الاثنين، 24 يونيو 2013
U.S. Stocks Tumble as S&P 500 Extends Monthly Decline
U.S. stocks retreated, sending the Standard & Poor’s 500 Index to a nine-week low, as Chinese equities entered a bear market amid concern a cash crunch will hurt the world’s second-largest economy and speculation increased that the U.S. will begin curbing stimulus.
Bank of America Corp. and Citigroup Inc. slid more than 2.8 percent as banks tumbled. Barrick Gold Corp. led gold producers lower as the precious metal traded near a 2 1/2-year low. Deere & Co. lost 3.2 percent as JPMorgan Chase & Co. recommended selling the shares. Vanguard Health Systems Inc. surged 67 percent after agreeing to be bought by Tenet Healthcare Corp. for about $1.8 billion.
The S&P 500 (SPX) fell 1.7 percent to 1,565.07 at 10:01 a.m. inNew York, the lowest level on a closing basis since April 22. The Dow Jones Industrial Average slipped 239.03 points, or 1.6 percent, to 14,560.37. Trading in S&P 500 stocks was 33 percent above the 30-day average during this time of day.
“Investors have been shaken by the concept of rising interest rates and a reduction in stimulus from the Federal Reserve, coupled with the uncertainty regarding effectively how robust the Chinese central banking system is,” Ethan Anderson, senior portfolio manager for Rehmann Financial in Grand Rapids, Michigan, said by phone. His firm manages about $1.5 billion. “We found ourselves in a headline-dependent environment, which is difficult for investors to function.”
The CSI 300 Index (SHSZ300) of China’s biggest companies tumbled 6.3 percent, the most since August 2009 and taking its decline from this year’s peak to more than 20 percent. China’s central bank said there’s a reasonable amount of liquidity in the financial system and urged banks to control risks from credit expansion, signaling no relief from a cash squeeze.
China Rates
China’s benchmark money-market rates last week climbed to a record as the central bank refrained from using open-market operations to ease the cash crunch. The rates still fell for a second day today.
The S&P 500 (SPX) sank 2.1 percent last week, the most since April 19, after the Federal Reserve said it may start paring stimulus measures as soon as September if the economy improves in line with its forecasts.
The benchmark index is down 3.9 percent in June, on course for the biggest monthly drop since May 2012. The gauge has declined 6.2 percent since its May 21 high amid speculation the Fed will scale back quantitative easing that helped fuel a rally in stocks worldwide. The index has stillrallied 132 percent from its March 2009 low.
‘Great Performance’
“We’ve had this great performance in stocks without great economic growth,” Larry Kantor, the New York-based head of research at Barclays Plc, told Anna Edwards on Bloomberg Television. “Those days are over. I suspect over the next couple of months U.S. growth is going to be a little weaker than people are anticipating.”
Treasuries slumped today, pushing the 10-year yield as high as 2.66 percent, a level not seen since August 2011, before data this week that may add to the case for the Fed to slow bond purchases. Reports tomorrow may show U.S. durable-goods orders rose and house pricescontinued to recover, according to Bloomberg surveys of economists.
While U.S. equity volatility reached a six-month high last week, expected stock swings are less than half as much as peaks in the last four years and traders are pricing in little increase for the rest of the year.
Volatility Index
The Chicago Board Options Exchange Volatility Index (VIX) jumped 10 percent to 18.9 for the week. Even after the gauge of options prices on the S&P 500 increased 67 percent since March, it would have to rise 134 percent more to reach its average high of 44 from 2009 to 2012, according to data compiled by Bloomberg. VIX futures expiring in six months trade only 10 percent higher than the index. The gauge jumped 13 percent to 21.45 today.
Financial shares tumbled. Bank of America dropped 3.2 percent to $12.29. Citigroup slipped 2.8 percent to $45.56.
Barrick Gold declined 4.9 percent to $16.06. The precious metal dropped to the lowest since September 2010.
Deere lost 3.2 percent to $79.82 as JPMorgan cut its rating on the world’s largest agricultural-equipment maker to underweight, similar to a sell recommendation, from neutral. Lower crop prices and higher land rent costs may drive profit-per-acre lower, analysts led by Ann Duignanwrote.
Allergan (AGN) Inc. slipped 8.1 percent to $85.15. Deutsche Bank AG downgraded the maker of the Botox wrinkle treatment to hold from buy and Leerink Swann LLC trimmed its recommendation to market perform from outperform.
Vanguard Health Systems jumped 67 percent to $20.61. Tenet will pay $21 a share in cash for the Nashville, Tennessee-based hospital operator and will assume $2.5 billion of Vanguard debt, the companies said in a joint statement.
Trade of the Day for May 30th, 2013 – Long USD/CHF
USD/CHF Pressing Validity for the Uptrend
The USD/CHF uptrend is still fresh in that it is not established and the extent to which the 34EMA Wave will be respected is still unknown. That means that today’s pullback which currently had a daily pip movement range of 123 pips is on the very high end of historical price movement.
