This week will be relatively light on the US economic front, here's a breakdown of the week's economic events...
You can click on the calendar for a larger view. The main events other then F_E_D speak, will be Durable Goods on Wednesday, Chicago PMI and Personal income on Friday. The trend in US macro-economic data was strong early in the year largely due to seasonal adjustments, but as we have moved out of the seasonal adjustment period, the reports have been coming in pretty bad with over 80% of the last 14 important economic indicators missing. Whether that trend continues with the above economic data will probably weigh on the tone of the market in the later half of the week. There's no lack of F_E_D speeches this week, maybe we'll here something surprising. As of late several F_E_D speakers have been talking about hiking rates earlier then expected and downplaying additional stimulus/QE.
As I mentioned about a week ago, the EU has been largely sidelined for a month or so as far as the market's interest has been concerned, but it is rolling back in to rotation and EU events will play a bigger role moving forward. This week specifically, the German IFO Index will be watched after a weak Euro-zone Flash PMI and the Euro-area Flash CPI will be watched by the market. Friday and Saturday there will be an EU Eco-Fin meeting to discuss the ESM bailout mechanism, I doubt that will effect trade this week except in the form of sewing circle rumors and comments that come out and are quickly denied as is the usual case in the EU.
China's official Flash PMI will be a market moving event, but that won't come until Sunday, after the week Flash PMI for China last week.
As for the market technicals,
Friday's underlying trade ended on a weak note as can be seen above in the SPY.
Multiple negative divergence have sent the market gapping lower, the morning gap has been where the market movement and volatility and even trend have been. Intraday trade has faded those gaps, seemingly trying to keep the "buy the Dip " crowd in the game. I will even admit myself, emotionally, intraday trade feels like the market is more bullish then what the trend is depicting, albeit a new trend bout a week old, but the first week the market has closed in the red all year. We do have some quarter end window dressing, but don't forget about the T+3 settlement rule, that gives Institutions until Tuesday to make changes in window dressing, There is a relative positive divergence above at the white arrow, that may have already partially played out on Thursday and Friday, but we do still have at least 1 decent unfilled gap and this market has been very diligent about filling gaps.
The gap from 3/20 is just about filled, the gap from 3/22 is still open. In the near term for this week, the 10 and in some cases, 20 day moving averages will receive a lot of attention from traders. The SPX, NDX and IWM are at the 10-day, the DOW hit the 20 day and is just on top of the 10-day. Although the Russell is at the 10-day, it has seen the most bearish volatility and movement and thi is the average that should be leading the market in a risk on move.
As far as the open tonight...
Here's where the Euro opened and has lost some ground, but this is still very early as Europe opens at 3 a.m. EDT.
The recently more important AUD opened like this tonight, this has had a stronger correlation with the market and seems to be leading the market.
Here's the longer term AUD trend and in the red box is tonight.
Here's the longer term trend of the SPY in green vs the AUD in red.
And zoomed in you can see it is still leading the market as it was divergent in the yellow box leading the market lower. The AUD on this chart does not reflect tonight's open in FX trade.
ES looks like this since opening tonight...
ES open in the light shaded area... As you can see, 3C is leading negative as of now and ES has leaked lower since opening. We'll see what European trade does with it, as of now it looks to be on a trajectory to keep losing ground.
Of course well see what AAPL has in store, it is close to support that has been tested numerous times, it will certainly be on our radar all this week.
That's it for now unless something big happens and happen to be awake to catch it (I usually like to check ES around the EU open).
Every one have a great week!
