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NB: THE FOLLOWING IS AN ABRIDGED VERSION FOR A FAST OVERVIEW OF ALL MAJOR GLOBAL STOCK, FOREX, AND COMMODITY MARKETS — FULL ANALYSIS AND CHART ILLUSTRATIONS OF RECOMMENDED TRADES GO TO http://fxmarketanalysis.wordpress.com/   AND SELECT “DAILY OUTLOOK{date}: Analysis, Events, Trends,  FOR TODAY

 

Stocks: Prior day: Asia down, Europe, US up. Today: Asia, Europe UP as EU debt crisis fears ease on Greek aid request, US housing and durable goods orders confirm ongoing US recovery, though many questioned the validity of the data.

- US Bonds: Down on rising risk appetite.

- FX:  Overall bias against safety currencies [JPY, USD, CHF in order of safety appeal] vs. risk currencies [AUD, NZD, CAD, EUR, GB in order of risk appetite appeal], but many exceptions

- Main events: MON USD Bernanke speaks, NZD CPI q/q TUES AUD Monetary Policy meeting Minutes, GBP CPI+ y/y, EUR German ZEW, EU ZEW sentiment+, CAD BoC Rate St.++ WED GBP Claimant Count Change+, MPC Meeting Minutes, THURS GBP Public Sector Net Borrowing, Retail sales m/m, USD PPI, Unemployment Claims, Existing Home Sales, CAD BoC Monetary Policy FRI: AUD RBA Gov. Stevens Speaks, EUR German Ifo Sentiment, GBP Prelim GDP q;q, CAD Core CPI, CPI, Core Retail Sales, USD Core, Durable Goods, New Home Sales.

- Earnings: Monday: Canon (CAJ), Humana (HUM) Tuesday: 3M Company (MMM), BP Plc (BP), Celanese Corp (CE), Corn Products Int. (CPO) CTS Corp (CTS), Daimler AG (DAI), Enterprise Products Partners LP (EPD), Ford Motor Corp (F), Kyocera (KYO), Newmont Mining (NEM), Office Depot (ODP), UAL Corp (UAUA), United Parcel (UPS), US Steel (X), US Airways (LCC), Valero Energy (VLO) Wednesday: AOL Inc (AOL), Baidu (BIDU), Barrick Gold (ABX), Corning (GLW), Honda Motor Co. (HMC), JetBlue Airways (JBLU), Dow Chemical (DOW), Visa Inc (V) Thursday: Bristol Myers Squibb (BMY), ConocoPhillips (COH), Dentsply Intl Inc. (XRAY), Dominion Resources (D), Eastman Kodak (EK), ExxonMobil Corp (XOM), France Telecom (FTE), Metlife (MET), Motorola (MOT), Seimans AG (SI), Weyerhauser (WY) Friday: ITT Corp (ITT).

Big Theme: Risk Appetite on again/off again: Long anticipated normal test of support after Fridays big high volume drop is again off the menu on optimism from Greek rescue request. Most risk assets have advanced on EU debt news since Friday, pulling back somewhat mid-Monday GMT on doubts about German participation. NB: Many analysts note global stocks have risen to 200 week MA- very strong resistance, could signal at least a normal retest of recent support.

STOCKS:

US: Up Most global stocks indices finished the week at or near highs for the year, and finished higher for their eighth consecutive week, closing at or near 200-week moving average. As in Europe, US investors responded positively to Greece seeking 45 aid from the IMF and European Union.

The positive reaction to the request as a tacit Greek acceptance of further spending cuts and virtual takeover of Greek economic policy by EU/IMF officials. See the full length version Analysis, Events, Trends, Trades for details on key market drivers and threats.

US Bonds: Down with the benchmark 10-year Note yield up to 3.82 % as rising stocks pressured safe-haven bonds.

Asia Stock Outlook: Up- Asian share markets rose on hope that Greeces requested emergency aid will prevent its default, and also on U.S. data that showed its economic recovery was continuing. See the full length version Analysis, Events, Trends, Trades for details.

European Stock Outlook: Down European shares rose sharply in early trade on Monday, following strong gains in the United States and Japan, led by banks amid optimism that Greece can avoid defaulting on its debt. As noted in the above section on US stocks, we question this optimism.

Commodities Outlook: In Friday and early Monday trade GMT: Up along with other risk assets on optimism about Greece and positive US data. Prior to Fridays Greek aid request commodities were not reflecting the higher risk appetite shown in stocks, a bearish sign for stocks. These other assets typically turn down before stocks.

Moves for the coming week will follow overall risk appetite, which will be driven mostly by news on the EU debt crisis, US earnings, key economic events (see MARKET WEEK AHEAD APRIL 25th 30th QUICK REVIEW/PREVIEW). Evidence of cooling in China would also hurt commodity prices, and many see a slowdown coming there.

Both energy and precious metals posted strong gains on the week.

