psychological level. Moreover, if it breaches the 1,000.00 psychological support, the its next downside target could be the 950.00 price mark. But if luck strikes and the index returns above the neckline, it could once again ascend and reach the 1,131.23 level.
On the side, it is important to remember that the S&P 500 is a broader measure of the US’s economy since as its name suggests, it takes into account the 500 biggest companies in the Us from different sectors. Therefore, a downturn in the index could very well lead the US’s economy itself to another bear market.
A Head and Shoulders in the Ford Motor Company? – July 1, 2010
Ford Motors or F in the New York Stock Exchange produces cars and trucks you could see almost everywhere. However, they were one of the big companies badly hit by the 2008 financial crisis. Anyway, their stock chart was on an uptrend from 2009 up to March of 2010. Then the stocks broke down from its uptrend and formed the right shoulder of the head and shoulders formation. Recently, its stock price has also broken below the neckline of the said formation (indicated by the yellow circle) and is bound to go lower all the way to the $8.86-9.00 support levels. If that level of support is cleared out then the price could drop and hit the $6.50-6.70 price mark. On the upside, if it manages to climb back above the neckline, its immediate target would be $11.80-12.00.
Red Alert on the Dow! Watch Out! – July 1, 2010
Red alert on the Dow! Watch out! The Dow Jones Industrial Average (^DJI) is at risk of breaking down! From my last post about the index a couple of days ago (kindly check my past entry here), it has finally approached the neckline of a head and shoulders pattern. The NASDAQ, which I presented earlier today (see here), already shows a breakdown from the same formation. Now, will the Dow follow suit? Let’s hope not but there’s a big possibility that it might. The MACD in i ts daily time frame has already turned negative, suggesting a likely down move soon. Moreover, the RSI is also indicating that its downside momentum is gaining speed. So if and when the DJIA falls below the neckline support, it could slide all the way to 8,250.00. Now, that’s a huge drop! But if the neckline holds (I’m crossing my fingers that it does), the index could once again bounce and at least aim for the previous high around 10,500.00.
The recent decline in the index was due to the less-than-stellar rise in China’s leading economic indicator which only rose by 0.3% after posting a gain of 1.7% in the previous month. This was followed up by a weak US ADP employment change number that showed that US firms only hired about 13,000 new employees in June as opposed to the 60,000 expected.
Today, the major markets could once again experience some selling pressure if the US’s pending home sales have indeed dropped by 7.4% or worse in May. The US’s ISM manufacturing PMI is likewise seen to cool down to 58.9 from 59.7. This could pull the index down as well.
Tomorrow’s big time event that will surely cause some volatility on the markets will be the release of the US NFP employment change. according to the estimate of the government’s actual figure, US firms have cut about 103,000 jobs. Now, if the ADP number is correct, the NFP could also come in worse. Such would likely spark some broad based risk aversion, causing the equities and the non-dollar currencies to lose ground.
Bear Market Alert on the Nasdaq Composite! – July 1, 2010
Good day to you people! It is sad to say that I got some bad news to deliver to you. The Nasdaq composite is an stock market index in the US that has over 3,000 listed technology and growth companies. This composite, though, is not exclusively a US index since non-US companies are listed here as well. In any case, this composite is one of the three major indices, alongside the DJIA and the S&P 500, that are highly followed by investors. Yesterday, however, the index plunged with a 1.21% loss, breaking the neckline of a head and shoulders formation in the process. The week actually started off on a sour note as it opened with a bearish gap and was followed by two consecutive days of heavy losses. If the index is not able to creep back above the neckline, it would more likely drop further until it reaches its downside target at around 1,750.00. This scenario would actually place the index back on a bear market again. A couple of indicators suggest that this could happen. The first one is the MACD which already turned negative. The other one is the RSI which is now showing that the index is gaining some downside momentum. On the bright side, if risk aversion disappears and the buying resumes, the index could bounce back until it meets some resistance somewhere at 2,300.00.
Monday’s gap down was due to the poor results of China’s leading economic indicators. One of China’s leading barometers failed to get some fans when it only showed a gain of 0.3% after rising by 1.7% the other month. Yesterday’s drop, on the other hand, was due to the weak US ADP report which only showed that US firms had added 13,000 new workers as against the 61,000 expected. This weaker-than-expected result, now, could also reflect on the US government’s actual figure which will be reported this Friday. A less-than-stellar count in the NFP employment change would more likely hit the markets hard. Equities alongside the non-dollar currencies like the AUD, NZD, CAD, EUR, GBP would further lose their appeal versus the safer ones like bonds, USD and JPY.
Meanwhile, the expected 7.4% slide in the US’s pending home sales, which is due for release today at 2:00 pm GMT could likewise place some selling pressure on equities and the major non-dollar currencies as well.
Boston Properties Breakdown – June 30, 2010
From my yesterday’s post on Boston Properties, Inc. or BXP in the New York Stock Exchange (click here to see it), I mentioned that the stocks are more likely to breakdown from the 1-year uptrend and it did. The stock price gapped down during the opening of yesterdays trading session and declined by 3.1% to $72.34. It nearly tapped the $70.00-71.00 support. If the $70.00-71.00 price mark gets cleared out, the Boston Properties stocks could further slide to the $61.50 support. However, anything could happen and the stocks could ascend. In case it does, the current resistance could be the former uptrend. Once that hurdle is cleared out, the next resistance could be the red dotted line.
