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FOREX, COMMODITIES, STOCKS Brief 1/15: Inter-market Analysis Key Events, Trends, Trades

NB: THE FOLLOWING IS AN ABRIDGED VERSION FOR FULL ANALYSIS AND CHART ILLUSTRATIONS OF RECOMMENDED TRADES GO TO http://fxmarketanalysis.wordpress.com/   AND SELECT "DAILY OUTLOOK" FOR TODAY
 
Stocks: Prior Day: Asia, Europe, USA up, Today: Asia, Europe up,
-           FX: bias against safety currencies [JPY, USD, CHF in order of safety appeal] vs. risk currencies [AUD, NZD, CAD, EUR, GBP in order of risk appetite appeal], US Dollar down as jobs data defers stimulus exit, interest rate increases
-           Main events: FRI: USD Core CPI, CPI m/m, Prelim UoM Sentiment, JP Morgan-Chase earnings
-     Big Theme: ECB statement, US retail sales and Intel earnings dominate news Thursday. Many at Good Entry Pts SEE   – SEE RECOMMENDATIONS BELOW FOR THE COMING DAYS
STOCKS
US: Despite lackluster data, stocks climbed modestly towards 52-week highs amid modest support. Stocks were generally flat in the early going. The big disappointment was in retail sales, suggesting that the higher sales volumes were achieved via deep discounts. See our special report on it: How To Play the Current Dollar Pullback And Identify Its Reversal. The poor retail figures, combined with recent disappointing jobs data, suggest strongly that rates will remain low and liquidity kept high, providing a supportive environment for stocks. Intel was expected to beat estimates, which also helped stocks. After hours it did indeed do so, which is providing a boost for stocks today thus far in Asia and Europe. Intel is a bellwether for the chip sector.
European Stock Outlook:  European shares advancing for a thirdstraight session on Friday, after rising Thursday, led higher by banks and miners.
.
ASIA- UP N225I +1.61% HS -0.15% SSEC +1.35% FTSTI -0.24% AORD +0.60%
EUROPE UP FTSE +0.45% DAX +0.43% CAC  +0.37%  
US- UP S&P +0.24% DJIA  +0.28% NASDAQ +0.38%    
THIS MORNING UP  N225I +0.68% HS -0.29% SSEC +0.27% FTSTI +0.03% AORD +0.00%
                          UP FTSE +0.22% DAX +0.13% CAC  +0.33%  
               
 
Crude Oil Outlook: Continuing its 5th day of pullback, currently around $79/bbl. Crude oil closed below 80 for the second day Thursday. Weak economic data, persisting worries about China's cooling policies and dismal energy demand are key reason for the correction. In Asia session today, the February contract continues to edge lower, poising for the first weekly decline since December 7.
Gold Outlook:Pulling back for the second straight day in early Friday trade.
FOREX Daily Outlook: Surprising US dollar strength despite rising stocks showing rising risk appetite and disappointing US retail sales figures.
US Dollar Daily Outlook: Gaining against most majors in early Friday trade. On Thursday, it sold off against most of the majors early on, but still ended the day higher against the euro and Swiss Franc, suggesting concerns about sovereign debt after ECB President Trichet’s remarks. The poor spending data yesterday, combined with equally disappointing recent jobs data, suggests downside risk for the USD as expectations for stimulus exit and rate increases are now reduced, leaving the US dollar, with its low yield, to trade as a safe-haven funding currency for carry trades, rising only in times of fear.
 
Euro Daily Outlook: Cautious comments from ECB President Trichet offset weaker U.S. economic data. Trichet indicated that the current level of interest rates is still "appropriate," given uneven growth and low inflation, However what worried euro bulls was his dovish tone, saying that during the recovery, quarterly GDP will be up and down. Thus he said the central bank will remain "very alert, very prudent" on the economic outlook.
Yen Daily Outlook: Given that the USD/JPY moves with yield spread expectations and thus correlates well with related economic reports, the recent US jobs and spending disappointments have sent the pair trending down for over a week.
British Pound Daily Outlook: Gained Thursday vs. the US dollar and euro, pulling back slightly in early Friday trade. At the 200 day EMA vs. the EUR, and given the lack of change in relative economic outlooks, we question whether it will go much lower.
 
