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Monday 09th of December Market Report

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Monday 9th of December 2013 as of 12:00 CET

Friday, the US nonfarm Payrolls came out a bit better than expected, adding 203k jobs in November. The equity market’s initial reaction was lower, but it quickly reversed higher and tested the highs in the S&P 500 futures. The tapering talk did not get any momentum even though the data was strong enough to suggest more focus on the tapering should have emerged. This is very surprising given that the market is boosted by cheap money from the Central Banks, but a good US retail sales number later this week could change that focus quickly.

S&P 500 futures are trading around the unchanged mark at 1805 and Dax futures are up 6 points at 9180. Crude tested the 98 level this morning and the Euro is is trading above 1.37.

Over the weekend we got strong data out of China, export data, released on Saturday, showing increase by 12.7%Y. The data were boosted by hot capital inflows.

According to Morgan Stanley FX Morning report “ China’s authorities have sounded the alarm and introduced regulation to reduce loopholes, which had allowed the overstating of exports. Worryingly, imports grew by a less-than-expected 5.3%Y, suggesting that the rebalancing of China’s economy is making only slow progress. Concerning the inflow of hot money into China, there is good and bad news. Hot money always moves into the direction of high short-term return expectations. Investors placing funds into SPVs, which then lend at inflated rates into the Chinese economy, must believe in short-term stability, which is the good news. Otherwise, this speculative inflow would not happen. Recent data surprises in China were on the positive side, supporting the notion of bullish short-term investor flows. Note, steel prices, an indicator for domestic investment, have picked up over recent weeks. “

The calendar is light this week, with main event being the US retail sales out on Thursday.

Full earnings calendar can be found here at Bloomberg: http://www.bloomberg.com/apps/ecal?c=US

VIX closed at 13.79 Friday, this is pretty much on the low of the range, and it looks attractive to get long at these levels in our opinion. However keep in mind that the all-time low in the VIX is around 10, so given the fact the the S&P

Technicals

Market

S&P 500 emini (ES)

Dax

Crude

Corn

Eur/Usd

Res 3

1828

9330

99.00

470

1.3910

Res 2

1812

9275

98.30

464

1.3800

Res 1

1807

9240

98.00

459

1.3730

Sup1

1797

9170

97.30

434

1.3650

Sup 2

1785

9130

96.90

427

1.3530

Sup 3

1777

9080

96.40

420

1.3460

ATM calls Vols. nearby month

12

14

21.13

30.89

7.73

100 EMA

1644

8633

99.00

486

1.3279

200 EMA

1595

8334

101.18

520

1.3202

14 Day avg. Volume

1606K

89K

163K

85K

159K

S&P 500 Emini futures – Bullish momentum is intact above 1797 support today and the key resistance levels are 1807 and 1812, which could be levels to use to sell towards. The longer term objective up at 1828 is still in play for the longer term bulls. A break below 1797 would put focus back towards the downside and a key objective is to try and test the 1775 support level for the bears.

Dax futures – Big resistance towards 9240 and the bulls needs to take out this level very soon to avoid a setback towards 8960. Given the rally in the US Friday, we expect to see interest to buy dips, at least early on.

Corn –  Stronger USD hurting corn and cannot really get any real bounce so far, still looks like a long trade, but need to see momentum to get into this one. 

Crude – Key resistance is 99 level at the moment and below this level the upside is limited. Daily support is down at 96.90 that needs to hold to keep the recent upside momentum going.

Euro – Selling rallies looks the most attractive right now at least below 1.3800 level for now. Structural and fundamental reasons that should be negative for the Euro in 2014 could make EURUSD short the big trade of 2014. We think more focus will come back towards the Euro zone economic weakness in the next 6-12 months, with potential crisis in French bond markets, which will force ECB to act with more liquidity. At the same time we expect the tapering in the US to start taking shape, with higher rates in the US benefiting the USD.

Today’s Economic Calendar (CET):

No Major Economic data today

 

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Risk Warning:  

Any information in this report is based on data considered to be reliable, but no representations or guarantees are made by KBR Capital Partners AS with regard to the accuracy of the data. This information is provided on condition that we accept no responsibility, legal or other for its contents. We, including our directors, officers, employees or publishers, disclaim all liabilities. Any statement constitutes only current opinions, which are subject to change. Neither the information nor any opinion expressed shall be construed to be, or constitute an offer to sell or a solicitation of an offer to buy any investments mentioned herein. Prices can go down as well as up. There is a significant risk involved in derivatives trading, including the risk of loss greater than the original investment. Past performance is no guarantee of future results. Conditions can vary from client to client, and therefore influence performance. The opportunity for profit creates a corresponding risk of loss. Anyone wishing to invest in any of the products mentioned should seek their own financial or professional advice.

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