Markets Steady Ahead of German IFO Report; Key S&P 500 Level Seen at 1400

The Euro is rolling over from the highs posted at the end of last week as traders square positions ahead of the German Business Confidence data released later today.  The report is expected to show that confidence has risen to its highest level since the middle of last year, as the debt situation in Greece continues to see progress.  Adding to what could turn out to be a positive data is the story in Europe suggesting that the EU is planning to combine temporary and permanent bailout funds so that future debt problems can be dealt with more quickly.

In the UK, the FTSE 100 future are pointed toward a higher open, with today’s main macro release coming with the Nationwide Housing Prices and corporate earnings coming from Lamprell, Kentz Corp., Slamander, and A.G. Barr.  The main story in British equities last week was the decision in Oman to support the merger of HSBC with Oman International Bank.  This helped lift financials on the day, keeping the index near its monthly highs.

In Asia, stocks are moving modestly higher with export sector stocks supporting the move.  Hitachi, Nissan, Panasonic and Suzuki are some of the names supporting the move, as a weaker Japanese Yen is encouraging traders with respect to Trade Balance figures and the electronics and automotive industries have the most to gain if these expectations turn out to be accurate.  The Nikkei 225 is trading off of its highs but is still managing to hold above key psychological levels at 10,030.

In the US, equity markets are unchanged ahead of today’s Pending Home Sales, Chicago Fed survey, and the Dallas Fed Manufacturing report.  Corporate earnings are mostly second-tier but will come from Apollo Group, Landec, Cal-Maine Foods, and Saratoga Resources.  In Europe, both the DAX and CAC are pointed to a higher open, with today’s volatility likely to be driven by the German IFO and Italian Consumer Confidence Index.  Trading volumes are mostly lower to start the week with asset prices confined to tighter than normal ranges and this could continue until the more market moving data is seen later in the week.

Technical Analysis:


 

The USD/CAD is caught in a descending triangle on the longer term charts, with critical support at 0.9890 coming under pressure at the moment.  We have yet to see a convincing break of this area, however, so there needs to be a daily close below here before the bear run can be expected to continue.  0.9890 is historical support as well as the 61.8% Fibonacci retracement of the move from 0.9370, so long positions can be taken in this area as long as 0.9890 is not convincingly broken.

The S&P 500 is trading within some clearly defined Fibonacci ranges, with key resistance coming in just below 1400.  A break here turns the short term bias to bullish and targets 1410 first, on the hourly charts.  First support comes in at 1390, and the MACD reading has just turned to negative territory, so short positions can be established with tight stops.

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