Thoughts from the Trading Floor 28th January 2013

Still no sellers

Last week saw the continued rise of stock futures markets with little in the way of sellers entering the markets. The grind higher this year has been on low volume and low volatility and the theme continued last week. While the cash continues to hover just above the 1500 level the futures came mighty close to touching that mark too, leaving a high of 1499.25 on Friday. We are still yet to see a genuine pull back - with the two drops of note coming in the European session in the last couple of weeks being immediately bought back.

LTRO lifts equities

Friday saw more bullish moves in equity futures - particularly in the Dax as the ECB announced that €137bn would be paid back from the first 3 year LTRO - above analyst expectations of €100bn. It was a perceived boost in confidence from the banks themselves in the state of lending conditions and health of financial institutions.

US data in focus

This week will see the US back into focus with a number of economic releases as well as the Fed meeting (though little is expected from the FOMC). Consumer Confidence and the first release of Q4 GDP will be important, but will still be trumped by the employment situation on Friday. Potential for some more genuine, volume-induced moves this week.

Last/First day of the month

A quick note on European equities; in the past whenever we have seen a strong performance in equity futures over the month, there is often a big sell off heading into the cash close at 16:30GMT so keep an eye out for this. If this is the case then we can expect another strong day on the first day of the month for February.

Technical Outlook

The momentum continues to be to the upside with the psychological 1500 level now just a tad higher. Despite this the broader resistance area of 1495.50-99.50 mentioned last week remains in play, though we have yet to see any responsive sellers here yet. Through the 1500 level high volume areas are marked at 1502.75 and further up at 1513.75-14.50. The medium term picture only changes on a break of 1432 with 1445 also an important area. Closer to home though we may see some selling should we break through 1482-84 with 1476.50 and 1460.25 the targets lower down.

Important events this week
•    Monday:  US Durable Goods, Pending Home Sales
•    Tuesday: US Consumer Confidence
•    Wednesday: US ADP Employment, GDP (Q4 1st est.), FOMC Announcement
•    Thursday: DE Unemployment, US Initial Claims, Chicago PMI
•    Friday: EU Manufacturing PMI’s, UK Manufacturing PMI, US Employment Situation, Michigan Confidence, ISM Manufacturing