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Wednesday 18th of September Market Report

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Wednesday 18th of September 2013 as of 13:00 CET

Nikkei rallied 1.35% overnight and the Dax spiked to new multi month high (8647) this morning. It seems like most people think the equity market will continue to rally higher.

The big question is how much tapering will be announced by the Fed tonight at 20:00 CET. It looks to me like the market is expecting something in the range of 10-15 bln and majority of that should be in Treasuries. Another market mover is of course the FOMC press conference at 20:30, where Bernanke might give us some surprises or not?

The biggest risk in my opinion would be if the Fed is a bit more aggressive regarding the tapering, which would send the market much lower. However I don’t think the Fed will risk potential back drop in the economy so I expect the tapering will be very slow and gradual and the Fed will most likely confirm this stance.

On a side note the GBPUSD is approaching the 1.60 level and there is good resistance towards this level.  

We still have the big open gaps from Monday below current price in both S&P500, Dax futures and US 10 year treasury among others that is something to watch.

Asian equity markets traded mixed overnight Nikkei 225 up 1.35%, Shanghai up 0.21% and S&P/ASX 200 down 0.25%

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

VIX closed at 14.43 yesterday, which I expect to come down following the Fed announcement tonight and I think towards the 12 level it would be a decent long trade.

Technicals

Market

S&P 500 emini (ES)

Dax

Crude

Corn

Eur/Usd

Res 3

1720

8700

109.77

504

1.3458

Res 2

1712

8665

109.17

493

1.3423

Res 1

1706

8630

108.73

485

1.3390

Sup1

1695

8575

106.07

468

1.3248

Sup 2

1690

8521

105.56

463

1.3223

Sup 3

1680

8453

104.22

453

1.3163

ATM calls Vols. nearby month

13.75

14.92

21.13

30.89

7.73

100 EMA

1634

8186

100.03

530

1.3150

200 EMA

1586

8010

97.94

564

1.3073

14 Day avg. Volume

1391K

88K

165K

83K

185K

 

 

S&P 500 Emini futures – Gapping higher and reaching high of 1712 yesterday, and this massive gap higher is a bit difficult, because we often see some initial selling to try and close the gap and the reaction of this price action is important to watch to see how strong the market is. The gap  will be closed by a move down to 1690.50.

Dax futures – Big overhead resistance at 8665 that is the next big resistance level. Key support is the former high at 8561, so as long as this level holds the market is looking bullish. The open gap is down at 8521.

Corn –  Rolled to the December contract and we have good support around the 454 level and as long as this level holds there is potential for a move higher. If 454 is broken, the key support at 429 is within reach.

Crude – With Syria conflict less likely to escalate in the near term, it looks like some of the risk premium should come out of Crude.  Key support is 104.22 and I would not be that surprised if this level is taken out this week.  Watch out for the DOE inventory data at 16:30.

Euro – Have falling resistance coming in at 1.3390 that is a key pivot point in my view for the direction of the Euro the next few days. If this level is taken out the focus is on a test of the 1.3450-1.3500 key resistance level. If it fails up here, then the next leg should be a deeper sell off.

Today’s Economic Calendar (CET):

14:30     US Building Permits (0.95M)

16:30     DOE Crude Inventories

20:00     FOMC Statement and Economic Projections

20:30     FOMC Press Conference

 

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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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