CBOT Rice Futures : At the crossroads after recent spike.

CBOT Rice futures spiked to US$ 17.51 a few days ago but are currently at the crossroads, with a daily close below 16.50 likely to see a spike down to nearer 16.20, if not the more significant support at 15.50-15.60.

A risk on trade across the commodities board is however possible, so if rice breaks and holds above 17.37 anytime soon, the grain could be in for a move to 17.8-17.9 if not higher.

CBOT Dow Futures : A breakout at 12,255 should be good for a 200 point bounce

The Dow and indeed Dow Futures have been beaten down for 6 session due to both rather poor US data and indeed to saga over the debt ceiling.

Watch for an imminent break above 12.255 which will point to 12,450 or so as the target.

A failure to pass 12.255 tonight would be bad news, ad a break below 12.155 as very bad news for global equities Tuesday.

Surely the raw patriotism on show Stateside whenever they get the chance will win out, and a rally ensue? Hard to have faith in such a bunch of idiots thought.

US Dollar Index : Still firmly a dog, but due a technical rebound

The USD Index is the main reason the Baht is strengthening, ditto the SGD, MYR, IDR…all ASEAN currencies apart from the inflation ravaged VND.

There is however a rebound due, and this could be the near term catalyst for a pullback in the likes of gold and silver, with a decent rally in oil, stocks and in the USD against pretty much everything in the currency markets.

If the US end up defaulting – which we view as almost 0%, or more likely, one of the ratings agencies have the balls to downgrade US debt, then we will have the most volatile few days in market trading since the Q1 pullback when the world just started to get used to Arab protests and bloodshed…… 800 or so points on the Dow over 3 weeks.

More likely is a deal and a rally in the dollar, probably from Wednesday or Thursday.

 

Shanghai Composite Index : Next supports at 2650 then 2600

The main China market was looking quite positive a few weeks ago, but once again – much like Vietnam’s VN Index, it has fallen heavily and should dip further before a technical rebound. We are looking for 2650 to temporarily fail, with a pullback to 2600 or a few points lower. If this occurs Tuesday, which is entirely possible, a snap rebound to coincide with the US government finally raising their debt ceiling could be on offer.

Lower supports are seen at 2560 and 2520. On a longer term view, when the market finally reverses and crosses 3000 on a weekly basis it will be very interesting, but for now the rebound target (given it does turn around as forecast above from just below 2600) will be just 2770-2780.

For those who follow the VN Index, we are looking at a move down to 400, possibly 390-392 this week. It is currently at 409 with a recent low (May) of 386

TFEX SET 50 Futures (S50M11) : Last week’s low in danger of being taken out

S50M11 hit key support last week, but the technical set up is less than good, and we fear it will break the recent low of 692.30 and head off first to 680, and possibly lower to nearer 660.

It may first manage some more upside, to the 717-721 range but unless something very positive for the global risk trade occurs rather soon, further downside will be unavoidable for this contract and indeed S50Q11 which will soon be the front month contract in play.

In favor of 24hr trading on TFEX

What with elections coming and maybe some changes thereafter, our own wishful thinking list has 24hr TFEX trading on it, along with a healthy expansion of product.

How about oil and oil minis, Dow, S&P 500, NASDAQ, FTSE, DAX, CAC, Kospi, Nikkei, Hang Seng, STI and Jakarta Index futures (minis for the big ones) , forex futures, majors, regional crosses, a big basket of commodity futures …..  softs, metals and energy.

Jakarta and Singapore are racing ahead in this sphere. 24hrs trading is a must in futures trading, and variety of product is needed to keep people interested.

All of this from one account, with the inherent advantages of exchange trading with proper clearing and settlement.

It would attract retail and institutional money from around the region, and would place Thailand on the map for forward thinking capital market policy.

After all, it would all be electronic, so only  a very few staff would be needed on the 3 shifts of 8hrs the TFEX people would have to accommodate.

They could even outsource the operations, but alas we are guilty of dreaming. Must be all that nitrous we inhaled whilst diving.

Global Equity Markets : Reason to worry.

Risk is increasing and in our view a major change in trend should occur over the next few weeks. The exact timing is anyone’s guess, but from the charts – be them US Indices or emerging markets, the readings are similar and a correction of quite some force will play out during late Q2 and in to Q3.

The Thai market will follow, but may be given an extra few weeks of respite due to the election.

