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FINANCIALS
BOND MARKET RECAP
5/12/2014

June Bonds finished down 0-130 at 135-110, 0-110 off the high and 0-060 up from the low.

June 10 Yr Treasury Notes closed down 0-085 at 124-235. This was 0-020 up from the low and 0-045 off the high.

A distinct downside breakout in June Bonds on Monday injured the technical condition of the charts. While the breakdown on

the charts took place in the absence of fresh US data, US data from last week continues to project forward momentum in the economy and that could set the stage for an important reaction to Tuesday’s Retail Sales results. Gains in US equities added to the downside liquidation in Treasuries on Monday, as a return to all-time high ground seems to have improved overall macro-economic sentiment. June Bonds began the trading session on a weaker note and that selling trend persisted through the day. Today’s trading range in June 10-Year Treasury Notes was narrower than the average of the previous 5 sessions.

Technical Outlook

BONDS (JUN) 05/13/2014: Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. A negative signal for trend short-term was given on a close under the 9-bar moving average. The market tilt is slightly negative with the close under the pivot. The next downside objective is now at 134-260. The next area of resistance is around 135-210 and 136-010, while 1st support hits today at 135-020 and below there at 134-260.

10 YR TREASURY NOTES (JUN) 05/13/2014: A crossover down in the daily stochastics is a bearish signal. Daily stochastics turning lower from overbought levels is bearish and will tend to reinforce a downside break especially if near term support is penetrated. The close below the 9-day moving average is a negative short-term indicator for trend. The close below the 2nd swing support number puts the market on the defensive. The next downside objective is 124-155. The next area of resistance is around 124-285 and 125-030, while 1st support hits today at 124-190 and below there at 124-155.
STOCK INDICES RECAP
5/12/2014

June S&P closed up 19.1 at 1892.5. This was 10.5 up from the low and 0.5 off the high.
June S&P E-Mini finished up 19.5 at 1893, 0.25 off the high and 19 up from the low.
June Dow finished up 128 at 16655, 5 off the high and 55 up from the low.

US equity markets rallied throughout Monday’s trading session, with the Dow Jones Cash Index climbing to a new all-time high and the S&P 500 close behind. While there was some concern out of Ukraine after weekend elections, strength in momentum names and fresh merger and acquisition activity provided the bull camp with a reason to buy. Some traders viewed the ongoing acquisition trend in equities as a vote of confidence. A quiet US economic calendar left the major indices focusing on sentiment for direction. Most of the major S&P sector indices were higher, led by strength in technology and material-related shares.

Technical Outlook

S&P 500 (JUN) 05/13/2014: The market rallied to a new contract high. A bullish signal was given with an upside crossover of the daily stochastics. Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. A positive signal for trend short-term was given on a close over the 9-bar moving average. If yesterday’s gap higher on the day session chart holds, additional buying could develop this session.

There could be more upside follow through since the market closed above the 2nd swing resistance. The next upside objective is 1906.45. The next area of resistance is around 1902.10 and 1906.45, while 1st support hits today at 1884.30 and below there at 1870.85.

S&P E-MINI (JUN) 05/13/2014: The market rallied to a new contract high. The crossover up in the daily stochastics is a bullish signal. Rising stochastics at overbought levels warrant some caution for bulls. The market’s short-term trend is positive on the close above the 9-day moving average. Since the close was above the 2nd swing resistance number, the market’s posture is bullish and could see more upside follow-through early in the session. The near-term upside objective is at 1907.56. The next area of resistance is around 1902.62 and 1907.56, while 1st support hits today at 1883.38 and below there at 1869.07.

NASDAQ (JUN) 05/13/2014: The cross over and close above the 60-day moving average is an indication the longer-term trend has turned positive. The crossover up in the daily stochastics is a bullish signal. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The cross over and close above the 18-day moving average indicates the intermediate-term trend has turned up. Follow through buying looks likely if the market can hold yesterday’s gap on the day session chart. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. The next upside objective is 3622.12. The next area of resistance is around 3576.75 and 3622.12, while 1st support hits today at 3519.25 and below there at 3507.13.

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