Top Lessons, Market Movers, And Questions For The Coming Week

How bullish and bearish forces align for stock indexes, forex and other global markets, both technical and fundamental outlooks, likely top market movers. EU really saved?

Summary

–Technical Outlook: Upward Momentum Intact – But Beware Growing Signs Of Indecision

–Fundamental Outlook: Primary data trends, market drivers- what’s changed, what hasn’t, what actually might, and what matters

–New declarations that the EU has been saved – and why they’re wrong, and other top lessons, likely market drivers, and questions for the coming week and beyond

The following is a partial summary of the conclusions from the fxempire.com weekly analysts’ meeting in which we cover the key lessons, drivers, and questions for the coming week.

Lessons

Technical Picture

We look at the technical picture first for a number of reasons, including:

Chart Don’t Lie: Dramatic headlines and dominant news themes don’t necessarily move markets. Price action is critical for understanding what events and developments are, and are not, actually driving markets. There’s nothing like flat or trendless price action to tell you to discount seemingly dramatic headlines – or to get you thinking about why a given risk is not being priced in.

Support, resistance, and momentum indicators also move markets, especially in the absence of surprises from top tier news and economic reports.

Overall Risk Appetite Medium Term Per Weekly Charts Of Leading Global Stock Indexes

Top Lessons, Market Movers, And Questions For The Coming Week

Top Lessons, Market Movers, And Questions For The Coming Week

Weekly Charts Of Large Cap Global Indexes January 27 2013 To Present With 10 Week/200 Day EMA In Red: LEFT COLUMN TOP TO BOTTOM: S&P 500, DJ 30, FTSE 100, MIDDLE: CAC 40, DJ EUR 50, DAX 30, RIGHT: HANG SENG, MSCI TAIWAN, NIKKEI 225

Key For S&P 500, DJ EUR 50, Nikkei 225 Weekly Chart: 10 Week EMA Dark Blue, 20 WEEK EMA Yellow, 50 WEEK EMA Red, 100 WEEK EMA Light Blue, 200 WEEK EMA Violet, DOUBLE BOLLINGER BANDS: Normal 2 Standard Deviations Green, 1 Standard Deviation Orange.

Source: MetaQuotes Software Corp, www.fxempire.comwww.thesensibleguidetoforex.com

01 May. 18 09.46

Key Points: Upward Momentum Intact – But Beware Growing Signs Of Indecision

  • US and European indexes continue to move gradually higher or hold steady near their multi-year or all-time highs. Medium term upward momentum remains intact as the indexes continue to close in their Double Bollinger Band buy zones.
  • Flat trading ranges of past months taking their toll, weakening momentum.
    • Ultra tight trading ranges: Most of our sample US and European indexes remain stuck in very tight trading ranges. For example, The S&P 500 has closed virtually unchanged over the past 2 weeks and within a 15 point range for the past 4 weeks.
    • All those dojis: The most outstanding point to note about Western indexes is the unusual number of doji shape weekly candles we’re seeing over the past months. The doji candle is almost all wick with little or no body, meaning that despite a relatively wide trading range there was almost no net change in price over the week. Dojis reflect indecision.
    • Except for the UK’s FTSE 100, every US and European index in our sample has flashed at least two doji type weekly candles in the past 4 weeks.
    • Nowhere is this tendency better illustrated than on the largest cap index of all, the S&P 500 shown below, which has printed 3 in the past 4 weeks, 7-9 out of the past 16 weeks (depending on how strictly you define dojis).  

ScreenHunter_03 May. 18 11.07

S&P weekly chart September 29 2013 To Present

Key: 10 Week EMA Dark Blue, 20 WEEK EMA Yellow, 50 WEEK EMA Red, 100 WEEK EMA Light Blue, 200 WEEK EMA Violet, DOUBLE BOLLINGER BANDS: Normal 2 Standard Deviations Green, 1 Standard Deviation Orange.

Source: MetaQuotes Software Corp, www.fxempire.comwww.thesensibleguidetoforex.com

03 May. 18 11.07

By themselves dojis may not mean much, and in general Japanese candle patterns by themselves are not adequate evidence of trend reversals. Here’s why we think they’re worth noting for the coming week:

When they appear at the top or bottom of a long-lived trend, they take on added significance and suggest that investors may lack the confidence to push the trend higher (or lower).

Moreover, we’ve seen so many top economists, analysts, and fund managers openly worried that stocks are too expensive, so the unusual frequency of dojis is worth noting.

Beware the doji pair: Over the past months these dojis have not foretold any material pullbacks, except when we had two in a row, from the weeks of March 23rd and 30th on the S&P 500. The following week of April 6th saw one of the largest drops of the year. Last week we completed another pair.

The weekly charts of our sample Asian indexes show no overall trend for us to draw any general conclusions about the technical outlook for Asia.

Daily Charts: Short Term Neutral

As those tight trading ranges and weekly doji candles indicate, the index daily charts show trendless, neutral momentum, as markets await the next big fundamental driver of risk appetite.

Fundamental Picture

Economic Data Trends Unchanged

Here’s the short version to save you the time of perusing results from prior weeks’ economic calendars.

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The above is for informational purposes only, responsibility for all trading or investing decisions lies solely with the reader.

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