Global Equity Monitor: Techno-Fundamental Research & Analysis

By Joel Kruger, Technical Strategist
  • US equities holding above 20-Day SMA for now
  • UK equities trigger short-term double top
  • German equities have yet to close below 10-day SMA in 2012
  • Japanese equities expected to be very well capped by 200-Day SMA
  • Australian equities showing relative weakness after already establishing below 10/20-Day SMAs

US30 (Dow)

Technical : The market remains verywell bid but is starting to show some signs of exhaustion afterrolling over in the previous week. The 20-Day SMA is key here andwhile the price holds above this shorter term moving average, theup-trend will remain intact. However, a break and close below the20-Day SMA will suggest that the market is ready for a moresignificant corrective pullback which would further accelerate on adrop back below the previous higher low from January 30 at12,528.

Fundamental : Against the backdrop ofan improved job market and bolstered US bank lending, this pastmonth (January) has turned out to be the best January for the USstock market in 15 years. The hike in equities has directlycorrelated with more optimistic outlook for the US economy in theface of improving economic data. Market participants are nowwondering if Mr. Bernanke and company have been a little toodownbeat on their assessment and if a policy reversal may be closerthan has been intimated by the Fed.

UK100 (FTSE)

Technical : While the trend in thismarket remains bullish for the time being, we are starting to seesigns of a potential bearish reversal. A closer look at the dailychart shows the trigger of a double top with the break below theneckline by 5,848, opening a measured move objective down by 5780over the coming sessions. A close back below the 20-Day SMA will berequired to accelerate further and expose more significant supportby the January 30 previous higher low at 5,649.

Fundamental : The Confederation ofBritish Industry has come out with a statement projecting gains inthe UK economy in 2012 as the UK avoids a recession . Indeed, risksentiment appears to be growing in the UK, which along with the USwas the first country to enter the current crisis and may be among the first toemerge. Elsewhere , Scottish investors have startedbuying shares in US banks, a sign that the UK could join the US ineconomic recovery. Increased QE from the BoE could be also becontributing to the pickup in sentiment.

GER30 (DAX)

Technical : This market has beenvery well bid since late 2011 and continues to remain supported ondips towards the 10-day SMA. However technical studies are startingto look a little stretched and we would warn of the possibility fora bearish reversal over the coming sessions. We have not yet seen adaily close below the 10-Day SMA in 2012, and a close below thisshort-term SMA will likely be the trigger for the anticipatedpullback.

Fundamental : DAX has joined Europeanand global risk optimism following the Greek deal. Solid debtauction results out of Germany haven’t hurt either. Movingon, traders are talking about the potential Vodafoneacquisition of Cable &Wireless , a deal that couldimpact markets around Europe. Shares in both companies were higheras a result.

JPN225 (Nikkei)

Technical : A strong bearishreversal day from Friday shows the market at risk for a moresignificant pullback over the coming days with daily studiesrolling over from overbought territory. Look for the 200-Day SMA by9,000 to act as a formidable resistance zone going forward, andonly a clear and sustained break back above the longer-term SMAwould delay our bearish outlook from here and give reason forpause. As such, any rallies above 9,000 should be used asformidable sell opportunities, with only a break above 9,100 tonegate. Back under 8,885 will confirm outlook and acceleratetowards 8,750 further down.

Fundamental : Despite the recentgreater than expected drop in GDP, Japanese markets have beenrallying on Greek optimism. A few significant Japanesecompanie s haven’t beenriding the wave though, with OlympusCorp projecting an annual loss of 32bill ion yen ($412million), worse than analy st estimates. Also, TokyoElectric Power Co. widened its 2012 loss forecast as compensationand clean-up costs rose after the Fukushima nucleardisaster.

AUD200 (ASX)

Technical : While all of the othermajor global equity markets have done a good job of holding abovetheir 10/20-day SMAs, this market has already broken down belowthese moving averages to warn of a more significant bearish shiftin the structure. From here we look for the formation of amedium-term lower top somewhere around the 200-Day SMA just over4,300 ahead of a fresh downside extension back towards multi-daysupport by 4,000 over the coming weeks. Ultimately, only asustained break back above the 200-Day SMA would negate outlook andgive reason for pause.

Fundamental : We’ve seen somesolid development out of Australia recently with the RBA’sdecision to hold rates steady surprising many. However, the economycontinues to suf fer from weakness incorrelated Asian marketswith the Aussietelecommunication sector taking a hit fromS ingaporeTelecommunications report of a 9.6 percentfall in third-quarter earnings . Elsewhere, Australia & New Zealand BankingGroup, has released a plan to eliminate about 1,000 jobs. TheAussie banking sector has been hit hard by a slump in lendinggrowth.

--- Written by Joel Kruger, Technical Currency Strategist

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DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/market_alert/2012/03/05/Global_Equity_Monitor_Techno-Fundamental_Research.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

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