Wakeup Call: Equities Will Trade Higher In The Beginning - But May Turn Lower In The Afternoon

Daily Forex Fundamentals | Written by Saxo Bank | Nov 12 08 08:15 GMT |

The S&P500 closed above the important 895-level, but the upside momentum in the S&P500-future is very weak. We expect the European equity markets opening higher, but could turn negative. Calendar Economic Data Releases Country Name Time (GMT) Expectation Prior Comment UK Jobless Claims Change (OCT) 09:30 40.0K 31.8K EC E-Z Industrial Production YoY (SEP) 10:00 -1.2% -0.7% UK Bank of England Quarterly Inflation Report 10:30 - - What's going on? US House Speaker, Nancy Pelosi calls for aid to the faltering auto makers. GM trading at 2.92 (lowest since 1943). Ford at 1.8, lowest since 1982. Our global top 100 stocks CDS price index dropped 12 bps. to 101 bps. from Monday. That is a comforting sign in the dark. The RUB was devalued 1% from its dual basket (45% EUR, 55% USD). Russian FX reserves are under massive pressure after the CB lost 19% in 12 weeks. A lot of speculation that the RUB will see additional devaluations. China’s trade (both exports and imports) are slowing at a rapid pace, but the Baltic Dry Freight Index is about to stabilize. Money market spreads are continuing to narrow, but it seems that the Commercial Paper market in Europe is about to freeze over again, raising the question if MM spreads are representative of the credit crunch conditions. FX FX Daily stance Comment EURUSD 0 Looks negative, but momentum uncertain. 1.2625 first resistance EURJPY 0 New 10-day lows don’t hold, raising uncertainty. 123.24 resistance USDJPY 0 Rangy. Bearish below 97.00 area. 98.00 is resistance. GBPUSD - Still in bearish mode, but low momentum 1.5500 closest resistance. USDCAD + Needs good upside follow-through to stay bullish 1.2000 area key support. Equities Equities Daily stance Comment DAX + Buy on rally. Target 4940 intially, 4989 finally. S/L at 4830. FTSE + Buy on rally. Target 4343 initially, 4378 finally. S/L at 4300. S&P500 + Buy on rally. Target 913 initially, 922 finally. S/L at 899. Nasdaq100 + Nikkei225 + Futures Commodities Daily Stance Comment Gold (XAUUSD) - Sell rallies towards 746. Stop above 751. Target 735. Silver (XAGUSD) - Sell below 9.70 and target 9.25. Stops above 10. Oil (CLZ8) - Sell below 60 with stops above 61.30. Target 58. Analysis Disclosure & Disclaimer Saxo Bank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Saxo Bank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated. Saxo Bank utilizes financial information providers and information from such providers may form the basis for an analysis. Saxo Bank accepts no responsibility for the accuracy or completeness of any information herein contained. Any recommendations and other comments in Saxo Bank's analysis derive from objective fundamental macro economical and company specific calculations, statistical and technical analysis, and subjective general market assessment. If an analysis contains recommendations to buy or sell a specific financial instrument, such recommendation should be seen as Saxo Bank's opinion that the specific instrument will respectively outperform the relevant market or underperform compared to the market. Saxo Bank's recommendations should statistically correspond to an even distribution between buy and sell recommendations. The recommendations may expire promptly due to market volatility and in general, Saxo Bank does not anticipate its recommendations to be valid more than one month. An analysis will be updated if and only if a market development or other issues relevant to the analysis render a new analysis on the same topic relevant. Saxo Bank's analysis does not cover any specific financial product over time but only products which Saxo Bank's strategy team finds it important to cover at any given point in time. In order to prevent conflicts of interest, Saxo Bank has established appropriate business procedures, incl. procedures applicable to research and analysis to ensure objective research reports. Saxo Bank's research reports have not been discussed with the parties, e.g. issuers of securities, mentioned in the analysis. Saxo Bank is under supervision by the Danish Financial Supervisory Authority. Saxo Bank does not engage in corporate finance activities and accordingly, Saxo Bank's employees, incl. the persons responsible for an analysis, do not receive remuneration associated with investment banking transactions.