This is the second day of such a dramatic move lower when considering that yesterday the pip range was 190 pips. Certainly the U.S. dollar’s weakness is mainly the fuel for the move lower – interesting also then is the the fact that the dollar is pulling back sharply today through key, near-term support that was at 83.50. For the USD/CHF’s uptrend to continue, the dollar will have to stabilize so the question will be where? For now the U.S> Dollar Index is finding support above 83.00 and the 50DMA. This bodes well for USD/CHF bulls.
The USD/CHF entry has an advantage today that it didn’t have yesterday: The buy is triggering at a lower level but still within a valid uptrend and still within the support of the 34EMA Wave. Even if this is a market trend transition, the strategy would be to fade (buy) the weakness on an oversold Stochastic, so either way I am looking to get long based primarily on the expectation for the greenback to be supported.
The entry is valid at 0.9550 – taking advantage of the major psychological level support. For traders more risk averse, use a cheated-in stop loss below today’s low which would put the order at 0.9515. I would prefer to tack on another 20 pips to my potential loss and be able to use the “00” level and a 0.9490 stop loss; it’s an individual choice. Follow-through to the upside will depend heavily on the greenback and while there will be a hurdle at today’s high (0.96499) look to the 0.9690 level as a profit target and then 0.9790.
Keep an eye on equities since if risk comes off the table, the franc could strengthen as the safe haven play gets put on. The expectation is that the dollar is ready for a pullback but should be supported; traders will accept this as the beginning of what could be a volatile Summer of trending but ugly markets.
About Raghee Horner
Raghee Horner is the Chief Currency Analyst for IBFX. She has written three books published by John Wiley & Sons including her latest, “Forex on Five“. Raghee is a featured contributor at TradeStation, ForexFactory, BabyPips, Investing.com, and is a blogger for the StockTwits Network. Raghee runs a popular morning chat, trading commentary, and alert service
Top Trade Idea for June 14th, 2013 – EUR/AUD
This week’s price action in the Aussie Dollar pairs looks like something that could develop into a larger correction.
EUR: AUD is a typical example. On the daily chart, price is now well above both its 20 and 50 day moving averages (blue and green lines respectively. The near vertical rise from the trend line is typical blow off behaviour and the fact that the slow stochastic is now starting to trend lower from the oversold zone above 80% provides a clue that a pullback towards longer term trend averages may be underway.
Against this bigger picture background, the 4 hour chart looks as though it may be in the early stages of forming a downward sloping trend channel.
There’s a fair way to go yet but if this situation continues to play out, my trade idea is to sell if price rises to and again rejects the channel resistance. This would involve selling only if price makes a trend peak at the resistance line or close to it. I define a trend peak as a candle high surrounded by lower highs and then a move under the low of the highest candle.
There’s a fair way to go yet but if this situation continues to play out, my trade idea is to sell if price rises to and again rejects the channel resistance. This would involve selling only if price makes a trend peak at the resistance line or close to it. I define a trend peak as a candle high surrounded by lower highs and then a move under the low of the highest candle.
A typical profit objective may be either a return to the channel support or to the 20 day moving average on the daily chart with an init
Ric Spooner is Chief Market Analyst at CMC Markets in Sydney. He has over 30 years experience in derivates markets, and was previously a Managing Director at Sydney Futures Exchange Clearing, General Manager at JBWere Futures and Manager at Elders Futures.
Top Trade Idea for June 19th, 2013 – EUR/USD
The FOMC could make like harder for EURUSD above 1.34
The EUR has been one of the top three performers versus the dollar in the G10 over the last month. It has traded in an uptrend ever since Fed chairman Ben Bernanke announced that the Fed could taper asset purchases during his testimony to Congress last month. Ironically, the prospect of an end to QE3 has been more positive for the euro than it has been for the USD.
So how far can the EUR uptrend go? The fundamentals for a strengthening single currency are mixed: growth is picking up from a low level but it is still too early to say that the Eurozone economy is in recovery mode. However, on the other hand, the ECB has not embarked on QE and its balance sheet has continued to shrink in 2013. Even if the Fed does start to taper asset purchases its balance sheet will still be expanding, which should be EURUSD positive. However, we expect the era of easy gains in EURUSD are over.
Some dollar weakness post the FOMC meeting might be expected because a lot of “tapering” has already been priced in by the market. Thus, we could see EURUSD strengthen further in the short term. However, we hope to see any rallies in EURUSD start to fade because of:
- EURUSD is close to overbought territory and both the hourly and daily RSI’S are close to stretched levels.
- The base of the monthly Ichimoku cloud comes in at 1.3650; this could act as a fairly sticky resistance zone.
- Investors may get nervous if EURUSD gets close to 1.3700 – the high from February. Back then ECB President Draghi expressed his displeasure with the level of the euro, which caused EURUSD to drop 900 points in the next 2 months….
So, from a technical and fundamental perspective I think that EURUSD could be a sell on any rallies. 1.3650 may act as a selling zone, with a target of 1.3220, the low from 7th June, initially. A stop could be fairly tight, around 1.3730, since if the market gets above this level then it would negate this market idea.
