Global Equity Monitor: Techno-Fundamental Research & Analysis

By Joel Kruger, Technical Strategist Ben Spier, David Schutz,
  • US equities remains very well bid; 100-Day SMA now key indicator
  • UK equities should find formidable resistance by psychological barrier
  • German equities break through key level; additional gains limited
  • Japanese equities at risk for major corrective declines
  • Australian equities remain well offered on rallies

US30 (Dow)

Technical : The market remainsexceptionally well bid and while we continue to project a bearishreversal ahead, there is no clear sign of any such development justyet. We had been looking for a break back below the 20-day SMA toconfirm our bias but this proved to be a faulty signal and we willnow defer to a break below the 100-Day SMA for bearishconfirmation. Until then, the uptrend remains intact.

Fundamental: US markets remain wellbid on sign that the US is poised to resume its role (for now atleast) as the catalyst of global economic growth. The Fed, however,continues to remain hesitant to declare an economic recovery withFed’s Evans yesterday calling for a third round ofquantitative easing and for the Fed to avoid a“premature” rate hike until unemployment falls below 7%or inflation threatens to top 3%. For the time being, then,investors seem poised to continue taking advantage of ultralowrates.

UK100 (FTSE)

Technical : Although the market hasmanaged to mount an impressive rebound since breaking down from2012 highs at 5,964, we see any additional rallies as limited, withthe greater risk for the formation of an interim top aroundpsychological barriers at 6,000. Look for a break back below 5,900to help confirm outlook.

Fundamental: Mining companies andbanks led a decline in UK stocks today as uncertainly overExchequer Chancellor Osborne’s budget (set for releasethis week) kept markets in limbo. As the spat over a possible scrapof the UK’s top tax bracket (50% income tax) continues,Osborne today sought to calm speculation by promising to use thenew budget to help lower-income workers.

GER30 (DAX)

Technical : While the market hasmanaged to post a significant recovery rally and extend gains tofresh 2012 highs, we still see the prospects for recent ralliesbeyond 7,000 as limited with the greater risk for the formation ofa medium-term top in favor of a deeper decline over the comingweeks. Look for a break and close back under 7,000 to confirm andaccelerate.

Fundamental: European stocksdeclined today after a sharp weekly advance last week. The move wasattributed to market consolidation. An IMF report released over theweekend said that without official support and access to ECBfunding, a disorderly Greek exit from the Euro-area would have beenunavoidable. The report comes amid speculation that the recentGreek deal has merely delayed the inevitable; a Pimco executivetoday said he expects Portugal to become a “secondGreece” in the near future.

JPN225 (Nikkei)

Technical : Daily studies arefinally starting to correct from violently overbought levels and wewould recommend that bulls proceed with caution over the comingdays. From here, short-term risks are tilted to the downside sothat technical studies can unwind from these overextended readings.Look for a pullback towards the 9,500 area before consideringpossibility of a bullish resumption.

Fundamental: The Japanese Nikkei 225Stock Average recorded its highest close since the March 2011earthquake. The yen took gains against the euro and the dollar onspeculation it had excessively dropped recently. The Yen’sstrength translated to a consolidation of recent sharp gains inJapanese equities and the market seems poised for a healthypullback before resuming further gains as the Bank of Japanencourages the outlook of exporters.

AUS 200 (ASX)

Technical : Rallies have been wellcapped by 4,300 and we look for the market to roll over yet againin favor of a bearish decline towards 4,100. A break below 4,100will then accelerate setbacks and expose 4,000 further down.Ultimately, only a daily close back above 4,315 gives reason forpause.

Fundamental: The RBA’s Stevenstoday said he sees China’s GDP surpassing Europe and matchingthat of the US in a decade. The comments boosted confidence in theAustralian dollar, which is closely correlated to the Chineseeconomy, and sent the Aussie to a 10-month high versus the Yen. Thegains in the Australian dollar were not yet reflected in Aussieequity markets, which saw losses today after recentgains.

--- 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/2012/03/19/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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