Dow Jones & Nikkei Key

Market Calls Plus EURUSD

Strategy Review

with Peter Esho April 13, 2014

Well it's expected today, another busy week on markets this week as the

US market goes into reporting season. We made two varied key calls last

week in our video. Our first call was that we thought that the DOW Jones

industrial average would struggle to exceed its all-time high levels, and we

actually saw the DOW come off in the order of about 500 points since we

made that call. In fact, we wrote a note on the blog explicitly calling the

DOW lower on Monday.

The DOW Jones industrial average is coming from its all-time high. We

actually think that the US market is set for a decline somewhere in the

order of about 5 or 10 percent, perhaps over the next four to six weeks.

That's a key market that we’ll be watching. It's a key market that we've

been recently discussing.

We also made a call on the Nikkei index. We said that the Nikkei index in

Japan was looking quite toppy, and that the technical levels were

suggesting more downside. We actually saw the Nikkei also fall in the

order of about six and a half percent.

The Japanese market, the Nikkei, is also looking under pressure. There is

perhaps somewhere in the order of about 4 to 5 percent downside on the

Nikkei. We've been updating that in our live market analysis which runs

every Wednesday.

This week the market will be watching Chinese data very closely. What we

have seen over the past few months is Chinese data pointing to the

downside. We haven't really had any key data that’s surprise on the

upside. The most recent data to have come out around the trade balance

again disappointed in terms of composition. What we have seen over the

past six months or so is market warming down, really revising down its

GDP estimates for the Chinese economy.

The quarterly, Chinese GDP numbers are up this week. The market is

expecting an annualized GDP rate of about 7.4 percent. That's going to be

really the key trigger event, particularly for the Aussie market.

On the Aussie market we’re seeing support for the ASX 200 index of about

5300. We think that will hold, but really the Chinese data is on the

wildcard.

Our key trade for this week is the Euro. We think that Draghi’s recent

comments need to be backed by action. There will be pressure on Draghi

and the ECB if we do see the Euro-Dollar at 139ish. So we think there’s a

very good risk reward ratio at the moment to be short.

The Euro --- there’s definitely an aversion away from risk this week,

particularly given the way that technology stocks did trade in the US

market and on the NASDAQ last week. We think it’s not a bad idea to be

long USD. We think the best trade out there at the moment, on a risk

reward basis, and given the liquidity in all the information out there that we

know --- going short the Euro.

We'll actually publish a note on the Invast blog with our key levels. Our

technical levels are put very broadly. Just as the way we made clear our

preference to be short, the DOW and short the Nikkei last week, our

preference this week is to be long USD and short the Euro. We'll update

the blog.

Make sure you check in to the live market analysis and the webinars this

week. You will now receive a link on your screen as to how to register into

those, and we hope you have a very successful trading week.

Register for our webinars here - invast.com.au/resources/webinars.aspx