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"U.S. stock market is currently in a Wolf market???..."
"It's going to take a long time to reverse to a classic economic cycle??...."
Investors have been involved in a back-and-forth the past few
months, trying to decide if we’re in a long-term bear market, or
awaiting a bullish period that’s just around the corner. However, both
views are wrong according to one analyst.
Michael Purves, chief global strategist and head of derivatives
research at BGC Financial, coined the term wolf market to describe the
current state of the U.S. stock market.
Mr. Purves told Reuters that the current market is characterized by
a tight trading range, increased volatility, high stock correlations
and quick reversals. Choppy trading meanwhile makes it hard to pick
stocks based on fundamental qualities. That leaves shorter-term options
and technical analysis as better tools for navigating the bounces, he
told Reuters.
So when did this so-called wolf market start? Well, according to Mr.
Purves, it hit full on in April. But the origin goes back much further.
You have to look back to the rally that materialized out of the March
2008 market lows. Investors priced in expectations of a quick
reccovery, one that has yet to materialize the way they had envisioned
it.
Meanwhile, macroeconomic shock waves like the European sovereign
debt crisis and a sputtering recovery have clashed with strong second
quarter private sector earnings, leaving trading in a tight range and
vulnerable to sharp ups and downs.
And that’s not going to change until at least next year, says Mr.
Purves. Of course, that’s based on the assumption that the economic
recovery doesn’t take a sudden sharp turn — for better or worse.
“It’s going to take a long time to reverse to a classic economic cycle,” he told Reuters.
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"CAD- Retail sales data came less than expected for June...
"Motor vehicle and parts dealers saw the biggest gains..."
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Canadian retail sales grew less
than expected in June as gasoline prices slumped, partially offsetting
a rebound in auto sales, according to Statistics Canada data released on Tuesday. After
two months of contraction, sales climbed 0.1 per cent in June from May
in current dollars but they jumped 0.9 per cent in volume terms – used
to calculate real gross domestic product – as five of 11 sub-sectors
recorded gains. The sales value fell short of market expectations for a 0.4 per cent gain in overall retail sales. Excluding autos, sales fell 0.5 per cent in the month, defying expectations of a 0.1 per cent rise. Motor
vehicle and parts dealers saw the biggest gains, with a 2.1 per cent
increase. Sales fell most sharply at gas stations, down 2.7 per cent,
as prices fell for the third straight month after an 11-month climb.
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| Currency Commentary
EUR, USD, CAD, GBP & JPY
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EUR: The Euro continues trading lower against safer currencies like Dollar
and Yen, as economic outlook deteriorated, and EUR/USD decline from
1.3335 high on early August has extended on Tuesday, with the pair
breaking below 1.2600 to a fresh 6-week low at 1.2585.
USD: Today's Richmond Fed announcement @ 10am might cause more movement in the equity and currency markets, the USD is continuing it's bullish trend. More U.S. data this week will cause more volatility on the USD/CAD.
CAD: As expected key data today caused major movement in the USD/CAD, commodity and equities on a fall as more economic uncertainty continues the theme for 2010. Expect today's range from mid 1.0600 to lower 1.0700 levels. Since last Friday till today...great selling rates for sellers of the USD. If we reach 1.0700...will 1.0800 be next level later this week?
GBP: The Pound's retreat from 1.6000 high on early August extended on Tuesday's
Asian and early European session, weighed by deteriorated global
economic outlook, and the pair dropped to a fresh one-month low at
1.5370, where the pair found support for a mild pick up to 1.5414 area.
JPY: The Japanese Yen continued to make further progress against the
Greenback on Tuesday, after a new wave of selling pressure spiked the
price down through 84.14 hurdle, hitting a new 15-year low at 83.70.
“The Japanese Prime Minister said today that sudden moves in currency market are unwelcome and he is watching market carefully”
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| Technical Ranges
CAD, USD, EUR, JPY & GBP
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 USD/CAD
Support: 1.0548 Resistance: 1.0720
CAD/JPY
Support: 78.17 Resistance: 80.41
EUR/CAD
Support: 1.3351 Resistance: 1.3539
EUR/USD
Support: 1.2526 Resistance: 1.2719
GBP/USD
Support: 1.5308 Resistance: 1.5508
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| Main USD/CAD data today: |
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1. USD-Existing Home Sales and Richmond Fed. Manufacturing data.
CAD - Retail Sales data.
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