© 2012 ROHR International, Inc. All International rights reserved.

The full calendar is available through the link in the right hand column. Apologies for the delayed posting this week. We had some significant web connection failures earlier today. From last week onward we have been adding color-coding to the various reports and events to indicate the nature of the key influences. We will also be italicizing those reports and events which we add to the base table from other resources than the main table. That will assist with differentiating which bold font items are highlighted because of their importance, versus those that simply come from other sources.

This week typically sees a bit less economic data, even if some of it remains quite important. However, on many fronts this week in particular is likely to be one of the most convoluted, impactful weeks in the scope of recent trends in all asset classes. That is due to significant international influences on many fronts that overshadow things like the Tuesday’s preliminary European Purchasing Managers Indices and Euro-zone Industrial Production, Wednesday’s German IFO, and Thursday’s extensive US releases into a quieter day on Friday.

Prior to any further discussion of the balance of the calendar for this week, it is important to note that while more of our sources are listing European debt auctions, somehow they managed to come up with slightly different times for those auctions. As such, any of the times might be off by anywhere from 10 minutes to one hour. Not a major issue, yet still worth noting.

From this morning there were already many speeches and meetings, such as the IMF head Lagarde speech on Restoring Confidence and Growth. The financial luminary-speak continues right into tomorrow and all week. Tomorrow evening is President Obama’s State of the Union address, but the real fun begins with Wednesday’s opening of this year’s World Economic Forum in Davos, Switzerland; especially as Chancellor Merkel will give the opening address. That is followed by planned meetings and speeches, and typically disruptive ad hoc pronouncements right through the weekend. Wednesday morning is also the FOMC interest rate decision and statement, the most important of three central bank meetings this week insofar as it is followed by Chairman Bernanke’s press conference.

Along with that there are quite a few European ministerial meetings this week prior to and during Davos, releases of various central bank reports and working papers, and no small number of speeches in addition to those at the World Economic Forum. At least it’s a quieter week on the government debt auction side, even if more critical factors related to that pick up again quickly with peripheral European bond offerings and the EU Summit next week.

General Market Observations

As far as the markets are concerned, it still feels like equities are attempting to escape the important March S&P 500 future resistance in the 1,310 area (with a Tolerance to 1,315) noted in our extensive macro-technical analysis posts last Thursday and Friday. It is likely either headed for 1,340-50 or back down to 1,280 (or lower) from here.

EXTENDED TREND IMPLICATIONS

Those posts also include the important supports for the govvies that the markets slipped to this morning, such as March T-note future slipping near its 129-24 support, March Bund future being down into 137.50 area, and the March Gilt future testing 115.00-114.85. That is also very consistent with activity in foreign exchange, where the US Dollar Index is back down toward its late 2011 .7950 UP Break, which is a complement to the euro’s push to resistance at EUR/USD 1.3050-80. Please refer back to that analysis for more extensive individual market views.

Thanks for your interest.

© 2012 ROHR International, Inc. All International rights reserved.

There is a very interesting fundamental context in markets right now, and even in light of the price activity yesterday in other equities and asset classes much still rests with the S&P 500 future decision into the key 1,310 area resistance. The background on that is the same as yesterday’s post. So, very brief today, simply adding some evolution of the technical trend observations to that extensive previous trend analysis.

The US is still leading the other equity markets higher, which is part of what makes the March S&P 500 future decision so critical with the DAX and FTSE 100 obviously still lagging in spite of pushing above their near-term resistance of late. And before getting to the govvies and the US dollar it is important to note that both the Gold and Crude Oil are sagging in spite of the US equities resilience. Which highlights another interesting twist to the entire range of intermarket activity right now.

Beyond the precious metals into the industrial harbinger of what’s happening in the real economy, March Copper future has also had quite an upside run due to improved economic data. At the top of the week it exhibited a Breakaway Gap UP Break above 3.66, and has (not surprisingly) pushed up rapidly. However, that has left it up at its mid-September weekly gap lower in the 3.80-3.92 range, which is also formidable resistance around the bottom of its first half of 2011 trading range. Therefore, the industrial metal indication that would coincide with and reinforce the equities uptrend as an indication of much stronger economic activity is only on the cusp.

