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Global Equity Monitor: Techno-Fundamental Research & Analysis

Global Equity Monitor: Techno-Fundamental Research & Analysis

Joel Kruger and David Schutz,
  • US equities still bid for now but could roll soon
  • UK equities locked in quiet consolidation
  • German equities stall ahead of key resistance; deeper setbacks ahead
  • Japanese equities on fire but surge looking exhausted
  • Australian equities rally but moves expected to be well capped

US30 (Dow)

Global_Equity_Monitor_Techno-Fundamental_Research_Analysis____body_us30.png, Global Equity Monitor: Techno-Fundamental Research & Analysis

Technical: Remains very well supported on any form of a dip with the 20-Day SMA continuing to prop. However, the market is trading by multi-week highs and daily studies are starting to track in overbought territory to warn of short-term structural shift. But, a close back below the 20-Day SMA will be required to trigger bearish price action and open deeper setbacks. Initially, look for a break below Thursday’s low to get reversal prospects going.

Fundamental: Markets were well bit today on risk appetite bolstered by an improving housing market. Market sentiment is expected to get another boost from today’s new home sales data. On the flip side, a dispute between America’s second largest lender Bank of America and government-run Fannie Mae is escalating as the two argue who will pay for defective mortgages. Meanwhile, Middle Eastern developments continue to influence commodity markets with the US today announcing its intention to assist India to avoid Iranian oil by negotiating with other suppliers.

UK100 (FTSE)

Global_Equity_Monitor_Techno-Fundamental_Research_Analysis____body_uk1000.png, Global Equity Monitor: Techno-Fundamental Research & Analysis

Technical: While the trend in this market remains bullish for the time being, we are starting to see signs of a potential bearish reversal with daily studies looking stretched. A close back below the 20-Day SMA will be required to accelerate further and expose more significant support by the January 30 previous higher low at 5,649. A daily close back above 6,000 negates and gives reason for pause.

Fundamental: UK markets remained limited today as markets absorbed somewhat weaker than expected UK GDP numbers from Q4 2011. The economic contraction was attributed to scaled back business investment. BOE members were quoted today saying that they are “completely open” to the possibility of expanded easing measures in the future.


Global_Equity_Monitor_Techno-Fundamental_Research_Analysis____body_ger30.png, Global Equity Monitor: Techno-Fundamental Research & Analysis

Technical: No major signs of reversal just yet despite daily studies tracking into overbought territory on the daily chart. Still, while the up-trend remains intact, there are risks for a significant short-term pullback ahead. Look for a break below the 20-day SMA to confirm short-term shift and open the door for an acceleration of declines. Above 7,000 delays bearish outlook and gives reason for pause.

Fundamental: The telecommunications sector led European stocks higher today, breaking a three-day streak in the red.

Europe’s largest automaker Volkswagen reported record 2011 profit as demand increased for sport-utility vehicles. Bloomberg today estimated that of the 212 companies on the EU Stoxx 600 that have reported quarterly earnings so far, 108 have missed analyst estimates, while 92 have beaten them.

JPN225 (Nikkei)

Global_Equity_Monitor_Techno-Fundamental_Research_Analysis____body_jpn225.png, Global Equity Monitor: Techno-Fundamental Research & Analysis

Technical: Daily studies are now violently overbought at current levels and we would recommend that bulls proceed with caution over the coming days. From here, short-term risks are tilted to the downside so that technical studies can unwind from overbought readings. Look for a pullback towards the previous resistance now turned support by the 200-Day SMA in the 9,000 area before considering possibility of a bullish resumption.

Fundamental: Japanese markets remain incredibly well bid on a free-falling Yen which has encouraged exporters’ outlooks.

The Japanese currency fell to a three-month low against the Euro as signs of global growth bolster higher-yielding currencies. Market sentiment received an added boost as applications for unemployment benefits in the U.S. reached a four-year low overnight.

AUS200 (ASX)

Global_Equity_Monitor_Techno-Fundamental_Research_Analysis____body_aus200.png, Global Equity Monitor: Techno-Fundamental Research & Analysis

Technical: Setbacks have been well supported for now by 4,164 and the market has once again found renewed bids to retest the recent multi-session highs by 4,315. Still, we see risks for more consolidation rather than any meaningful upside break beyond 4,315 and would recommend selling rallies towards the latter in favor of a range trade.

Fundamental:The RBA’s Stevens today said Australia’s benchmark interest rate is “about right for the moment” in a bid to dispel concerns that Europe’s debt crisis will balloon to include Australian markets. The RBA last month unexpectedly declined to lower its benchmark interest rate, which is the highest in the developed world at 4.25 percent. Australia continues to benefit from a bullish commodity market and a record-high harvesting season.

--- Written by Joel Kruger, Technical Currency Strategist

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.