The Kiwi is Running on Reserve – June 30, 2010
Hello once again forex fans! Earlier today, I presented the recent price action of the Aussie-USD pair. Now, it’s the Kiwi’s turn to be on the spotlight. On this canvas is an update of the NZDUSD pair which I posted yesterday (kindly click here to see my blog yesterday). It turned out that the Kiwi lost sight of the “KitKat” that I was talking about yesterday when it broke down from a rectangle pattern. As I had mentioned, a break of the range;s support would likely send it back down towards the double bottom’s neckline – and that is exactly what transpired. Yesterday’s fire sale caused the Kiwi to be dropped like it’s hot with the NZDUSD sliding from 0.7065 to close at 0.6923. But unlike the AUDUSD in my other post today, the NZD’s double bottom lifeline has not yen been breached, giving it a higher chance of surviving the next couple days. With the stochastics in the oversold area, the pair could bounce back until it meets some resistance at the former support of the rectangle. A break of the 0.6900 psychological barrier, on the other hand, could send it down at the trough of the double bottom which is around 0.6575.
Yesterday’s breakdown was due to the downbeat results from China’s leading economic indicators. China recent leading barometers failed to impress with only a 0.3% gain after printing a surge of 1.7% during the previous month. This result sparked some fears that the present global growth may not be as robust. Remember that China is the number 2 largest economy in the world. With the US already slowing down, a cool down in China’s growth would further cap the world’s economic growth. Remember also that China sources its raw materials like commodities from countries like Australia and New Zealand. A drop, therefore, in China’s production would also limit their need for these input materials.
China’s manufacturing PMI is on deck tomorrow (July 1) at 1 am GMT. China’s manufacturing index is seen to have dipped slightly to 53.2 from 53.9. Such would add some confirmation that China’s economy has indeed cooled down a bit. If the index comes in as expected or worse, the higher yielding currencies like the NZD could suffer again. An upside surprise, on the one hand, could give the Kiwi some support. Let’s all hope for that.
The Aussie’s Hanging By a Thread – June 30, 2010
Good day forex people! Here’s an update of the AUDUSD pair which I posted back on June 22 (click here to see my previous entry). Anyway, the Aussie bullish run was cut short last night due to a slide in the global equities markets. The Aussie skidded from 0.8709 to settle at 0.8463 against the greenback in yesterday’s bloodbath. Looking at the pair’s 4-hour canvas, you can see that it has retreated even past the neckline support of its previous double bottom after reaching a high of 0.8859. The only net that is keeping it afloat now, in my view, is the 0.8500 psychological support. If this number gives way, the Australian dollar could further return its gains over the USD and the pair could fall towards 0.8300 or 0.8100. However, given the oversold conditions, traders could view the AUD as ‘cheap’ which could lead them to push it back higher. If the fear in the market dissipates and buying resumes, the pair could at least reach for the resistance just below 0.8800.
The Aussie’s slide yesterday was due China’s leading economic indicators for April cooled down 0.3% after posting a jump of 1.7% during the month prior. This unexpected figure stirred some concerns that the present global growth may not be as strong. Remember that China, as of now, is the world’s second largest economy. With the ongoing fiscal crisis in Europe and the US’s mixed economic standing, a dip in China’s economy could further add a lot of bearish pressure on the markets.
China also has a big impact on Australia because the latter is one of the former’s major trading partners. A dip in China’s economy could mean lesser exports, hence, lesser growth for Australia. Tomorrow (July 1), China is set to publish its latest manufacturing PMI figure. The index is also seen to have cooled to 53.2 from 53.9. If such decline indeed happens, the Aussie could once again take a hit. On separate news, Australia will likewise release its May building approvals and retail sales. Building approvals are projected to hold steady after falling sharply by 14.8% the other month. Retail sales on the other hand, are expected to have gained again by 0.3% on top of the 0.6% rise in April. Upbeat figures from these two accounts could support the Aussie while bleak numbers could obviously push it lower.
Boston Properties, Inc. to Break its Trend Today? – June 29, 2010
Boston Properties, Inc. or BXP in the New York Stock Exchange owns and develops office properties in the United States. Chart-wise, their stocks had been moving in a 1-year uptrend and from my last post about it (kindly click here to see my previous entry), it successfully bounced off its trend line and avoided a breakdown. However, the Asian markets were down by more than 1% during earlier’s trading session. The European markets and the US market’s futures are also pointed downwards. In that case, BXP stocks are more likely to break below it’s uptrend today. In case it does, the price could be pushed lower to the $70.00-71.00 support levels. If those price marks still don’t hold on, the next support could be $61.50. On the upside, if Boston Properties, Inc. bounces back up, it could aim for the current resistance. Once that hurdle is cleared out, the next resistance could be the 1-year high at $83.42. For the mean time, as long as the uptrend remains intact, the stocks could be headed north.
