Analysis from Broco - page 2
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
The market demonstrated a strong growth of volume over the week closure. Up-trend of the market is seen again On Friday the market canceled transfer to correction and returned to up-trend state; broad indices showed new 10-months' maximum values. S&P 500 and NYSE were leaders of growth and each added 1.9%. Dow index followed them with the growth 1.7% and NASDAQ with 1.6%. The index of the best growth stocks, IBD 100, grew for 1.7% on Friday and 1.2% according to the results of the week. The volume of major indices sharply increased because of mass expiry of options enhanced trading volume. Up-ward trend has renewed its movement. According to our system of analysis, buying of growth stocks is quite acceptable, when they leave correct basis or other key points (for example, after bouncing from 10weeks' average value) Still there are the reasons to be careful. As we told the last week, last bull markets which directly followed large bear markets, resulted in large deep corrections lasting longer than the last current up-ward tendency. S&P 500 still has five distribution days last weeks though Friday took one day away for NYSE. Stocks started their increase at once on Friday's opening in the list of all four major indexes. Positive news about real estate market pushed the share. National Association of real estate agents informed that after market sales of houses moved up for 7.2% in July. It was the fourth growth in succession. News was above estimations which went around 2% growth. Stocks of house-building industry sharply increased and the growth amounted to 5% approximately. While shares with weak fundamental properties such as Toll Bros. (TOL) and KB Home (KBH) each added around 3%; the stocks made it in the volume under average. The best performance was demonstrated by the member of IBD 100 list – Brazil company Gafisa(GFA). It made a beeline in volume for 10%, twice as higher as average. The whole rating of this company is 99 – the best possible rating. Though stocks are far from the point of correct entrance. The market was also supported by speech of Federal Reserve Chairman. According to him, economy's return to growth within the nearest time is quite probable. Oil prices went up to highs of 2009 year. Expectations and forecast Despite an extensive growth and optimism of Friday, general market situation is evaluated in terms of instability and high volatility. A considerable 2days' decline followed by a strong growth – all this often points its vicinity to the market's peak and as a result, to reversal. I still expect a durable deep correction. Next week trace how market behaves as strong news is published – in particular, books of durable goods and consumer trust.
October 17, 2009. Energy Market Weekly Review
On Friday, oil prices reached their maximum level, of the last 12 months, on Friday the price of the barrel of oil rose by $0.95 to the level of $78.53 per barrel on the New York Mercantile Exchange, so oil prices over the past eight trading days have increased by 12,9%, thus for the past week by 9,4%.
If we consider the fundamental factors carefully, we can see that they show that the energy market instruments are gaining strength. US dollar falls rapidly against the basic currencies basket, investors seek refuge from possible and further decline of the US dollar purchasing power and find it, in particular, in oil.
Investors express extremely high optimism due to emerging of macro-economic data. On Friday, the Federal Reserve reported an increase in industrial production in September by 0.7%, the rate exceeded the experts consensus forecast.
Industrial production growth has given confidence to traders, because this field of business consumes about 65% of raw materials in the country. The Ministry of Energy has given information on commercial stocks of crude oil and petroleum products on Thursday, they can be characterized as fairly positive. For the week that ended on October the 9th, commercial crude oil stocks increased by 0.4 million barrels, whereas petrol stocks have decreased by 5.2 million barrels; the Ministry data showed the most significant decrease in petrol stocks over a year. Petroleum processing sector's capacity declined from 85% to 80.9%, due to scheduled maintenance of part of US oil refineries. Perhaps the declining trend in petroleum and distillate will persist for several weeks, which would also support price levels.
US Banks oil traders show rather aggressive interest in oil over the last months of this year. In their opinion the price of a barrel could go up to $ 95 by the end of 2009, if the US government, Europe and Asia continue to stimulate national economies. Yet OPEC is not going to increase production volumes of raw materials after significant cuts, that will also support prices. Nearest OPEC cartel meeting is scheduled for December 22 in Angola, it is clear that by this date, we can see a few more bursts of buyers activity.
