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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 looking top heavy; pull back seen ahead
  • UK equities locked in quiet consolidation
  • German equities looking for close back below 20-Day SMA
  • Japanese cooling from parabolic price action
  • Australian equities well capped by range highs; deeper setbacks ahead

US30 (Dow)

Global_Equity_Monitor_Techno-Fundamental_Research_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.

Fundamental: Markets continue to be well supported despite recent setbacks, with ultralow rates from the Fed thought to be providing an added push to sentiment. Markets await the impact of US housing data today. Meanwhile, a number of large banks including Wells Fargo and Bank of America are set to get protection for $308 billion of home equity loans that they hold.

UK100 (FTSE)

Global_Equity_Monitor_Techno-Fundamental_Research_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: Despite losing ground in recent sessions, UK stocks are rallying just as much as the rest of the world in the best start to a year since 1998. This comes despite analysts cutting earnings forecasts for a number of key companies. The world’s largest bank by market capitalization HSBC today said it is on a “clear trajectory” to its targets, despite posting profits that missed analyst estimates.


Global_Equity_Monitor_Techno-Fundamental_Research_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: German markets are down after the G20 leaders refused to commit to encouraging IMF funding for the Greek bailout. Germany has pushed for increased IMF involvement. Meanwhile, European Central Bank President Draghi today said he expects banks to increase credit supply as confidence returns to financial markets. Elsewhere, automotive giant Volkswagen is reportedly close to buying the remainder of shares in Porsche that it does not already own.

JPN225 (Nikkei)

Global_Equity_Monitor_Techno-Fundamental_Research_body_jpn225.png, Global Equity Monitor: Techno-Fundamental Research & Analysis

Technical: Daily studies are finally correcting from violently overbought 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 these overextended 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:Stocks have come off hard after skyrocketing on the back of increased quantitative easing from the Bank of Japan. The freefalling Yen is seeing its steepest drop in two years, a development which is expected to continue bolstering the outlook of exporters into the coming weeks. Elsewhere, the last Japanese maker of computer-memory chips Elpida filed for bankruptcy in the nation’s biggest such case in two years. The company recently failed to win a second government bailout.

AUS200 (ASX)

Global_Equity_Monitor_Techno-Fundamental_Research_body_aus200.png, Global Equity Monitor: Techno-Fundamental Research & Analysis

Technical: Rallies have been well capped above 4,300 as we had anticipated and the market is in the process of rolling back over in favor of a bearish decline towards 4,165. A break below 4,165 will then accelerate setbacks and expose 4,100 and the 4,000 further down. Ultimately, only back above 4,315gives reason for pause.

Fundamental:Australian markets have weakened as the Greek situation weighs on Asian market sentiment. Moreover, correlated New Zealand last night unexpectedly reported a trade deficit in January. Kiwi exports have fallen and an airline recently imported a large aircraft which weakened the currency.

--- Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email Follow me on Twitter @JoelKruger

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