General Market Observations

The other very interesting development is that in spite of seemingly more constructive indications out of Europe, euro is sagging again without even reaching key resistance. Even though the US Dollar Index weakened off below its near-term .8050-30 support, it is right back up there. More critical support remains the .7950 area major channel UP Break. It is also the case EUR/USD rallied back above its major 1.2860 January 2011 low, yet with formidable resistance is still up in the mid-upper 1.3000 area that it has failed to even get near so far.

EXTENDED TREND IMPLICATIONS

Similar violation of near-term support is also apparent in European government bonds, but not in the US govvies as the March T-note has held so far no worse than 130-16 area. March Gilt future on the other hand violated its short-term support in the 116.50 area, and is now down near interim 115.50 support with more major support in the 115.00 area. Similarly in the March Bund future, key short-term support at 139.30-.20 was violated yesterday, with not much of a surprise this fomented another full point selloff.

Yet, in this case as well for the bi-polar Bund (exhibiting rapid vacillations between strong sister and weak sister status) this is not yet totally convincing. Ultimately extended support in the mid-137.00 area would need to fail to establish a full intermediate term trend reversal. Along with all that as a final note on those extended supports, March T-note future would also need to violate its lower support in the 129-24 area for confirmation of a more sustained trend reversal.

Thanks for your interest.

© 2012 ROHR International, Inc. All International rights reserved.

There is a very interesting macro-technical context to markets right now. As is the case in so many of these major psychological decisions, the S&P 500 is approaching a key technical resistance area that is also a major previous psychological decision threshold. That would be into the March S&P 500 future 1,310 area. There are quite a few reasons that is an important technical resistance.

Yet, the important fundamental/psychological aspects make this a very clear macro-technical crossroads for all the equities… and in that context the other asset classes as well. In the first instance, there is the fact that US is now leading the other, more challenged, equity markets higher. That is reasonable in light of improved US data pointing toward potentially better times in the key ‘conspicuous consumption’ economy.

So in some goodly measure there is the question over whether the improved data from the end of last year driving the continued equities rally is indeed going to continue in early 2012. There is also another important intermarket indication we have reviewed since the beginning of the year: the somewhat perverse “it’s all going up together” psychology. That was apparent in the strength of Gold and Crude Oil, which would not normally accompany the also somewhat atypical sustained overall up trends in the equities, govvies and the US dollar.

As we noted yesterday, that meant these markets were still very fraught, with the potential for a sharp trend reversal in one asset class or another. And after ignoring the serial new highs in the equities for the first two-and-a-half weeks of the year, those chickens finally came home to roost in the more pronounced weakening of the govvies and the US dollar today than anything seen since the first of the year. While still only sagging into or below short-term support so far, that is hardly the point.

The fact that classical countervailing intermarket activity is now apparent between the strength of the equities and weakness of those other two major asset classes is a telling change. This is also what makes the March S&P 500 future decision into the 1,310 area more critical than usual (more on that below.)

In addition to technical considerations, there are certainly plenty of politico-economic influences driving a significant macro-technical decision in the equities, and also other asset classes by extension. With the notable exceptions of last week’s OECD Composite Leading Indicators and today’s surprisingly abysmal Australian Employment data, the economic statistics have been very good.

However, other asset classes had been able to ignore the strength in equities in part because of the still radical risk factors that might percolate to the surface. The European Sovereign Debt Crisis focus is moving onto the Greek debt deal, and any chance for a successful Private Sector Involvement (PSI) is falling apart.

