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Dow Jones & Nikkei Key
Market Calls Plus EURUSD
Strategy Review
with Peter Esho April 13, 2014
Well it's expected today, another busy week on markets this week as the
US market goes into reporting season. We made two varied key calls last
week in our video. Our first call was that we thought that the DOW Jones
industrial average would struggle to exceed its all-time high levels, and we
actually saw the DOW come off in the order of about 500 points since we
made that call. In fact, we wrote a note on the blog explicitly calling the
DOW lower on Monday.
The DOW Jones industrial average is coming from its all-time high. We
actually think that the US market is set for a decline somewhere in the
order of about 5 or 10 percent, perhaps over the next four to six weeks.
That's a key market that we’ll be watching. It's a key market that we've
been recently discussing.
We also made a call on the Nikkei index. We said that the Nikkei index in
Japan was looking quite toppy, and that the technical levels were
suggesting more downside. We actually saw the Nikkei also fall in the
order of about six and a half percent.
The Japanese market, the Nikkei, is also looking under pressure. There is
perhaps somewhere in the order of about 4 to 5 percent downside on the
Nikkei. We've been updating that in our live market analysis which runs
every Wednesday.
This week the market will be watching Chinese data very closely. What we
have seen over the past few months is Chinese data pointing to the
downside. We haven't really had any key data that’s surprise on the
upside. The most recent data to have come out around the trade balance
again disappointed in terms of composition. What we have seen over the
past six months or so is market warming down, really revising down its
GDP estimates for the Chinese economy.
The quarterly, Chinese GDP numbers are up this week. The market is
expecting an annualized GDP rate of about 7.4 percent. That's going to be
really the key trigger event, particularly for the Aussie market.
On the Aussie market we’re seeing support for the ASX 200 index of about
5300. We think that will hold, but really the Chinese data is on the
wildcard.
Our key trade for this week is the Euro. We think that Draghi’s recent
comments need to be backed by action. There will be pressure on Draghi
and the ECB if we do see the Euro-Dollar at 139ish. So we think there’s a
very good risk reward ratio at the moment to be short.
The Euro --- there’s definitely an aversion away from risk this week,
particularly given the way that technology stocks did trade in the US
market and on the NASDAQ last week. We think it’s not a bad idea to be
long USD. We think the best trade out there at the moment, on a risk
reward basis, and given the liquidity in all the information out there that we
know --- going short the Euro.
We'll actually publish a note on the Invast blog with our key levels. Our
technical levels are put very broadly. Just as the way we made clear our
preference to be short, the DOW and short the Nikkei last week, our
preference this week is to be long USD and short the Euro. We'll update
the blog.
Make sure you check in to the live market analysis and the webinars this
week. You will now receive a link on your screen as to how to register into
those, and we hope you have a very successful trading week.
Register for our webinars here - invast.com.au/resources/webinars.aspx