Daily Market Review – 27/05/2015

Daily Market Review – 27/05/2015

Asia indices rewrote their multiyear highs with the Chinese index Shanghai closing green for the seventh session in a row. From the beginning of 2015 the index is up 50% despite fears of economic slowdown. That is why it is important to focus on charts and ignore noise created by media.

Europe opens a bit higher, which is good opportunity for investors to sell if they missed out yesterday. The German index DAX gave back 2% of its support at 11,766 as well as 8/21 moving averages. If sellers want to control situation, they should defend the 11,655-11,700 zone. A Breakout failure of this bull flag (trend line) means that we can drop down back to support at 11,225. Senior members of the Greek government have warned that the country doesn’t have money to pay the IMF back next week. This will be one of the hottest topics at the G7 meeting.

US markets are down 1% despite slightly better than expected macro statistics. This means that we are still in this mode when good news are bad news and vice versa. Perhaps investors are concerned about quicker-than-expected rate rise. SPY broke down 212.50 support, as well as 8/21 EMAs. After a big, ignited, red candle take note of two levels of resistance sellers should defend if they want to keep control of prices: resistance#1 211.30 (21 EMA), than 212.10-.50. Looks like it is heading to 207 support. At the same time we should spot stocks that show relative strength during correction phases.

Other currencies vs US dollar are starting to rebuild after heavy losses during the last few sessions. But still it is not enough to say that we can see a reversal from here. We have to wait for a new set-up and keep risk under control until new opportunities show up. On US Dollar Index charts you can easily see a strong long-term uptrend, but on the short term it looks a bit overbought. So, it becomes difficult for buyers to chase price here, pullback to 95.80 before another move higher will be constructive.