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Traders positioning ahead of ANZ update

Five markets in focus today: US 500 cash, EUR/USD, Oats, ANZ and USD/SGD.

US 500 cash

I had this as my one to watch last week and after moving the stop loss to breakeven on Friday, the position was closed flat. The monthly payrolls report has become a good opportunity for the bulls to do rather nicely, with the index up on the last eleven consecutive reports and despite a terrible headline print the market looked straight through it.

If you look at the S&P on the weekly chart, the index printed a bullish hammer pattern and closed nicely above the longer-term trend. It looks as the bullish momentum is asserting itself again and whether this is premised on bad news being seen as good for stocks I am not 100% convinced as there was some positives in the jobs report (if you drill down).

There is a view that the back-to-back poor payrolls could see the Fed maintain the pace of bond buying in its next meeting at $65 billion, or as some are calling it ‘taper the taper’. There is strong resistance around the 1806 to 1813 level, so a break of this level in the coming days could see the all-time highs being tested.

EUR/USD

It’s tough to short EUR/USD right now given the strength seen in European equity markets (usually outperformance in European equities benefits the EUR). However, moves to 1.37 have been excellent shorting opportunities in 2014 and I see no reason why this can’t still be the case. I hold a fairly neutral short-term bias on the pair, both from a fundamental and technical standpoint as well. Italian and French industrial production numbers released through European trade shouldn’t have too much of an impact on the pair.

Oats (March 2014 contract)

Oats fell 4.4% on Friday, printing a bearish reversal at the trend high. Trend followers have been keen to explore this commodity in more depth of late, given the 30% rally the commodity has seen this year, however when you see a textbook reversal like this it can be a red flag to many. We will need to see follow through selling of course, but there will be a few who will be keen to look at short positions if we see another fall on the day.

ANZ bank (ANZ)

Traders will be looking to position themselves today for tomorrow’s trading update from ANZ. The stock has been on a reasonable decline of late, hitting a low of $28.84 on 5 February, before seeing a modest rebound in the last few days, breaking the short-term downtrend (drawn from the January high) on the one hour chart. Given the offshore leads we should see the stock do nicely on open and it will be interesting to see if momentum can take the price through fairly strong resistance at A$30.44 (the 61.8% retracement of the January to February sell-off), where a break should see the January 22 high of A$31.43 come into play.

USD/SGD

One for those who like playing the emerging markets, but it’s worth flagging the pair has traded to trend support drawn from the October 2013 low. What’s more; stochastic indicators on the daily chart are at levels that if you go back over the last twelve months or so have provided excellent entry levels for longs. Singapore does have fairly good fundamentals, given its very high current account surplus, but the combination of these technical indicators are worth looking at for a potential bounce in the coming days.

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