Morning Updates and Range Estimates for 02/06/16
Today’s range is 154-158. 160 seems like critical resistance yesterday but i am going to go for broke and expect another weak day, hence lower resistance level at 158. I like what i saw yesterday afternoon, and since it was only the first day of selling after some strength for the past week, i expect this selling to have some continuation today. USD has turned down and probably would put a little bid tone in USD/JPY, just a little. i expect the market to test the lows this week or next. SHFE looks really weak, with the market only putting up a small reaction to the upside before the downtrend continues. Industrial metals continue to be under pressure.
Opec: Any deal that will upset production seems unlikely. Saudi Arabia has 72% of revenue coming from oil and 98 billion dollar budget deficit last year. So far every measure it has taken seems to be being able to gain more market share. I doubt this will change in the intermediate term. Crude prices are off the hourly lows despite the lack of a new deal.
China Manufacturing PMI: roughly inline with expectation. I think we will see a bottom soon enough after almost 6 years of slowing down, but remember, there is no obvious correlation between the performance of the china economy and it’s stock market.
ECB: set to keep interest rates firmly on hold, and likely to raise growth and inflation forecast. With the impending Brexit, i can’t see anything but volatility in the Euro for the weeks to come.
US Equities: still loitering at the highs with its new found strength since the bottom early this year. I think it shouldn’t be here and should be much lower in the months to come, but hey, don’t fight the trend! Bull markets are born amidst a wall of worry.