Australian Dollar Daily Outlook: Steady vs the US, falling against the JPY in early Friday  trade, despite recent great job numbers.
New Zealand Dollar Daily Outlook:  Steady vs the US, falling against the JPY in early Friday  trade, despite recent great job numbers.
.
Canadian Dollar Daily Outlook: Continued to gain vs the USD and others Thursday. Steady to slightly retreating in early Friday trade.Compared with the US, UK, and a large swath of the Euro-zone, all of which are dealing with ballooning deficits, Canada looks far healthier, and its banking system avoided exposure to the subprime debt market, leaving its housing sector healthier as well.
Swiss Franc Daily Outlook: The USD/CHF was up strongly in Thursday trade and continues rising early Friday. In a tight range with the euro
CONCLUSIONS: S&P 500 and other major global stock indexes continuing their steady climb, earnings data will be key over the next week. Intel results should give US stocks an early boost, but JP Morgan Chase announces pre market, and their results are likely to be more influential, given that they are the first of  Still near new highs. Near term direction likely to be driven this week by regularly scheduled releases and the beginnings of Q4 US earnings,. See below for specifics on the S&P 500, CRUDE, GOLD, EURUSD, NZDUSD, USDCAD, USDCHF, and GBPUSD
BIG PICTURE: Bias to Risk Appetite:The S&P 500 and other major stock indexes remain in up trends, thus our longer term ambivalent bias is long on risk assets like stock indexes, commodities, and higher yielding currencies, though as stimulus programs end in mid 2010 and mortgages reset higher we are skeptical about the rally's long term health. Meanwhile, play the uptrend.  Because we suspect that the Euro-zone's debt travails are far from over, and that some key commodities are still overpriced, our longer term bias is to believe the USD trend up still has room to run. Friday's NFP deferred that for now, and the current trends are anti-USD, pro risk assets (stocks, commodities and high-yield currencies). Beware that the USD trend could resume upon news of any of the 4 "dollar driver" types: fear event, positive US jobs or spending data, anti-EUR data, or falling Treasury bond prices (increases US bond yields, interest rates. Big name earnings reports (see Top-Summary-Main Events are also likely to influence sentiment.
For any trades we try to select only those trades with resistance/ profit targets that  are 2-3 times farther from the entry point than the stop loss, for a 2:1 or 3:1 reward/risk ratio.
SPECIFIC TRADE RECOMMENDATIONS: NO CHANGES FROM THURSDAY’S RECOMENDATIONS 
Stocks: Prior Day: Asia, Europe, USA up, Today: Asia, Europe up,
-           FX: bias against safety currencies [JPY, USD, CHF in order of safety appeal] vs. risk currencies [AUD, NZD, CAD, EUR, GBP in order of risk appetite appeal], US Dollar down as jobs data defers stimulus exit, interest rate increases
-           Main events: FRI: USD Core CPI, CPI m/m, Prelim UoM Sentiment, JP Morgan-Chase earnings
-     Big Theme: ECB statement, US retail sales and Intel earnings dominate news Thursday. Many at Good Entry Pts SEE   – SEE RECOMMENDATIONS BELOW FOR THE COMING DAYS
STOCKS
US: Despite lackluster data, stocks climbed modestly towards 52-week highs amid modest support. Stocks were generally flat in the early going. The big disappointment was in retail sales, suggesting that the higher sales volumes were achieved via deep discounts. See our special report on it: How To Play the Current Dollar Pullback And Identify Its Reversal. The poor retail figures, combined with recent disappointing jobs data, suggest strongly that rates will remain low and liquidity kept high, providing a supportive environment for stocks. Intel was expected to beat estimates, which also helped stocks. After hours it did indeed do so, which is providing a boost for stocks today thus far in Asia and Europe. Intel is a bellwether for the chip sector.
 
European Stock Outlook: European shares advancing for a thirdstraight session on Friday, after rising Thursday, led higher by banks and miners.
.
ASIA- UP
N225I +1.61%
HS -0.15%
SSEC +1.35%
FTSTI -0.24%
AORD +0.60%
EUROPE UP
FTSE +0.45%
DAX +0.43%
CAC +0.37%
 
US- UP
S&P +0.24%
DJIA +0.28%
NASDAQ +0.38%
 
 
THIS MORNING UP 
N225I +0.68%
HS -0.29%
SSEC +0.27%
FTSTI +0.03%
AORD +0.00%
                          UP
FTSE +0.22%
DAX +0.13%
CAC +0.33%
 
               
 
Crude Oil Outlook: Continuing its 5th day of pullback, currently around $79/bbl.Crude oil closed below 80 for the second day Thursday. Weak economic data, persisting worries about China's cooling policies and dismal energy demand are key reason for the correction. In Asia session today, the February contract continues to edge lower, poising for the first weekly decline since December 7.
Gold Outlook:Pulling back for the second straight day in early Friday trade.
 
