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Weekly

.

Journal

08 Aug 2010

NFP has given the market a reality check, although very few instruments that I monitor had convincing bearish prints

at the weekly close. All except the ES broke through key levels early in the week and have held above, though gains remain precarious at this stage. This week, the major market moving events for the US and EU indices kick off on Tuesday, with FOMC. The weeks ends with EU GDP and US CPI, along with advance retail sales.

6E long abv 1.3125 (!)

ES nxt rez 1130, 1147 (!)

DAX neutral to long blw 6400 (!)

CL buy dips abv 80 (!)

DAX neutral to long blw 6400 (!) CL buy dips abv 80 (!) Calendar GMT Event

Calendar

GMT

Calendar GMT Event Mkt Risk Exp Prev Remarks

Event

Mkt

Risk

Exp

Prev

Remarks

Monday

0130

NZ

Home loans Jun

Ccy

Med

1.9

NZD pairs

 

0600

EU

German trade balance

C/E

Med

12B

9.7B

DAX, ESX, EUR pairs

 

0830

EZ Sentix investor confidence Aug

Equ

Med

2.0

-1.3

DAX, ESX intraday

 

2301

UK

RICS house prices Jul

Ccy

Med

5.0

9.0

GBP pairs

Tuesday

0000

JP

Cabinet office monthly econ report

Ccy

High

JPY pairs

     

BoJ rate decision

C/E

High

0.10

0.10

JPY pairs, leading equity indices (priced in)

 

0130

AU

NAB business confidence Jul

Ccy

Med

8

AUD pairs, watch conditions

 

0600

EU

German CPI Jul final YoY, MoM

C/E

Med

1.1

1.1

EUR, DAX, ESX, watch harmonized figures

 

0830

UK

DCLG house prices Jun YoY

Ccy

Med

9.8

11.0

GBP pairs

     

Visible trade balance Jun

Ccy

M/L

-7.8B

-8.06B

See above, likely priced in

 

1215

CA

Housing starts Jul

C/E

Med

184K

192.8K CAD pairs, ES intraday (priced in?)

 

1815

US

FOMC rate decision Aug 10

C/E

High

0.25

0.25

USD pairs, indices (priced in, watch stmnt)

 

2301

UK

GBP consumer confidence Jul

Ccy

Med

61

63

GBP pairs

Wednesday

0030

AU

Westpac consumer confidence Aug

Ccy

Med

 

11.1

AUD pairs

 

0830

UK

Claimant jobless claims

C/E

High

15K

20.8K

Z, GBP pairs, watch claimant count rate

 

0930

 

Quarterly inflation report

C/E

High

   

See above, priced in

 

1230

CA

Int'l merchandise trade Jun

Ccy

Med

 

0.5B

CAD pairs

   

US

Trade balance Jun

C/E

Med

-42.2B

-42.3B

Indices, USD pairs, priced in

 

1800

US

Budget statement Jul

Equ

M/L

 

-180.7B

See above

Thursday

0130

AU

Unemployment rate Jul

Ccy

High

 

5.1

AUD pairs, watch change for 20K

 

0500

JP

Consumer confidence Jul

Ccy

M/L

43.9

43.5

JPY pairs

 

0800

EU

ECB monthly report Aug

C/E

Med

   

DAX, ESX, EUR pairs, priced in

 

0900

 

EZ industrial production Jun YoY

C/E

Med

 

0.7

DAX, ESX, EUR pairs, priced in

 

1230

US

Import price index Jul YoY

Equ

Med

0.4

-1.3

ES, TF, YM intraday

 

2245

NA

Retail sales Jul

Ccy

Med

0.5

0.4

NZD pairs, watch ex auto/inflation

Friday

0600

EU

German GDP Q2 YoY

C/E

M/H

2.4

1.6

DAX, ESX, EUR pairs, preliminary

 

0900

EU

EZ GDP Q2 YoY

C/E

High

1.4

0.6

See above

 

1230

US

CPI Jul

C/E

High

1.2

1.1

All markets, intraday, watch core/ex-

     

Advance retail sales Jul

C/E

High

0.4

-0.5

See above

 

1355

US

Univ. of Michigan confidence Aug

C/E

Med

69.8

67.8

See above, preliminary

Another word about EURJPY.

Will basing continue, signaling increasing commitment to risk?
Will basing continue, signaling
increasing commitment to risk?

Basing continues, but the relative weakness of EUR compared to other key currencies (except USD of course) suggests the level of commitment to risk required to reverse bearish sentiment in global markets is still lacking. This is confirmed by just about every piece of economic data and punditry in the MSFM. Low volume should continue, with market internals supporting a summer range. Volatility in this context will be sharp and unpredictable, I believe. Last week's culmination in poor US jobs data has given everyone pause. Some are speculating this will give the Fed that much more reason to continue suffocating the USD. The thinking is that the single best option for repairing the US economy at this point is through export-led growth -- because it could be a very long time before the job market and consumer spending recover. This week we have a full calendar. I'll be watching Friday's growth and inflationary data in particular.

The Lonely Trader

Disclaimer: All information is provided as market commentary and not as investment or trading advice. The Lonely Trader expressly disclaims liability, without limitation, for losses or damages resulting from reliance on such information. Past results are no guarantee of future performance. Please consult a registered financial advisor before risking your capital.