Crude Oil Daily Outlook: Up- Closed out the week at $85.12 after rising sharply Friday up 2.26% on the week, retreating slightly in early Monday trade. Close to its 17+ month high, has just broken above its near term downtrend line though coming back in to test support there. On a bullish note, it remains in the lower parts of its rising channel on the daily charts. Future moves following risk appetite.

Gold Daily Outlook: Up- Closed out the week at $1153.7 after rising Friday, up 1.48% on the week, retreating slightly in early Monday trade. Its 23.6% Fibonacci retracement level at $1137 has held as support, currently 50 day SMA at around $1125.50 would be the next level, then the 38.2% fib retracement at 1086.07. In the middle of its rising channel on our daily charts

FOREX Daily Outlook: In Friday and early Monday trade GMT: Bias to risk fx on Friday is clearly reversing in early European trade on concerns about German commitment to the Greek rescue and its ability to commit funds quickly enough. Premium on Greek 10 year bonds over German bunds climbs to a record 600 bps. There are exceptions, as the EUR is down vs. all on (surprise!-not!) doubts about Germany making funds available quickly enough or at all.

US Dollar Daily Outlook: Up vs. the JPY but fading in early Monday trade in Europe, Up vs. the EUR, steady, down vs. the CHF, NZD, GBP, AUD, CAD

Euro Daily Outlook: Up vs. most on Friday but down Monday vs. the JPY, CHF, USD, GBP, CAD, NZD, AUD. After opening strongly early Monday in Asia, the EUR/USD has surrendered most of its gains as Greek bond spreads widened once again to 600bp+ to German bunds on trader concerns that the EU-IMF bailout deal may not be ratified, due to doubts about Germanys commitment to the deal and more importantly traders are increasingly concerned that legal or parliamentary approval delays will prevent funds from being available in time for Greece to roll over its debt by middle of May.

Yen Daily Outlook: Up vs. EUR, CHF, down vs. the USD, NZD, CAD, GBP as risk appetite retreats in Europe on doubts about German commitment to Greece rescue, especially if more than the planned funds are needed.

British Pound Daily Outlook: Up vs. USD, EUR, CHF, CAD, JPY down vs. the NZD, AUD. The pound backed off from the $1.5500 level on fear of hung Parliament and ensuing inability to address UK economic policy needs effectively. See the full length version Analysis, Events, Trends, Trades for details.

Australian Dollar Daily Outlook: Down vs. the GBP, NZD, up vs. the CAD, USD, JPY, EUR

New Zealand Dollar Daily Outlook: Up vs. all except the GBP, CAD. Markets not bothered by the recent IMF report that the kiwi is 25% overvalued. As usual, risk appetite rules, and rising risk appetite is moving the NZD to recover lost ground.

Canadian Dollar Daily Outlook: Down vs. the USD, JPY, GBP up vs. the EUR, AUD, NZD

Swiss Franc Daily Outlook: Steady vs. GBP, down but recovering vs. the EUR, down vs. the JPY up vs. the USD

CONCLUSIONS & Big Picture: Trends continue to favor risk assets as stocks and other risk assets recovering this week after the S&P 500s high volume drop Friday- however as noted in the Big Theme section above, correction risk is strong on both technical and fundamental bases. Technically: The S&P 500, our key risk asset barometer, like other major stocks, near 200 week moving average- key resistance. Near Term Bias remains bullish as trend remains in out Bollinger Bands Buy Zone (price is between the 1st and second standard deviation) though risk remains of the long awaited pullback, which should not be exceptional unless EU debt situation- the chief fundamental risk to the recovery- worsens significantly. A slowdown in China is also likely at some point.

Longer term, we are especially about the latter part of 2010. 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. NB: Never fight the trend, no matter how irrational, as markets can stay irrational longer than you can stay solvent (Keynes). Therefore, as anyone who follows our trade recommendations knows, we stay long and always wait for some breach of key support/resistance as a signal to enter a short position as odds appear to be in our favor, and even then only when the likely target is more than 2x as far away as out stop loss (which we ALWAYS USE, RIGHT?) so that our winning trade profits exceed out losses by at least 2:1.

Near term the biggest market mover remains the latest news on the EU debt crisis.

Trade Ideas: NZDUSD at key resistance on daily chart

NZDUSD DAILY CHART 06 APR 26

Long: Enter just above the 23.6% Fibonacci retracement level at 0.7271, for more risk/reward, enter on breach of the upper channel line just above 0.7235. Target a few pips below 0.7380, stop loss ideally just below the upper channel line but not more than 50 pips below entry point to allow for a gain at least 2x the potential loss.

Short: Wait for the upper channel line or Fibonacci level mentioned above to hold as resistance and enter with target to just above the lower channel line and 38.2% Fibonacci retracement level around 0.7106. Distance to your stop loss should be no more than a half of the distance in pips to your profit taking target for at a potential gain twice your maximum potential loss.

DISCLOSURE AND DISCLAIMER: OPINIONS EXPRESSED ARE NOT NECESSARILY THOSE OF AVAFX, AUTHOR HAS NO POSITIONS IN ABOVE INSTRUMENTS.