This is not the time to buy for anything more than quick trading punts, and indeed those heavily long should consider taking profits and cutting back exposure.

The time to get on the short side is coming, and already there is some markets.

Check your TFEX account and make sure you’re ready for a multi-week short.

Nikkei 225 : Upper gap closure expected quite soon

Struggling in the face of a strengthening Yen let alone all the other problems in Japan, the Nikkei might take until next week to offer much action due to local holidays.
Trade View
• The Nikkei closed well last week, but given this is ‘Golden Week’ in Japan, with 4 holidays, we may need to wait a little longer for an attempt to close the gap to 10,254, created in early March right after the earthquake and tsunami.
• There is some technical resistance from 9980 to 10,020, with first support now 9825, then 9780.

DJIA : No stopping it just yet

The Dow keeps on going, but volumes are alarming low, probably because the clever money has been long to the hilt for ages now, and with low volatility, the ultra high frequency sharks have little to trade, hence the anemic flows of late.
Trade View
• Non stop for 5 solid months now, there is little if any reason to expect anything less than the 13,000 mark being retested this week, from where 13,160-13,190 is seen as its next actual price resistance.
• Although it may seem too good to be true, a move to 14,000 or beyond is entirely possible thanks to the green light given to the markets by Fed chief Ben Bernanke last week, and even though volumes are very low, there will be no stopping the Dow just yet.

Nikkei 225 : Possible gap closure move this week

Struggling in the face of a strengthening Yen let alone all the other problems in Japan, the Nikkei looks as if it will close the day chart gap back to 9275, with 9491 seen as the key support and breakdown point to monitor in coming days.
Trade View
• A spot of intervention by the JCB will be most welcome by equity traders, but we fear they will have to suffer first – with the risk of a retracement to or very near the March 8 day chart gap at 9275 looking increasingly likely.
• There is strong resistance at 9820, and unless the Yen suddenly weakens early this week we do not see this level being taken out just yet.

DJIA : Risk of a correction this week.

Earnings are coming in thick and fast and are less than impressive so far, placing the Dow at some risk of a pullback to 12,150 or so and possibly down to nearer 11,850
Trade View
• Momentum is decreasing, the market is struggling but the Dow can keep the trend intact for a while longer given any dip is met by fresh buyers – as has been the case for several quarters now.
• In terms of technical levels, use 12,116 to 12,150 as the first decent support. If it holds, fine, then a new high or at least a retest of 12,500 should be in store.
• However a breakdown below 12,100 should result in a pullback to 11,850 or near, so the week ahead does have more risk attached than seen since the Japan tragedy.

S50H11 : Weekly close at 700 will do… just.

Closing right on the 700 mark, TFEX Set 50 futures front month contract has key support at Thursday’s low at 694, and as long s this levels holds on a daily closing basis there will be hope for a snap reversal in the current correction wave.

There is further support at 688 then a more substantial base at and very near 680, but with a bit of luck and maybe some good news for a welcome change, a close Friday at 700 or a tad higher will at least be something almost positive for next week.

 

Nikkei 225 : 7000 is a major LT support

On a long term basis the Nikkei 225 has huge support at and near 7800. If this level is taken out it will be a very bad sign for both the market, with little support from here to 6900-7000.

Nikkei futures are currently trying to bounce a tad, but there does not seem to be strong buying. We are monitoring the Nikkei futures as a key global indicator for now, a 15 minute chart of which can be seen below.

 

 

 

 

 

 

 

 

 

 

 

 

Dow Jones Industrial Average

Coming off as expected last week, Friday’s bounce leaves the Dow with a critical barrier from 12,130 to 12,200.

Trade View
• It remains to be seen if the Dow will manage another breakout move in coming days, but it looks possible, with a test of 12,130 if not nearer 12,200 expected.
• We view 12,020 as the first support of importance, but if it fails there may well be a pullback to the 11,800-11.700 range.
• A breakout above 12,200 will have 12.260 to 12,280 as the immediate target.

FIN Sector : Supports at 800, 780 then 745

The FIN sector’s week chart shows all is not well. Closing at 821.33 there is a cluster of support at at 815-817, but it looks to us as if it may come down to 800 over coming sessions, with some chance it will not hold here and retest 780 or so very soon.

On the week chart a breakdown scenario at 78 would place 735-745 as the target zone, which is possible given uncertainty re brokers, of not all stocks in the sector.

 

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