Euro weekly studies

Weekly range extreme Will the euro establish a new range of accepted value? Weekly range
Weekly range extreme
Will the euro establish a new
range of accepted value?
Weekly range extreme
Low volume on the ascent
continues, except that buyers
have initiated trade above
1.3125/30, creating the conditions
(but not a guarantee) that a new
range will be established between
1.3 and 1.35. Possible upside to
1.37, but doubt we'll get there this
week.

Euro Sept contract has broken and held above key resistance. The bounce at 1.3125 suggests a move to 1.35 is underway. This week the odds of a touch are about 30%. My question is whether a new range will be established above 1.3. How confident I am in answering this question will be the cornerstone to my trading strategy for the rest of the quarter. The likely range this week will be between 250 and 370 pips. The high extreme projection is 1.3550. The low extreme projection is 1.2850. I have revised my guess that the euro is in the process of establishing a range between 1.5 and 1.3 with possible stabs at 1.36xx and 1.27xx. My bias has shifted to long above 1.3125/30, but I'm sure the euro will find some way to embarrass me. Long term (6m to 1yr), my bias is to the downside, targeting 1.2000 and 1.1500 eventually.

The Lonely Trader

Disclaimer: All information is provided as market commentary and not as investment or trading advice. The Lonely Trader expressly disclaims liability, without limitation, for losses or damages resulting from reliance on such information. Past results are no guarantee of future performance. Please consult a registered financial advisor before risking your capital.

ES90 weekly studies

Weekly range extreme Weekly range extreme
Weekly range extreme
Weekly range extreme

ES Sept contract is rotating higher on low(er) volume. ES firmed above 1100 last week with momentary downside probes. 1130 has not yet given way, so my bias is neutral going into this week. A break of 1130 opens up 1147, which is my projected weekly high -- note that this projection is different from the weekly extreme high at 1155. The quick recovery after Friday's NFP numbers suggests there is significant support for equities -- whether due to earnings, a brighter corporate outlook and continued unwinding of toxic assets, confirmation of a continued accommodative monetary stance, or whatever. My bias is still short below 1130, long above 1147 -- but of course I'm talking about my bias only. I would not put on a short position here. Range studies put a close above 1130 by Wednesday at 40%, 18% higher than last week. Odds of a touch at 1130 before Wednesday are 25%. Odds of a touch at 1100 are 59%. Range extremes are at 1155 and 1085. Two week HVNs at 1120, 1118.50 (POC), 1110.50, and 1107.50. The distribution below 1118.50 is not very well defined. Last week's range was narrower than the week before, at 26 points. My studies indicate primary range projection of 32 points and an alternate of 45 points, give or take a few.

The Lonely Trader

Disclaimer: All information is provided as market commentary and not as investment or trading advice. The Lonely Trader expressly disclaims liability, without limitation, for losses or damages resulting from reliance on such information. Past results are no guarantee of future performance. Please consult a registered financial advisor before risking your capital.

DAX weekly studies

I have NO IDEA where this market is going, other than to say that the
I have NO IDEA where this market is going, other than to
say that the consolidation will continue until it doesn't .
My bias is long, but watching HLs and LHs very closely.
Composite volume profile isn't giving any clear signals.
Very messy picture here, but intraday looks much nicer
and that is the time horizon I call home with DAX.
Range extreme 6690 ↗
Likely range limit 6510
Likely range limit 6110
Range extreme 5980

DAX Sept contract remains volatile and range bound. Volume over the past four weeks has been consistent and on the low side, but higher high have printed and a break of 6400 looks to be close at hand. I continue to believe that as long as this index remains above 5600, the uptrend is still intact. My bias this week is for a correction within the range. Short term resistance levels are 6410 and 6500, with 6690 being the extreme of my weekly range studies. Short term support levels are 6250 (technical), 6110 (technical), 6060 (rejection low), 6000 (range pivot), 5910 (rejection low), and 5800 (responsive buying at major swing low). Two week key HVNs roughly in the areas of 6345, 6300, 6280, 6221, and 6178. It's important to keep in mind that currently the DAX sits in the middle of a very large range -- from the 2008 range high to the 2009 range low.

The Lonely Trader

Disclaimer: All information is provided as market commentary and not as investment or trading advice. The Lonely Trader expressly disclaims liability, without limitation, for losses or damages resulting from reliance on such information. Past results are no guarantee of future performance. Please consult a registered financial advisor before risking your capital.

Crude weekly studies

Weekly range extreme Weekly range extreme
Weekly range extreme
Weekly range extreme

Crude will continue to lose ground in a weak global economy, but buying continues. The breakout from the June/July range has held, with a rejection at 80.04 after Friday's NFP release. That said, the close was bearish from a technical point of view. Range studies suggest not more than 3.5 handles to the upside and not more than 4.5 handles to the downside, making 84.10 and 76 the projected extremes for the week, with 83 (last week's high), 80 (key support level), 76.90 (supply and support), and 76 (last week's swing low and possible range pivot) the only significant intermediate technical references. A clear break to the upside targets 85. A break to the downside targets 72.

Comments and ideas welcome. Insults appreciated, as long as they are clever.

Seriously.

If you have feedback or helpful

resources, let's hear it!

Jay Schneider -- FX and futures, range studies San Diego Area, USA Email Blog

The Lonely Trader

Disclaimer: All information is provided as market commentary and not as investment or trading advice. The Lonely Trader expressly disclaims liability, without limitation, for losses or damages resulting from reliance on such information. Past results are no guarantee of future performance. Please consult a registered financial advisor before risking your capital.