This market brief is an overview of the week ahead and some of the events we see as being important to the markets.
Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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AUSTRALASIA
ASX – 4693
The ASX attempted to rally early last week but found itself back below a critical level of 4719 to close at 4693.
If the down move continues its fall then we would like to see 4653 broken before reaching 4582, which as mentioned last week, could be the difference between a potential support and rally or a continuation of the down move towards 4417.
If we see a solid break past 4719 and 4796 this week, it could indicate that the down moves are overextended, and a reversal could take place if the ASX moves past 4840 with long up bars. If we see 4840 broken then the next 2 levels of interest would be 4903 followed by 4982.
EUROPE
FTSE – 6128
The FTSE followed the rest of the global markets downwards and broke through April lows reaching a low point of 6098.
If the down move is to take another leg down then last week’s level of 6080 needs to be broken with some solid momentum. Depending on the acceleration of the downward move then the levels we will be looking at for support are 5922, 5886 and 5814.
If 6080 is difficult to break and provides some support then we would like to see 6237 broken on the upside before 6306 is reached.
DAX – 7824
The DAX moves are becoming more aggressive as the break below the 8003 level and show no signs of support.
If this aggressive down move continues through 7750 and 7661 then our previously mentioned target of 7584 could occur much sooner than originally expected.
If any attempt at a rally from here is to be made then we would like to see solid up moves through 7875 initially, then a strong move back towards 7968 and 8003.
US SESSION
S&P – 1589
With the VIX indicator moving above 20 last week, and Ben Bernanke’s speech not providing much confidence to stabilize the markets, the S&P made some heavy moves through important levels of 1611 and 1597.
For the down move to continue then 1585 must show no support and allow the move to continue down towards our next target of 1547.
If a move back up is to occur then this will need to happen early, and a rally back through 1597 and 1611 needs to occur. Otherwise an upward attempt without strength will be short lived and the continuation of the down move could be very aggressive.
NASDAQ – 2870
The NASDAQ has provided the same aggressive down moves like the rest of the markets and broke through 2890 on its second attempt, which occurred towards the end of the week and reached a low of 2851.
If the down move continues past 2838 with the same strength, then we will be watching the area of 2778 – 2784 very closely for any potential support which may provide the launching pad for a rally into the 2nd half of the year.
If any attempt at an up move is to start from here (note Sept 2012 highs were 2876), then a solid break above 2890 needs to occur early with a follow through past 2920. If this occurs then we could see 2962 reached.
FOREX MARKETS
AUD.USD – 9215
The AUD was completely out of favour last week and the down move was aggressive as buyers weren’t anywhere to be seen.
If the continuation of this down move is to occur then hold on tightly as the 80’s might be back in fashion soon.
If the AUD somehow finds buyers then 9325 needs to be broken before we could see 9580 again.
EUR.USD – 13119
Last week’s EUR rally was short lived as it found it difficult to break above the 13433 area and reversed back down as the slowdown process that mentioned last week took effect.
If the down move is to continue then we would like to see 13084 broken with the same long down bars as the previous week then we could potentially see 12974 followed by 12837.
If 13084 area provides support then an up move could occur if 13176 is broken followed by 13227 could see the EUR back at 13285.
GBP.USD – 15413
The GBP rally came to an abrupt halt as the slowdown process took effect and a down move played out. It broke down through a previous potential support level of 15597 to close nearly 200 points lower.
If this down move continues then once 15387 is broken we will be looking for 15185.
If we are to see a reversal back up, then the area of 15368-15387 needs to hold and a move back through 15597 needs to be strong before this pair sees 15808.
USD.JPY – 9787
After reaching a low of 9378 the JPY weekend and a rally of 400 points took place reaching last week’s target of 9785.
If the current bounce has any momentum left then the key level it needs to break will be 9864 before a new potential uptrend is formed and a possible break back above 100 occurring.
If the current up move stops and reverses back down, then 9735 needs to be broken before we see 9603.
COMMODITIES
GOLD – 1296
GOLD’s 100+ point move last week was aggressive enough to take out the lows back in April. This shows that there has been a shift in sentiment about GOLD. In the past it was used as a safe haven play, but now with all the intervention from the banks it’s place in the portfolio allocation is unsure.
If the down move is to continue this week in the same fashion as last week, then no downside targets will be attempted.
If somehow we see a flurry of buying then a bounce from here needs break past 1321 before a new attempt at an up move is made.
US LIGHT CRUDE OIL – 9385
LIGHT CRUDE is clearly range trading at the moment and any attempt at a break on the upside is met with a solid move back down and vise versa.
If this down move is to continue and we see a break below 9347 then we will looking for 9016 as potential support.
If 9347 holds up and a bounce occurs then we could be back at 9742 again.
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