ECONOMIC CALENDAR
(All times GMT) (DAX related highlighted Red)
Monday 21st March
2pm – US existing home sales (February): expected to be 5.5 million, from 5.47 million annual rate.3pm – eurozone consumer confidence (March, flash): forecast to fall to -9.7 from -9.
Tuesday 22nd March
8.30am – German mfg PMI (March, flash): expected to rise to 53.1 from 50.5.
9am – eurozone mfg & services PMI (March, flash): mfg PMI forecast to fall to 50.7 from 51.2, while services drops to 53.2 from 53.3.
9am – German IFO business climate index (March): expected to rise to 106.5 from 105.7.
9.30am – UK CPI (February): YoY rate forecast to remain at 0.3%.
10am – German ZEW economic sentiment index (March): forecast to rebound to 5.3 from 1.
1.45pm – US mfg PMI (March, flash): expected to fall to 51 from 51.3.
Wednesday 23rd March
2pm – US new home sales (February): expected to rise to an annual rate of 510,000 from 494,000.
2.30pm – US crude oil inventories: forecast to rise by 1 million barrels, down from the 1.3 million increase in the previous week. Gasoline stocks expected to fall by 1.4 million, from a 747,000 drop.
Thursday 24th March
9.30am – UK retail sales (February): expected to fall by 0.3% MoM from a 2.3% rise in January.
12.30pm – US durable goods orders (February): forecast to fall 1.2% MoM from a 4.9% rise (including transportation), while excluding transport the figures are -1.12% from 4.5% respectively.
1.45pm – US services PMI (March, flash): expected to rise to 51 from 49.7.
11.30pm – Japan CPI (February): forecast to remain at 0% YoY.
Friday 25th March
12.30pm – US GDP growth rate (Q4, final): expected to be 1%, down from a previous 2% estimate.
Last week was somewhat mixed for the DAX. Sentiment saw the index range bound with bias leaning toward the bullish side ahead of the U.S. Federal Reserve’s statement on Wednesday. However, the Dollar then fell against major currencies on Thursday, a day after the Federal Reserve pared back expectations for interest rate increases. This stance caused a surge in the Euro which put pressure on European equities namely bank stocks, with KBC, Deutsche Bank, Unicredit and Commerzbank falling as much as 5%. The DAX also suffered a major selloff falling from the high of the day at 10069 plummeting & eventually finding support into the key 9745/9720 zone.
On Friday, the DAX resumed its trend higher as traders covered short positions in the wake of the Federal Reserve’s cautious view on global market developments. The market was also bolstered by comments from ECB Chief Economist Peter Praet. He told Italian newspaper La Repubblica, that if “negative shocks should worsen the outlook or if financing conditions should not adjust in the direction and to the extent that is necessary to boost the economy and inflation, a rate reduction remains in our armoury”.
Looking at a Weekly chart of the DAX below, one can see price rallied last week, eventually finding resistance into the 50% Fib level (Nov15/Feb16) of 10064 as mentioned in last week’s Shiel Report article.
(click to enlarge)
Now if one looks at the Hourly chart of the DAX below, you will notice the market remains in an uptrend. It did sell off at 10069 just a few pips off the 50% Fib level, but managed to hold above the 50% level from the previous week’s rally at 9732. After a few short hours it moved back above the Hourly 200 Moving Average (green line in the chart below). You will notice, the market came down to test this level once again on Friday but failed, resuming higher once more. Price is now at a crossroads, with it failing to move above the Hourly 100 MA (blue line in chart below) on Friday with any conviction. The bias is Bullish above the Hourly 100 MA and Bearish below the Hourly 200 MA.
(click to enlarge)
The line in the sand for the Bulls this week will be the 9732 level. If the market breaks that, expect to see moves to retest the 9395 level. Conversely, if the market can get & hold above the Hourly 100 MA, the line in the sand for Bears this week will be 10069.
Bull targets :-
- 10069 (Last week high & 50% fib level[Nov15/Feb16] 10064)
- 10128 (Weekly R1 Pivot)
- Daily 100 MA (currently 10162)
- Weekly 100 MA (currently 10314)
- 10363 (Weekly R2 Pivot)
- 10387 (61.% Fib level [Nov15/Feb16])
- Daily 200 MA (currently 10414)
Bear targets :-
- 9741 (38.2% Fib level [Nov15/Feb16])
- 9762 (Weekly Pivot)
- 9653 (61.8% Fib level [10/17March])
- 9592 (Gap fill 11th March)
- 9527 (Weekly S1 Pivot)
- 9395 (Low from ECB announcement)
The week ahead is much lighter with regards to announcements. Equity news is fairly light, PMI data will take centre stage on Tuesday in conjunction with the German ZEW report. Then on Friday there will be the final Q4 US GDP number
Overall, the global environment looks much more supportive of growth, with central banks communicating a dovish intent to investors. Fund flows are yet to turn bullish – in one respect suggests a period of weakness ahead – but in another indicates there is money on the sidelines. That in turn could mean further gains for global stock markets.
The Average True Range for the last 24 weeks has been 546 pips for the DAX. Last week saw a sluggish 321 pips for a trading range as some investors took profits from the rally the week before. Previous weeks over the last month or so have seen in excess of 600 pips, so don’t be surprised to see something in that region this week
And remember…
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