FOREX Daily Outlook: Surprising US dollar strength despite rising stocks showing rising risk appetite and disappointing US retail sales figures.
 
US Dollar Daily Outlook: Gaining against most majors in early Friday trade. On Thursday, it sold off against most of the majors early on, but still ended the day higher against the euro and Swiss Franc, suggesting concerns about sovereign debt after ECB President Trichet’s remarks. The poor spending data yesterday, combined with equally disappointing recent jobs data, suggests downside risk for the USD as expectations for stimulus exit and rate increases are now reduced, leaving the US dollar, with its low yield, to trade as a safe-haven funding currency for carry trades, rising only in times of fear.
 
Euro Daily Outlook: Cautious comments from ECB President Trichet offset weaker U.S. economic data. Trichet indicated that the current level of interest rates is still "appropriate," given uneven growth and low inflation, However what worried euro bulls was his dovish tone, saying that during the recovery, quarterly GDP will be up and down. Thus he said the central bank will remain "very alert, very prudent" on the economic outlook.
Yen Daily Outlook: Given that the USD/JPY moves with yield spread expectations and thus correlates well with related economic reports, the recent US jobs and spending disappointments have sent the pair trending down for over a week.
 
British Pound Daily Outlook: Gained Thursday vs. the US dollar and euro, pulling back slightly in early Friday trade. At the 200 day EMA vs. the EUR, and given the lack of change in relative economic outlooks, we question whether it will go much lower.
 
Australian Dollar Daily Outlook: Steady vs the US, falling against the JPY in early Friday trade, despite recent great job numbers.
 
New Zealand Dollar Daily Outlook:  Steady vs the US, falling against the JPY in early Friday trade, despite recent great job numbers.
.
Canadian Dollar Daily Outlook: Continued to gain vs the USD and others Thursday. Steady to slightly retreating in early Friday trade.Compared with the US, UK, and a large swath of the Euro-zone, all of which are dealing with ballooning deficits, Canada looks far healthier, and its banking system avoided exposure to the subprime debt market, leaving its housing sector healthier as well.
 
Swiss Franc Daily Outlook: The USD/CHF was up strongly in Thursday trade and continues rising early Friday. In a tight range with the euro
 
CONCLUSIONS: S&P 500 and other major global stock indexes continuing their steady climb, earnings data will be key over the next week. Intel results should give US stocks an early boost, but JP Morgan Chase announces pre market, and their results are likely to be more influential, given that they are the first of  Still near new highs. Near term direction likely to be driven this week by regularly scheduled releases and the beginnings of Q4 US earnings,. See below for specifics on the S&P 500, CRUDE, GOLD, EURUSD, NZDUSD, USDCAD, USDCHF, and GBPUSD
 
BIG PICTURE: Bias to Risk Appetite:The S&P 500 and other major stock indexes remain in up trends, thus our longer term ambivalent bias is long on risk assets like stock indexes, commodities, and higher yielding currencies, though as stimulus programs end in mid 2010 and mortgages reset higher we are skeptical about the rally's long term health. Meanwhile, play the uptrend.  Because we suspect that the Euro-zone's debt travails are far from over, and that some key commodities are still overpriced, our longer term bias is to believe the USD trend up still has room to run. Friday's NFP deferred that for now, and the current trends are anti-USD, pro risk assets (stocks, commodities and high-yield currencies). Beware that the USD trend could resume upon news of any of the 4 "dollar driver" types: fear event, positive US jobs or spending data, anti-EUR data, or falling Treasury bond prices (increases US bond yields, interest rates. Big name earnings reports (see Top-Summary-Main Events are also likely to influence sentiment.
For any trades we try to select only those trades with resistance/ profit targets that are 2-3 times farther from the entry point than the stop loss, for a 2:1 or 3:1 reward/risk ratio.
 
 
SPECIFIC TRADE RECOMMENDATIONS: NO CHANGES FROM THURSDAY’S RECOMENDATIONS
DISCLOSURE: NO POSITIONS