Whatever effect it might or might not have, it is also notable that the 1,310 area in the lead contract S&P 500 future is the same support violated at the end of last July, when the US Congress failed to deliver a meaningful debt reduction deal. It was in part the paltry overt spending cuts and that phony “Super Committee” compromise that left S&P 500 unable to get back above 1,310 back on August 1st. While the resurgence of the European problems were a major negative force back then as well, no doubt the US disarray contributed to the equities overall early August failure.

General Market Observations

On a purely technical level March S&P 500 future 1,310 area combines the nominal down trend off the weekly chart highs with the significant congestion from during the major top formation in the first half of last year. It is also just about as far as any of the bears would want to see the trend rally back into the overall range of that Head & Shoulders Top. Much higher than that might point to a new overall high.

EXTENDED TREND IMPLICATIONS

As for the counterpoint in the govvies, March Gilt future Closed right into key short-term support in the 116.50-.39 area (mid-December high), and March Bund future took a short, sharp spill below key short-term support at 139.30-.20 prior to closing just above 139.00. March T-note future remains resilient, holding right into its 130-16 area near-term support.

While all of those are still short-term levels, in fact they are already being challenged on the March S&P 500 future push into 1,310 is important. It both illustrates the degree of the countervailing intermarket activity now apparent in the wake of the extended equities rally, and sets the stage for a full point further drop to the next meaningful support in each of them if the equities should escape to the upside.

Similarly in the foreign exchange, the US Dollar Index Closed below its near-term support in the .8050-30 area, with the more critical support below the market in the area around the .7950 major channel UP Break from late last year (which was tested on the early year weakness prior to the recent rally.) That is most interesting because it is occurring on the EUR/USD squeeze back above the major 1.2860 January 2011 low that was violated on the weakness in the first week of this year. That said, the far more formidable resistance there as well is still up in the mid-upper 1.3000 area.

Thanks for your interest.

© 2012 ROHR International, Inc. All International rights reserved.

The Current Rohr Technical Projections – Key Levels & Select Comments (as of Tuesday’s US Close) are now available through the link in the right hand column. We have summarized some of the most interesting and telling tendencies below.

As noted in yesterday’s post, somewhat more upbeat economic data assisting the equities has also been putting a bit of pressure on the US dollar and primary government bond markets. Yet they have also been quite resilient, not exhibiting any UP trend reversing effects just yet. Adding to the somewhat perverse “it’s all going up together” psychology right now is the strength of Gold and Crude Oil, which would not normally accompany the combined overall up trends in equities,  govvies and the US dollar all together.

As such, we still see these markets as being very fraught, with the potential for a sharp reversal to the downside in equities a distinct possibility in spite of the early year sustained strength. However, it seems it will take much more of a catalyst than simply the recent (admittedly broadly anticipated) European sovereign debt downgrades to create any sustained equities pressure in the face of improved economic data.

However, the European Sovereign Debt Crisis focus is moving on to the Greek debt deal required to facilitate its next round of rescue funding. That is becoming more critical late this week (with possible extension into next week.) The one factor which might still assist the equities bears is the fact that any chance for a successful Private Sector Involvement (PSI) is falling apart.

There are many who would say that is also something which markets have already discounted. The idea that they will find some way to work it out because “they need to” is specious at best. That is distinctly similar to the discussion last summer over the US debt reduction negotiations. Up to the very end there was a major contingent (present analyst excluded since as far back as last spring) who also believed they could not possibly fail to achieve a successful outcome.

And the equity markets at that time also chose to drink the Successful Outcome Kool-Aid. It will be very interesting to see what happens if that troubled negotiation does indeed come to a bad end over the next week or so, as it will also be right into the G-20 Finance Vice Ministers meeting into this weekend. That’s going to leave a lot of room for dissention based on the comments we are already hearing out of the various players in Asia, the US and Europe…

…and now the IMF has weighed in on its further funding needs to mitigate any fallout from a European meltdown. Fasten your seatbelt.

General Market Observations

This all significantly revolves round the March S&P 500 future continued grind higher. While it has seemed very vulnerable at times, every selloff since the first of the year has held the next higher incremental support; substantially being the extended support around the most recently violated resistance in each case. That began with the gap above the 1,270 area inability to drop back below 1,264 two weeks ago.

