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22 Tue, Sep 2009
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Stocks in focus
BY Joanna Pluta and Micha³ Fronc
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In recent days major stock markets have not shown any substantial signs that would suggest a breach of important resistance levels, which in turn would open the way for further increases. In the US, the S&P 500 index is still moving in a narrow range, fluctuating around the level of 1,100 points.
The situation looks similar on the German stock market, where the DAX index is still above the upward trend line – but without beating the level of 5,890 points (year-to-date highs) there is no reason to expect further gains.
On the FX market the dollar is still gaining strength versus the euro. The Eurodollar has already lost almost 5.5 percent from its peak – the closest important resistance level that might stop further declines is $1.4150.
We are obviously seeing that market correlations which have worked in the recent past (the increase of the Eurodollar along with the publication of positive data from the US economy) are weakening now. Despite a better-than-expected retail sales reading in the US, which increased in November by 1.3 percent m/m (against a forecast of 0.8 percent m/m) and industrial output publication, that has beaten the expectations, the Eurodollar was still falling without showing any signs of growing risk appetite.
On Wednesday, December 16, investors’ attention was focused on the Fed’s announcement after its monthly meeting. US monetary authorities decided not to change interest rates. They also decided to withdraw the Fed’s liquidity packages from the economy till the end of the first quarter of 2010.
What causes concern is the fact that while the Eurodollar is substantially declining, the US and European stock markets are moving in narrow ranges, without showing any sensitivity to the FX market situation.
The Warsaw Stock Exchange is also struggling with a narrow range and even positive data from the Polish economy are not able to support stocks substantially. The WIG20 however, is still above the upward trend line, without any sign of a potential drop.
Micha³ Fronc
Analysis Department
TMS Brokers
Lower volatility on stock markets
Posted on 21 Mon, Dec 2009, with tags:
In recent days major stock markets have not shown any substantial signs that would suggest a breach of important resistance levels, which in turn would open the way for further increases. In the US, the S&P 500 index is still moving in a narrow range, fluctuating around the level of 1,100 points.
The situation looks similar on the German stock market, where the DAX index is still above the upward trend line – but without beating the level of 5,890 points (year-to-date highs) there is no reason to expect further gains.
On the FX market the dollar is still gaining strength versus the euro. The Eurodollar has already lost almost 5.5 percent from its peak – the closest important resistance level that might stop further declines is $1.4150.
We are obviously seeing that market correlations which have worked in the recent past (the increase of the Eurodollar along with the publication of positive data from the US economy) are weakening now. Despite a better-than-expected retail sales reading in the US, which increased in November by 1.3 percent m/m (against a forecast of 0.8 percent m/m) and industrial output publication, that has beaten the expectations, the Eurodollar was still falling without showing any signs of growing risk appetite.
On Wednesday, December 16, investors’ attention was focused on the Fed’s announcement after its monthly meeting. US monetary authorities decided not to change interest rates. They also decided to withdraw the Fed’s liquidity packages from the economy till the end of the first quarter of 2010.
What causes concern is the fact that while the Eurodollar is substantially declining, the US and European stock markets are moving in narrow ranges, without showing any sensitivity to the FX market situation.
The Warsaw Stock Exchange is also struggling with a narrow range and even positive data from the Polish economy are not able to support stocks substantially. The WIG20 however, is still above the upward trend line, without any sign of a potential drop.
Micha³ Fronc
Analysis Department
TMS Brokers
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