Diverging trends

Overall equities/commodities/fx performance over the last couple of weeks shows diverging trends. It all started with FX, when EURUSD rallied off 1.18, and since this week metals followed. Oil and equities remain tight together. Here's an update of short term correlations:

Metals broke risk assets relationship with copper surging to 2 months hight towards 100d and 200d moving averages. A move higher would open a 1k dollar rally for a retest of this year highs at $8000/mt:

As usually my favourite market remains Nymex gas, which as discussed earlier is bouncing off long term support line. Feels like consolidation at these levels is more likely outcome, but a rally through 200d moving average would open further upside towards low $5 and ultimately $8/mmbtu:

Oil and Equities remain well tied up together for the moment and for these markets risk still remain to the downside as we still post lower highs and only rally through 1100 in S&P would call for a further bounce towards 1115-1130 area. If such move occurs it will damage overall bearish trend, but hardly will make it a bull case scenario and rather call for consolidation and risk of further losses:

Same thing for oil... failure to push through 200d moving average still leaves us open for further losses. Short term moving averages give support to the market:

Bottom line, there is still little evidence in risk assets that there is a change in trend. Except for probably metals, risks are to the downside.

Something's gotta give PART3

Just a follow up on previous posts called "Something's gotta give"...In brief I speculated on the idea that EURUSD is to top around 1.30 and ahead of its head and shoulders target.

As discussed earlier Euro couldn't hold on to 1.30 and looks like it is set to close under 100d moving average again which does not really open much downside risk yet. Rally of 1.18 cannot be ignored and it looks a period of consolidation is on hands with downside risks as moving averages will have to catch up with the price:

A different approach - what could earnings season bring us? PART 8

Follow up on United Technologies and Coca Cola which reported yesterday. As suspected only Coca Cola ended the day in green above its channel resistance. UTX ended the day in red. While most of the weakness in stocks yesterday can be attributed to Ben Bernanke's comments, technical picture for UTX calls for further losses under $70...

Today we have many companies that report: Travelers, 3M, Caterpillar, AT&T and Microsoft. Technical picure one by one.

Travelers: rangy market, simialr to IBM, however since about 4 month we have troubles staying above 100d and 200d moving averages. Looks like earnings might disappoint and we might test lower support, but there is no clear sentiment for breaking through range:

3M: 200d and 50d moving averages support, currently in corrective up channel. Bias is to the upside above $80, but momentum has to turn higher for any upside potential:

 Caterpillar looks strong as we remain above all the averages. If we do not fall under support line, further advances are expected:

AT&T is the looser of the pack as market is making lower highs in each move. Expect earnings to disappoint:

Microsoft also remains in the down trend and only close above 26 might open small upside towards $28, but the risk is too big to my mind:

Overall DJIA is lacking direction, however there more components in the index that stand to loose rather then rise. Probably economic data today might help the market either way. Nevertheless the bias for this index remains to the downside. Happy trading!

A different approach - what could earnings season bring us? PART 7

I continue on my quest to provide chart analysis ahead of earnings for the companies in DJIA. Today we will have United Technologies and Coca Cola.

Both companies continue trading in downside channel despite yesterday's strength. UTX:

Need to see close through 68 to invalidate down trend. Up trend is only to resume if 70 is broken. Market has too many obstacles ahead: 100d, 200d and uper bollinger band. Momentum is turning down so there is risk we can see gap up on the open and market to end on the lows of the day as it happened with other stocks in the index.

Coca Cola:

Coca Cola is trading in well defined downtrend and only break through 54.36 (200d) will open significant upside. May be, just maybe following PepsiCo results recently we can have this stock finish higher on the day.

A different approach - what could earnings season bring us? PART 6

Well, so far so good for getting the direction and obviously not for the markets... IBM was down almost 5% in premarket after the results... still it is important to see normal hours trading, but this company will open sharply down. Today we will have Johnson and Johnson and basically the strategy for this market stays the same. Classical lower high and down trend is to resume if support line is broken:

So far none of the companies in DJIA showed positive post earnings performance despite earnings coming in better then expected. Bear market?

Something's gotta give PART2

Last week in the publication "Something's gotta give" I speculated on possible reversal in EURUSD. While technically head-and-shoulders in EURUSD targets roughly at least 1.3150 (see the chart below), but lack of deflation talk and bearish momentum/technical formations in other assets classes makes me think EUR to top ahead of minimum target and ideally around 100d moving average.

Intra-day developments with this currency pair  show signs of trend exhaustion as it failed to breach 1.30 again. The question is would you wait for head and shoulders target to be reached or take your profits now after such a rally? This rally in itself was short covering rather then something big. If I was long EUR, I personally would be frustrated to see profits evaporate. Therefore I think we might in for a top for the time being and relationship among risk assets is to resume again. And as posted last week there are more risks to the downside.

There is obviously risk we close above 1.30, but risk/reward for short EUR trade looks interesting...