U.S. stocks extended losses into a fourth straight session Monday, as Wall Street fretted about the economy. The Dow Jones Industrial Average ended down 61.3 points to 12,089.96. The Standard & Poor’s 500 Index declined 13.99 points to 1,286.17, its first close below 1,300 since March 23, and break through some key support levels while the Nasdaq Composite Index closed down 30.22 points at 2,702.56. The intraday support was really at the February and April intraday lows around 1,293. Traders will be looking for a violation of this support to perhaps trigger some stop-loss selling.
The signs of an economic slowdown became more evident today with another decline in stocks. Outside markets had inside ranges for the most part as we lack any real economic data until Wednesdays energy inventory report. The recent swing in natural gas prices contradicts supply and demand pressures, and today’s headline noting that global demand will increase by 50% in 2035 comes at the perfect time to draw in the average investor near the highs. If oil prices, and gas prices are heading lower due to a slowing economy, then it is only a matter of time natural gas will follow as we do not export the product, hence global demand will not affect our abundant supply.
On the European front, Portugal’s center-right party defeated the current governing socialist part on Sunday, which opens the door towards proper austerity measures and optimism towards a brighter future in light of problems in Greece. The Greek’s should learn from their neighbors and quit rioting when budget cuts are announced, and accept the road to recovery will be a difficult one while they move right with conservative leaders. There is no alternative other than another bailout for Greece, as the real uncertainty lies in implementing the proper measures for a balanced economy and possibly requiring strict conditions tied to the aid package to get it approved.
Today’s Important Economic Announcements (GMT)
7:15 AM CHF CPI m/m
9:00 AM EUR Retail Sales m/m
10:00 AM EUR German Factory Orders m/m
7:45 PM USD Fed Chairman Bernanke Speaks
Forex & Commodities Technical Analysis
Crude Oil
Light, sweet crude oil for July delivery fell 63 cents to $98.37 a barrel on the New York Mercantile Exchange during Asian trading hours. OPEC is set to meet on Wednesday, and there is a proposal for the Saudi Arabia’s to increase output to meet demand and combat rising prices. Fuel costs could very well be the tipping factor towards our global recovery, thus holding OPEC responsible for contributing to the current soft patch in our economy. In order for the commodity to confirm the bottom it will have to break and hold above the $100 level. We are likely to see $100.40 by Wednesday.
Stop Loss: 98.14
Take Profit: 100.40
AUD/USD
The Reserve Bank of Australia kept its benchmark interest rate unchanged for the sixth straight meeting in June, it announced on Tuesday. In a statement, the RBA said it was keeping its benchmark interest rate unchanged at 4.75%, broadly in line with expectations. The statement emphasized that the Board judged that the current mildly restrictive stance of monetary policy remained appropriate. In future meetings, the Board will continue to assess carefully the evolving outlook for growth and inflation. Following the decision, the Australian dollar was down against its U.S. counterpart, with AUD/USD shedding 0.24% to trade at 1.0686. We expect the Aussie to head south in the next 24 hours.
Stop Loss: 1.0772
Take Profit: 1.0608
GBP/USD
The value of retail sales in the U.K. unexpectedly declined in May, industry data showed on Tuesday. In a report, the British Retail Consortium said that retail sales declined by 2.1% in May, after rising by 5.2% in April. Analysts had expected BRC retail sales to rise by 2.0% in May. After two previous months distorted by the later Easter and extra bank holiday, this is a more realistic reflection of how tough conditions on the high street really are. This new evidence of weak spending shows how important it is to support this soft patch in the recovery by keeping interest rates low. Following the release of the data, the pound was down against the U.S. dollar, with GBP/USD easing down 0.04% to trade at 1.6351. Nevertheless, our bullish prediction are holding strong.
Stop Loss: 1.6322
Take Profit: 1.6400
Published by www.SolidityBrokers.com