Dollar Index Reaches 2-Week High as Fed View Boosts U.S. Yields
The Dollar Index rose to a two-week high as the yield differential between U.S. and Japanese government securities increased to the widest in almost two years, increasing the appeal of dollar-denominated assets.
The U.S. currency rose against all but one of its 16 major counterparts before U.S. reports tomorrow that economists said will show durable-goods orders gained and house pricesincreased as the Federal Reserve may reduce monetary stimulus. A gauge of currency volatility climbed to the highest since June 2012. Chinese stocks fell the most in four years, damping investor interest in riskier currencies. The Swedish krona slid to a seven-month low versus the dollar.
“Long-term yields in the U.S. have continued to jump higher over the last week,” Charles St-Arnaud, a foreign-exchange strategist at Nomura Holdings Inc. in New York, said in a telephone interview. “That’s driving some inflows and strength into the U.S. dollar. There’s been a reassessment of the whole liquidity story and what will be the impact on rates across the board.”
The Dollar Index, which Intercontinental Exchange Inc. uses to monitor the U.S. currency against those of six trading partners, rose 0.3 percent to 82.531 at 8:57 a.m. in New York after climbing to the highest level since June 5.
Currency Levels
The dollar advanced 0.2 percent to $1.3101 per euro after appreciating to the strongest level since June 6. The U.S. currency weakened 0.4 percent to at 97.50 yen. The yen added 0.5 percent to 127.77 per euro.
JPMorgan Chase & Co.’s Group of Seven Volatility Index, based on currency option premiums, rose to as high as 11.83 percent today, the most since June 1, 2012. The gauge has averaged 8.76 percent in the past year.
Sweden’s krona declined versus all 16 of its major peers as the CSI 300 Index of Chinese stocks fell the most in four years, signaling a bear market. The currency dropped 1.3 percent to 6.7550 per dollar after depreciating to the least since Nov. 21. It has tumbled 4.4 percent in the past week.
The Norwegian krone fell against the majority of its most-traded counterparts, slipping as much as 1.6 percent to 6.1539, the lowest since July 17.
Treasury Yields
Treasuries due in two years yielded 0.28 percentage point more than similar maturity Japanese sovereign debt, the biggest premium since July 2011, according to Bloomberg data.
“The fundamental picture for the dollar is clearly positive,” said Marcus Hettinger, a currency strategist at Credit Suisse Group AG in Zurich. “The expectation that the Federal Reserve may start reducing asset purchases leads to higher U.S. yields supporting the dollar.”
The Dollar Index jumped 1 percent on June 19 when Chairman Ben S. Bernanke said policy makers may begin reducing their quantitative-easing program this year and end it in mid-2014 if the economy is achieving the central bank’s objectives. The Fed purchases $85 billion of bonds each month.
Fed Bank of Dallas President Richard Fisher, one of the most vocal critics of the central bank’s quantitative easing, is due to talk about U.S. monetary policy and the economy today in London. This week will also see speeches from Bank of Atlanta President Dennis Lockhart, Bank of Richmond President Jeffrey Lacker, Bank of Cleveland President Sandra Pianalto and Bank of San Francisco President John Williams.
U.S. durable-goods orders increased 3 percent in May after rising a revised 3.5 percent the previous month, according to a Bloomberg News survey before tomorrow’s Commerce Department report. The S&P/Case-Shiller index of home values for 20 cities climbed 10.6 percent for the year ended April after a 10.9 percent gain in March that was the biggest since 2006, a separate survey showed.
Yen Misses Out on Flows to Risk-Off Currencies
EUROPEAN SESSION UPDATE: Euro fails to react to a better than expected German business climate survey; PM Abe said the Japanese economy has benefitted from Forex movements…
We seem to be watching another risk-off session in today’s Forex trading, as the Franc and US Dollar are showing the biggest wins, and the three commodity currencies, CAD, NZD, and AUD, are showing the biggest losses. Equities have traded lower in both the European and Asian markets, and US futures are also pointing downwards.
However, the Yen does not seem to be showing any significant gains in today’s risk-off trading, possibly explained by a widespread rise in 10-year bond yields from many different countries, with the exception of Japanese government bonds.
There was little data in today’s European session, and a better than expected rise in the German IFO business climate survey failed to move the Euro significantly higher. Meanwhile, the Swiss 10-year bond yield rose above 1.00% for the first time since October 2011.
In Asia, Japan PM Abe further broke a taboo for Japanese officials to discuss Yen levels, as the leader said Forex movements until now have been positive for the economy. In China, further worries over a lack of liquidity and a Goldman Sachs downgrade of its Chinese growth forecast sent the Shanghai Composite index 5.30% lower and below 2000 for the first time since December.
The US Dollar is currently trading slightly below 98.00 against the Yen, and USD/JPY may again see support around 96.50. The pair may see further resistance by the 99.00 figure.
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