And last Tuesday’s gap opening above key the previous Tolerance at 1,280.90 gap resistance was unable to Close back below 1,275.60 (last Monday’s Close from which it gapped up last Tuesday.) That was in spite of the extensive (if temporary) pressure last Friday. It remains the next lower key support. All of which left the door open for a push to the next important resistance at 1,310, which now seems to be in progress.

EXTENDED TREND IMPLICATIONS

Yet, in spite of that, the March T-note future has been unable to get back down to (much less below) its 130-16 support. And similar activity in other govvies even saw a new all-time high for the March Bund future. While backing off in the face of improvement in the euro from EUR/USD 1.2650-1.2550 support, the US Dollar Index has also only pulled back in an orderly reaction from its minor temporary push above .8133-44 resistance on Friday. While the various asset classes all remain more or less ‘up together’ it seems that taking short term views (or preliminary positions for broader trends) until the real catalyst for a bigger decision comes along is the most sensible thing to do.

The same is true for the February Gold future, as its recovery back above the key 1,615-30 resistance range sets that area as likely support even if it now much closer to important upper 1,600 to low 1,700 resistance. March Crude Oil remains erratic in the face of the unsettled Middle East situation, yet has still stalled around the top end of 102.00-103.39 resistance.

Thanks for your interest.

The full calendar is available through the link in the right hand column. From this week forward we will be adding color-coding to the various reports and events to indicate the nature of the key influences. We will also be italicizing those reports and events which we add to the base table from other resources. That will assist with differentiating which bold font items are highlighted because of their importance, versus those that simply come from other sources.

This is another important data release week, yet is less crowded and critical than some of the intense reporting last week even if the upbeat Chinese data has already been influential. Yet, continued sharp influences from any developments on the European Sovereign Debt Crisis will remain a major key even if the equities seem to be ignoring the recent sovereign debt downgrades for now (with more on that soon.) Thursday is a very key auction horizon once again this week as well.

The economic data has already begun as last week: mixed to strong, and it seems especially important the Australian, European and US numbers were also above expectations in the wake of the good numbers out of China. As far as further data throughout the week, while there are some interesting other reports it all comes down to a very crowded economic release schedule on Friday. That includes the Chinese MNI January Flash Business Sentiment, Italian Industrial Orders, UK Retail Sales and US Existing Home Sales. Another interesting week.

And among the more interesting events that will not occur on Friday is the seemingly significantly postponed meeting between Chancellor Merkel, President Sarkozy and Italian President Monti. (More on that soon as well.) As best as we can tell from press reports, that meeting will now not take place until the end of NEXT month!!

If that is true, it is yet another instance of the bombastic, bi-polar nature of the leadership in Europe right now. Chancellor Merkel and President Sarkozy attempted to defray criticism of Europe last week by asserting the full EU Treaty revisions would be done by the end of this month. That’s going to be pretty hard if they are not even meeting with Mr. Monti until the end of February. It is not too radical to note the vacillations are almost as troubling as the lack of real progress.

General Market Observations and EXTENDED TREND IMPLICATIONS

The economic data so far this week is constructive everywhere from China’s better-than-expected numbers this morning through Europe into the US. As such, the equities are benefiting quite a bit in spite of the still fraught general European Sovereign Debt Crisis situation, and Greece in particular. The latter reaches a hard deadline around the end of this week for any public sector involvement (PSI) in the debt deal necessary to facilitate the next tranche of funds to prevent a Greek bond default on March 20th.

The upbeat economic data is also putting a bit of pressure on the US dollar and primary government bond markets, yet not too any trend altering effect yet. Adding to the somewhat perverse “it’s all going up together” psychology right now is strength of Gold and Crude Oil, which would not normally accompany the combined overall up trends in equities, govvies and the US dollar.

Thanks for your interest.