It was a tough day for Twitter shareholders and a great day for those who are short, with the stock falling 17.8%. Volume was huge, with 134 million shares changing hands. The highly anticipated lock-up period expired and 480 million shares were eligible to be sold on the open market and it seems many of the insiders and employees were keen to dump their holdings. The stock is oversold, trading three standard deviations from its 20-day moving average, and its 9-day RSI is at 18. However it’s hard to see how this name sees a material bounce anytime soon.
Tesla continues to find support around the $200 mark, but its earnings report in after-hours trade in upcoming US trade could be a major catalyst either way. The market expects EPS of 7c, on revenue of $704.5 million, with Q1 gross margins expected to be up a touch. Traders will be keen to focus on narrative around deliveries to China, which many feel will be upbeat.
USD/JPY is testing the uptrend drawn from the February low at 101.50. This level seems key for the near-term direction of the pair and a failure to hold this level could see a move below the key 100.00 level. I closed out my long idea last week and this seems to be prudent in hindsight, and with Janet Yellen due to speak at midnight tonight, I suspect she will provide little reasons to be long the USD. We are seeing an improvement in US data, but the USD bears will be pointing to the lack of upside seen in US bond yields. For USD/JPY to make a concerted push higher we need to see better selling in the bond market and a renewed push back towards 3% on the 10-year. With the BoJ signalling that all is well in Japan, the prospect of increased monetary easing in June seems low and this should cap selling in the JPY. Expect weakness in the Nikkei today.
The AUD had a strong rally against all currencies yesterday, although the reasoning is hard to pin-point. Yesterday’s statement was neutral and certainly not bullish enough to cause a strong move in AUD/USD, still perhaps market positioning was to blame. The bond market, for example hardly moved with the Australian 10-year bond actually falling one basis point. On the docket today at 11:30 we get Australian retail sales (11:30am AEST) and the market expects a gain of 0.4%.