Oil found support level around $ 75 and due to the unusually low temperature in October settled in the north-eastern part of the United States, oil traders expect increased demand for heating oil by US consumers as well as speculators. DTN-Meteorlogix predicts storms coming in the north of the US in the beginning of a new week, that would support the speculators. In the short-term period Brent crude oil will stay below $76.2 with a possible rebound to $72.0 and further to $79.98.
Dmitry Stepanov, GK Broco analyst
EUR below 2008 closing level
In January currency market was focused on financial problems of European countries and their budget deficits on the first place. Late last week we have learnt that Standard & Poor's does not count British banks among the most low risks banking systems. Weakness of major American stock indexes and oil prices below $75 a barrel boosted USD growth by the end of the third week of January . US fourth quarter GDP data also contributed to dollar's advance. GDP has growth 5,7% against the third quarter of 2009 year on year, US Bureau of Economic Analysis, Department of Commerce reported. This numbers turned out much better, than analysts expected.
Results and Current Situation
In 2009 the major trend was appreciation of currencies dependant of raw materials export (AUD and NZD) and USD decline. This tendency has created a misleading picture of EUR strength. In fact AUD and NZD were also often bought for EUR. Absence of objective basis for EUR/USD growth in November resulted in market going below 1.50. Technical trend of the last quarter of 2009 - lowering from 1.4350 - sent EUR/USD towards the 2008 closing - 1.40. It was only owing to EUR/GBP cross rate trade against EUR, that GBP/USD held near the 1.6150 -1.6350 area in January . EUR/GBP decline dynamics did not reflect the USD growth, but was a EUR depreciation factor, this allowed GBP/USD to stay at 1.60 by the end of January trade.
Currencies dependant on raw materials export - AUD and NZD - declined from key levels. AUD closed below 0.90 at 0. 8835, аnd NZD finished the month at 0.70. Closing above 0.88 and 0.70 came as a result of EUR/AUD EUR/NZD cross rate lowering and gold sinking below 1100 an ounce. USD/CAD grew to 1.0705 on oil decline.
January EUR/USD closing shows, that for the period from the beginning of 2009 USD added 0,78%, from 1.3960 to 1.3850. USD appreciation is not yet big enough for EUR/USD to fall substantially in the first February week.
Expectations, Prognosis
In the February 1-5 period currency market will have a hard time choosing further direction. Market participant might wish to take profit on some long USD positions in the beginning of the month. Fourth quarter financial statements of banks and companies will become a major factor influencing trading decisions. Traders will pay special attention to JPY movements. In January USD/JPY kept moving downward and closed in 0.90 filter between 0.9012 and 0.9031.
Major currency pairs range:
EUR/USD – 1.3788-1.4095, attempts to grow, potential declin
GBP/USD – 1.3788-1.4095, attempts to grow, potential declin
USD/CHF – 1.0431-1.0712, attempts to decline, potential growt
USD/JPY – 0.8731-0.9188 attempts to grow, potential declin
AUD/USD – 8750-9088 attempts to grow, potential declin
USD/CAD – 1.0431-1.0712, attempts to decline, potential growt
Brent –68.88-73.50 consolidation
Currency Market Review 2/06/10 - 2/12/10
EUR below 2008 closing
The first February week ended with considerable EUR lowering and USD growth. Banks' buying USD against EUR, AUD and NZD in the end of the week was spurred by 5% decline of indexes on Lisbon and Madrid exchanges. Continuing concerns over swelling budget deficits and sovereign debts of EU member countries bolsters banks' appetite for USD. Currency market participants don't take EUR for a serious alternative to USD. Markititraxx Europe Index climbing to the 9-week maximum has further propelled USD against EUR. Michal Gomez, a senior vice president at Pimco (Pacific Investment Management Co) one of the largest investment companies in the world, advices to keep away from EUR, Euro zone and some of the developing European countries’ currencies
Results and Current Situation
During February 1- 5 trading week EUR has lost 1.44% against USD. EUR/USD slid two figures lower from 1.3850 level to 1.3650 by session closing Friday. Increased USD buying resulted in lowering of the currencies dependant on raw materials export, AUD and NZD. They have lost 100 points. At the same time CAD remained relatively strong against USD. USD/CAD growth for the week comprised 10 points. CAD received support form the oil market, which managed to stay above the $70 level.
