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FINANCIALS
BOND MARKET RECAP
5/14/2014
We are at a loss to explain the direction and the magnitude of the rally in the Bond market today. In fact, one
would have expected to see moderate weakness in the Bonds in the wake of the hotter than expected US PPI
results, but apparently the Treasury trade is instead focused on the lack of US and global

growth. In other words, the bull camp simply discounted the inflation threat and instead embraced ideas that data throughout the world is
failing to live up to lofty expectations. On the other hand, if the world is so fearful of sagging global growth, it is
somewhat surprising that the trade hasn’t turned more negative toward equities. June Bonds saw a higher open
and closed in the upper half of today’s range as the market made a new contract high on the rally. The strong start to the June 10 Year Treasury Notes trading session was seen as a positive and was later confirmed by a higher close as today’s close above yesterday’s high is viewed in favor of the bull camp.
Technical Outlook
BONDS (JUN) 05/15/2014: The rally brought the market to a new contract high. The crossover up in the daily stochastics is a bullish signal. Momentum studies are trending higher but have entered overbought levels. The
market’s close above the 9-day moving average suggests the short-term trend remains positive. There could be
more upside follow through since the market closed above the 2nd swing resistance. The next upside target is
138-050. The next area of resistance is around 137-210 and 138-050, while 1st support hits today at 136-090 and below there at 135-120.
10 YR TREASURY NOTES (JUN) 05/15/2014: Momentum studies are trending higher but have entered
overbought levels. The market’s close above the 9-day moving average suggests the short-term trend remains
positive. The market’s close above the 2nd swing resistance number is a bullish indication. The next upside target
is 126-085. The market is becoming somewhat overbought now that the RSI is over 70. The next area of
resistance is around 125-305 and 126-085, while 1st support hits today at 125-060 and below there at 124-230.
STOCK INDICES RECAP
5/14/2014
June S&P E-Mini finished down 8.75 at 1885.5, 11.75 off the high and 3.25 up from the low.
US equity markets grinded marginally lower during Wednesday’s session as they continued to correct yesterday’s
record-breaking performance. Stocks garnered a little bit of a bounce following this morning’s April Producer Price
data that came in a bit hotter than expected. However, some traders noted the growing threat of profit-taking as the major indices held near record-high levels. Shares of Deere & Co. tumbled more than 2% during the session
after reporting quarterly results earlier that came with a downwardly revised revenue forecast. An added measure
of weakness came with a better than 1% decline in the shares of IBM as their CEO addresses Wall Street
analysts. Meanwhile, there appeared to be some sector rotation taking place with modest gains in defensive-
related sectors like utilities. Downside leadership was seen in financial and consumer discretionary related shares. Earnings after the close are expected from Cisco Systems.
Technical Outlook
S&P 500 (JUN) 05/15/2014: A crossover down in the daily stochastics is a bearish signal. Momentum studies
trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The defensive
setup, with the close under the 2nd swing support, could cause some early weakness. The next downside target
is now at 1872.68. The next area of resistance is around 1892.95 and 1902.47, while 1st support hits today at 1878.05 and below there at 1872.68.
S&P E-MINI (JUN) 05/15/2014: Rising stochastics at overbought levels warrant some caution for bulls. The
market’s close above the 9-day moving average suggests the short-term trend remains positive. The market is in a bearish position with the close below the 2nd swing support number. The near-term upside target is at 1902.62.
The next area of resistance is around 1893.00 and 1902.62, while 1st support hits today at 1878.00 and below there at 1872.63.
NASDAQ (JUN) 05/15/2014: The market back below the 60-day moving average suggests the longer-term trend
could be turning down. Studies are showing positive momentum but are now in overbought territory, so some caution is warranted. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. There could be some early pressure today given the market’s negative setup with the close below the 2nd swing support. The near-term upside target is at 3635.25. The next area of resistance is around 3624.50 and 3635.25, while 1st support hits today at 3593.00 and below there at 3572.25.

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