Stocks: Prior Day: Asia up, Europe, USA down. Today: Asia, Europe down. Stocks consolidate due to lack of noteworthy positive news to justify new highs, uncertainty about the Greek/EU debt crisis and increasing monetary tightening in China and India, with more possible from Canada and Australia
.- FX: Slight bias to safety currencies [JPY, USD, CHF in order of safety appeal] vs. risk currencies [AUD, NZD, CAD, EUR, GBP in order of risk appetite appeal], as flat/down stocks reflect market seeking direction from news over the coming days.
- Main events: MON EUR ECP Pres. Trichet Speaks, GBP BoE Gov. King Speaks, TUES SNB Chairman Hildebrand speaks, GBP CPI y/;y CBI Realized Sales, USD Existing Home Sales NZD Current Account. WED EUR German IfO Business Climate, GBP Annual Budget Release, USD Core Durable and Durable Goods Orders m/m, New Home Sales, NZD GDP q/q
- Big Theme: Stocks, risk appetite pull back on lack of noteworthy positive data, low volume gains and FX and commodities failing to follow stocks higher, last week had cast doubt on the stock rally, along with downward pressure from EU still failing to produce Greek debt solution, US Fed still very cautious on US recovery, EU, UK, Japan all at some stage of considering (UK, EU) or implementing(Japan) more QE. All these factors have combined to pressure stocks, a normal move after stocks have hit new 52 week highs. Japan closed, European calendar empty, suggests quiet trading Monday. For Details See: The EU Debt Crisis: Two Minute Dummies Summary & How To Profit, The Week Ahead-Stocks, Commodities, Forex March 22nd – 26th :What To Watch, The Week Ahead March 22-26: Cliff’s 5 Minute Overview
US: Stocks fell to profit taking from a lack of positive catalysts, and the weight of its own status of being at new 52 week highs without news to justify further climbing for now, and concerns about global monetary tightening and the EU debt crises lurking in the background. Volume and volatility spiked with quadruple witching.
Asia Stock Outlook: Mixed: At the close early Monday GMT: Stocks were mixed as the Nikkei and Shanghai indices overcame early profit taking to finish higher, while most other major Asian indices finished down, following up on US losses Friday and weighed by concerns on Greece debt, and monetary tightening by China and India.
European Stock Outlook Down At the open early Monday GMT: European shares dropped for a third day on Monday, with drugmakers down after the House of Representatives approved an overhaul of the U.S. healthcare system, while renewed worries over Greece hurt banks, and IMF official states that advanced economies face ‘acute’ challenges in tackling public debt. No kidding?!
European banks are the primary holders by far of Greek debt maturing or owing interest payments in April and May. Current rates Greece must pay to issue new bonds are considered too high for Greece to afford, Markets are anticipating progress towards a solution from the EU Summit this Thursday and Friday. With India’s rate increase markets saw the movement towards global tightening pick up momentum, with Australia, China, and probably Canada also moving in this direction.
Commodities Outlook: Down: In Friday and early Monday trade GMT: continuing to pull back as they’ve been doing since early last week, once again leading stocks
Crude Oil Daily Outlook: Down: In Friday and early Monday trade GMT, following overall risk appetite.
Gold Daily Outlook: Down: In Friday and early Monday trade GMT, following overall risk appetite.
FOREX Daily Outlook: In Wednesday and early Thursday trade GMT: Bias to safety currencies as risk assets pull back at new highs amid ongoing uncertainty about Greece and growing risk of its default and possible ensuing wave of higher sovereign rates and defaults among the weaker economies.
US Dollar Daily Outlook: In Friday and early Monday trade GMT: Up vs. the EUR, AUD, CHF, CAD, NZD, GBP, steady vs. the JPY
The dollar's recent strength comes amid lack of any real plan to keep Greece from default, which could lead to a wave of defaults among the PIIGS block and beyond
Euro Daily Outlook: In Friday and early Monday trade GMT: Down vs. the USD, CHF, JPY, CAD, up vs. the AUD, NZD, , steady vs. the GBP
Yen Daily Outlook: In Friday and early Monday trade GMT: Steady vs. the USD, CHF, CAD Up vs. the EUR, AUD, GBP
British Pound Daily Outlook: In Friday and early Monday trade GMT: Down vs. the USD, JPY, CHF, CAD steady vs. the EUR down but rising vs. the AUD, NZD.
Australian Dollar Daily Outlook: In Friday and early Monday trade GMT: Down vs. the USD, EUR, JPY, GBP, up vs. the NZD
New Zealand Dollar Daily Outlook: In Friday and early Monday trade GMT: Down vs. the USD, AUD, EUR, GBP
Canadian Dollar Daily Outlook: In Friday and early Monday trade GMT: down vs. the USD, CAD, up vs. the EUR, GBP, steady vs. the JPY,
Swiss Franc Daily Outlook In Friday and early Monday trade GMT: down vs. the USD, up vs. the EUR, GBP steady vs. the JPY,
CONCLUSIONS & Big Picture: Short term bias for risk assets down- as they go through at least some normal consolidation after hitting new annual highs and little likely market moving news until the EU Summit Thursday and Friday, which will move markets either by producing a solution for Greece or by failing to do so once again. The S&P 500, our key risk asset barometer, like other major stocks, pulling back at / near the resistance of new 12 month highs, lacking any positive news to push them to yet new highs, and with considerable uncertainty from events noted in the market summary Also, fx and commodities continuing their move down begun mid last week, which was a bearish sign for stocks, because these assets should be following stocks higher. This negative divergence casts further doubt on the rally in global equities. Long Term Bias Down:, especially in July, when 2 major events hit: Spain needs to sell about 30 bln euros in bonds AND a massive wave of US mortgage rate resets not seen since 2007 begins. The last time we saw this magnitude of rising mortgage rates markets stalled out and ultimately crashed.
Want some good multi-day swing trade ideas? See the full Daily Outlook for today at: http://fxmarketanalysis.wordpress.com/
DISCLOSURE: NO POSITIONS