GBP turned out to be the biggest looser last week. By trade closing on February 5th GBP has lost 2.15%, which was reflected in GBP/USD decline of 345 points, from 1.5975 to 1.5630.
The major factor of last week's trade was a tendency of decline not only against USD but also against JPY. Growing interest in buying USD against other currencies could not hinder JPY appreciation. By the end of the week JPY added 0.034% against USD. USD/JPY has gone from 0.9025 down to 0.8935. The general JPY growth against other currencies in the market surpassed USD growth. This factor is a strong signal of further weakening of EUR, GBP, AUD and NZD.
Expectations, Prognosis
In the February 8-12 period currency market will remain pressured by increased buying of Japanese and American currencies . Possible attempts of EUR, GBP and other currencies buying in the first half of the week will be countered with large JPY purchases by cross rates. JPY buying will intensify EUR decline and USD growth.
Major currency pairs range:
EUR/USD – 1,3350-1,3769, declin
GBP/USD – 1,3350-1,3769, declin
USD/CHF – 1,0669-1,0888, growt
USD/JPY – 0,8831-0,8969, declining consolidatio
AUD/USD – 0,8331-0,8769, declin
USD/CAD – 1,0631-1,0869 growing consolidation
Brent – 68,88-71,50 consolidation, rang
Broco Group chief analyst Vladislav Gurov
4-months of the fiscal half year EUR trend points at 1.33
General background of the second February week was not in favour of the Single European currency. Negative tone was aggravated by weak EU macroeconomic staticstics and Greece's financial problems. Still the most important factor was the decion of China's central bank to raise the reserve ratio for Chinese banks by 50 basis points, which was announced on Friday.
Results and Current Situation
The ending of the second February week was in fact the result of the four months of fiscal half year period as well as the first half of the first 2010 quarter. Since the beginning of the fiscal half year period in October EUR has lost 6,45% against USD by session closing on Friday. 4-month EUR/USD decline comprised 9 figures or 950 points. EUR has lost considerably against currencies dependant of raw materials exports such as AUD and CAD (9% and 9.2%). Technically EUR/USD is moving in a well formed downward trend towards the area of 1.33-1.3350, which can be reached by the end of the 1st quarter of 2010 .
As results of the last week's trade show, EUR is held back from sinking below 1.35 only by 1.3650 area (1.3612-1.3688). In the meanwhile the week's trade of USD against JPY goes around 0.90 without a clear deriction. This fact shows that it is EUR depreciation that plays the key role in the market and not USD growth.
EUR/GBP cross rate decline below 0.8750 helped GBP/USD stay above 1.5650. GBP exchange rates have settled in the comfortable area between the 1.55 and 1.60 levels within a range of 1.57-1.58. This proves once again that the value of EUR is deminishing.
The idea, that the USD is ready to grow, but not yet growing is proved by the fact that AUD/USD climbed from 0.8650 to 0.8870 by the end of trade Friday. Persistant relative USD weakness is also sertified by the fact that by the week's end USD/CAD has declined from 1.07 to 1.05 levels.
Expectations, Prognosis
Within the period from 15 to 19 February curreny market trends will be dominated by Japanese currency purchases for EUR, GBP and raw materials currencies and general
EUR weakness. Federal Reserve rate increase has not become an active factor so far, although it was mentioned in the report by thу FRS President Ben Bernanke. Market participants will be assessing oil market in the range of 71,50-73,50 (Brent oil) and the possibility of prices breaking outside of this range. Apart from that traders will be watching Dow Jones Index dynamics around 10000, within the range of 9850-10150.
Major currency pairs range:
EUR/USD – 1.3350-1.3769, declin
GBP/USD – 1.3350-1.3769, declin
USD/CHF – 1.0669-1.0931, growt
USD/JPY – 0.8931-0.9096, consilidatio
AUD/USD – 0.8712-0.8931, consilidation with potential declin
USD/CAD – 1.0431-1.0688, consilidation with potential growt
Brent – 71. 50-73.88, consilidation, potential declin