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PRIOR WEEK MARKET MOVERS & LESSONS: BULLISH CHARTS BEARISH FUNDAMENTALS

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Part 1 of Weekly Market Movers Prior & Coming Week: A weekly market strategy overview for traders and investors in stocks, forex, commodities, both spot market and binary options

First, what did the prior week teach us?

OVERALL FUNDAMENTAL PICTURE REMAINS BEARISHTHE ONGOING EU SOVEREIGN DEBT AND BANKING CRISIS

As we’ll discuss in Part 2, no one believes the latest second annual Greece bailout is anything but yet another expensive short term deferral of what must eventually become a wave of sovereign defaults in the EU and bank bailouts that will follow worldwide.

ONGOING SLOWING GROWTH IN VIRTUALLY EVERY MAJOR ECONOMY

The past week showed yet more evidence of slowing major economies, with more coming as austerity remains the long term bias as they seek to reduce debt.

 

  • In the Euro-zone (EZ), composite PMI’s, consumer confidence, and ZEW survey all declined by more than expected. In Germany, the EZ’s chief growth driver, the manufacturing PMI new orders index dropped 47.6, indicating coming contraction.
  • In China, July flash manufacturing PMI survey fell from 50.1 to 48.9, suggesting contraction ahead in the manufacturing base of the world’s second largest national economy.
  • In the US, June existing home sales dropped again, suggesting renewed deterioration in US real estate, even after so much bad news already.
  • In Australia, the May Westpac leading index was down -0.1% and 2Q business confidence fell from +11 to +6.
  • US Q2 GDP this week is expected be dour
RISING RISK OF US DEBT TROUBLE

Risk of a disturbing US credit downgrade, even if a default is averted, is rising because the past weeks have revealed a genuine ideological conflict in Washington over the debt ceiling and deficit cutting, which in turn threatens to undermine the markets’ heretofore solid confidence in America’s ability to take decisive action on its debt troubles.

PERSISTENTLY HIGH OIL PRICES SAPPING AWAY CONSUMER SPENDING, GROWTH, WHILE FUELING INFLATION

Nothing more to say than that.

Technical Picture Stays Bullish

Yet despite this dour picture, risk asset markets not only remain near their multiyear highs, but after two weeks of controlled, rather modest pullbacks, markets ignored them and risk assets rallied despite climaxing EU and US debt troubles that are clearly far from being resolved.

See for yourself. Here are 3 daily charts that well represent what happened overall in global equities, currencies, and growth related commodities (though copper was fairly flat this past week).

ScreenHunter 02 Jul 24 01 05  PRIOR WEEK MARKET MOVERS & LESSONS: BULLISH CHARTS BEARISH FUNDAMENTALS

DAILY CHARTS JULY 6-21 COURTESY ANYOPTION.COM 02JUL 24 0105

The Main Point: The above 3 daily charts representing risk assets in equities, currencies (a look at other daily charts for equities (like the DAX), risk currencies (like the AUDJPY), and growth related commodities show the above charts were indeed representative) rose during week of July 18-22 for the first time in 3 weeks, and as their monthly charts below show, remain close to multi-year highs.

ScreenHunter 03 Jul 24 01 14  PRIOR WEEK MARKET MOVERS & LESSONS: BULLISH CHARTS BEARISH FUNDAMENTALS

MONTHLY CHARTS 2009-PRESENT COURTESY ANYOPTION.COM 02JUL 24 0105

03jul 24 0114

Yes, most risk assets pulled back slightly Friday, though that could be attributed to all 3 taking a normal breather after facing significant resistance levels comprised of both psychologically significant “round number” price levels and, in the case of the S&P 500 and EURUSD, long term downtrend lines on their daily charts.

S&P 500, EURUSD DAILY CHARTS 05july 24 0231

Just as a reminder, global equities indexes, risk currencies (check out the AUDJPY as well as the EURUSD, EURCHF, or EURJPY), and growth related commodities remain in long term downtrends on their monthly charts.

Prior Week’s Market Movers


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