Technical Analysis - European Financial Markets

Equities were higher firmly higher on the day. European equities rallied sharply from the off shrugging off the poor German economic data. US markets were also strongly higher despite seeing a dip to the unchanged mark on false news of a terrorist attack on the Whitehouse. Bunds were lower on the day reversing the gains seen early in the session. The European peripheral bonds saw another strong day with yields dropping to multiyear lows, The Euro currency was firmly lower on the day as the bad German data could now signal a potential rate cut by the ECB at the next meeting.

  

 
 

Market Analysis 24th April 2013:

  
 
 
 

Euro-Bund Futures (FGBL) Open:146.35 Low:145.91 High:146.77 Close:146.00

  
         
   

The Bund was lower on the day. The market traded to a new high for the year above the 146.54 level before turning around to sell-off sharply. If the 145.72 level is now taken out we could see a confirmation of a short-term top. This should allow for a stronger round of selling to hit the market. Otherwise, the market would need to see a quick recovery back through the 146.54 level in order to settle the volatility and for the market to build steadily higher.

  

Support

145.35-50 **
145.10-16 **
144.73-93 **
144.49 **
143.87-88 **
 

Resistance

1.127% *****
146.89 ***
146.77 **
146.54 **
146.15 **
 

   
 
 
 
 

FTSE 100 Index Futures Open:6247.5 Low:6219.0 High:6369.0 Close:6364.0

  
         
   

The FTSE was firmly higher on the day. The market took out the 6300.0-12.5 area to the way to 6350.0 a move through the 6370.0 level should allow for another strong bout of buying pressure as shorts continue to get stopped out. If the market can hold above the 6240-55 area, it could signal that a short-term low has been made for the market and allow for a steady trend higher once the sharper up-moves have dissipated a bit in the coming days.

  

Support

6300-12.5 **
6173.5-74 **
6159.5 **
6095-07 **
6007**
 

Resistance

6447-53 **
6419.5 **
6393-01.5 **
6370-74 **
6359.5**
 

   
 
 
 
 

EURO STOXX 50 Index Futures (FESX)Open:2531 Low:2519 High:2617 Close:2616

  
         
   

The EuroStoxx was strongly higher yesterday. The market took out the 2547-52 area on the way to taking out the 2600 handle. If the market can remain above the 2577 level on a test lower, it should settle into a firm up-trend. We could see another day or two of a firm push higher before the market settles into a steady trend higher. A push through the 2617-22 area may allow for another sharp bout of buying pressure. A failure to back below the 2547-52 area may signal yesterday as a sharp short-squeeze.

  

Support

2544-47 **
2481-88 ***
2423 **
2380-96 **
2354-60 **
 

Resistance

2683-89 **
2663-66 **
2594 **
2644-49 **
2617-22 **
 

   
         
 
 
 
 

DAX Futures (FDAX) Open:7485.5 Low:7450.5 High:7690.0 Close:7682.0

  
         
   

The Dax was strong on the day trading back up through the 7650.0 handle. The market may now have signaled a short-term low has been made and as long as the market can hang on to a good chunk of yesterday’s gains we should see another leg higher. A move through the 7751.5 level should allow for a strong continuation. A close below the 7545.5 level could signal that yesterday’s action was a sharp short-squeeze.

  

Support

7618.0 **
7545.5 **
7443-50.5**
7422 ***
7265**
 

Resistance

8047-89 ***           7967 ***
7897.5 **
7796 **
7751.5 **
 

   
         
 
 
 
 

Fundamental Analysis:

  
 
 
 

Economic Calender

  
         
   
Time (GMT) Country Data Month Expected Previous
09.00  DE

IFO Business Climate

APR 

106.2

 106.7
09.00      EZ IFO Current Assessment

APR 

 109.5 109.9
13.30 US

Durable Goods orders

 MAR -3.0% 5.7%

13.30

 US Durable Goods ex-transport MAR 0.5%

-0.5%
13.30 US

Cap good orders Nondef Ex Air

 MAR 0.3% -2.7%
   
         
 
 
 
 

Lesson From the Pros:German IFO survey

  
         
   

The IFO (Institute for Economic Research) is responsible for producing the Business Climate Index each month.  Based upon around 7,000 survey responses from senior managers in manufacturing, construction, wholesaling and retailing firms, the Survey is accepted as a sound predictor of German and, by extension, European growth.  Respondents are questioned on both the current business situation and expectations over the next 6 months.  These results are released in the form of two sub-indices, the average of which is extrapolated to give the headline Business Climate Index.  Owing to its forward looking nature, the expectations index attracts the majority of our traders’ attention.     

The IFO is a very timely report given that it is released in the same month to which it refers.  Also, the IFO has historically had a strong correlation with the US ISM Manufacturing report lending it credibility amongst our traders.

    
         
 
 
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