Currency
USDCAD Overnight Range 1.2455-1.2560
Optimistic analysts looking for a better-than-expected US nonfarm payrolls report were rewarded this morning when NFP gained 280,000 jobs, far surpassing the 225,000 forecast. The US dollar soared against the G-10 currencies as today’s report, which included a gain in the important hourly earnings component (0.3%), keeps a September US rate hike on the table.
The Canadian employment data was even more impressive than the US data as it beat the forecast by a factor of 5, coming in with a gain of 58,000 jobs vs. expectations for a 10,000 gain. Unfortunately, the Canadian data suffers from some credibility/reliability issues and although USDCAD declined on the initial release, it quickly reversed itself and probed key resistance in the 1.2550-60 area.
The other important meeting today was in Vienna. Opec has announced that they will keep the current production target of 30 million barrels per day. That doesn’t mean that members will adhere to the limit, just that there is a reference level. The news, while not unexpected has allowed WTI to rebound from this morning’s low and may have provided a modicum of support to the Canadian dollar which has drifted away from this morning’s high. (Currently 1.2532).
Overnight, trading was subdued. FX traders have ignored the late yesterday headline that Greece has decided to defer today’s IMF payment until the end of the month. Greece has four IMF payments due in June which means another two of them will be deferred making June 30th a very important date for the Eurozone.
USDCAD technical outlook
The intraday USDCAD technicals are bullish while trading above 1.2475 with a break above 1.2560 extending gains to the 1.2600-20 zone. A break above this level targets 1.2820. A move below 1.2475 will send USDCAD down to 1.2410 and if that level breaks, to 1.2360.
The longer term technicals point out that USDCAD is in a steady uptrend while trading above 1.1980. The shorter term downtrend from March which is in the 1.2620 area is being tested. A failure to break above this zone will result in further 1.2000-1.2600 consolidation.
Today’s Range 1.2480-1.2560
Chart: USDCAD daily with support and resistance noted Larger Chart
“optimistic global outlook”
This week I have more complimentary research from Jawad Mian for your review. You can access it by clicking here.
In one PDF, you can read Jawad’s May issue of Stray Reflections as well as a research track record summarizing his macro investment calls from past issues, beginning with the February 2014 letter.
In the May issue, you’ll see how Jawad’s optimistic global outlook is driving his investing decisions. Jawad’s view is closely aligned with my friend Anatole Kaletsky of GaveKal, who points out that post-2008 hasn’t looked all that different, globally, than pre-2008.
The research track record is a recap of Jawad’s month-by-month major themes and a description of how each theme played out over time. This is probably the best way for you to quickly evaluate how Jawad has performed in the global markets.
Access both the May issue of Stray Reflections and the research track record by clicking here.
John Mauldin
Chairman
Todd Market Forecast for Thursday June 4, 2015
Mon- Friday after 6:00 P.M. EST
DOW -170 on 1650 net declines
NASDAQ COMP – 40 on 1200 net declines
SHORT TERM TREND Bearish
INTERMEDIATE TERM TREND Bullish
STOCKS: Pessimism about Greece (again) caused selling in Europe which didn’t help our markets. Also concern about the non farm payrolls to be released at 8:3 EST on Friday played a roll. This is the most market moving of all economic releases.
GOLD: Gold lost $9. The reason cited was that the IMF stated that inflation remained elusive. Gold traders seem to think that the IMF knows what it’s talking about.
CHART: The advance decline line continues to underperform. There are no absolutes, but this is normally not a good sign going forward.
BOTTOM LINE: (Trading)
Our intermediate term system is on a buy from Feb. 20, 2015.
System 7 We are long the SSO from 67.93. If there are more declining issues than advancing ones at 3:45 EST, sell at the close.
System 8 We are in cash. Stay there.
GOLD We are in cash. Stay there.
News and fundamentals: New jobless claims were 276,000, in line with expectations. On Friday we get the dreaded non farm payrolls.
Interesting Stuff Hedge fund manager John Paulson gave $400 million to Harvard’s engineering school. Harvard now has a total endowment of $36.4 billion. So what do they do with it? Do they use it to open opportunities for students??
TORONTO EXCHAN GE: Toronto dropped 135.
S&P/TSX VENTURE COMP: The TSX lost 7.
BONDS: Bonds had a decent rebound.
THE REST: The dollar was slightly higher. Silver and crude oil got clobbered.
We’re on a sell for bonds as of June 3.
We’re on a sell for the dollar and a buy for the euro as of June 2.
We’re on a sell for gold as of May 19.
We’re on a sell for silver as of May 19.
We’re moving to a sell for crude oil as of today June 4.
We’re on a sell for the Toronto Stock Exchange as of May 6.
We’re on a sell for the S&P\TSX Venture Fund as of October 30.
We are on a long term buy signal for the markets of the U.S., Canada, Britain, Germany and France.
Sent to subscribers on June 4, 2015, 6:02 AM.
Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,140, and profit target at 1,980, S&P 500 index)
Our intraday outlook is bearish, and our short-term outlook is bearish:
Intraday outlook (next 24 hours): bearish
Short-term outlook (next 1-2 weeks): bearish
Medium-term outlook (next 1-3 months): neutral
Long-term outlook (next year): bullish
The main U.S. stock market indexes gained 0.2-0.4% on Wednesday, as investors reacted to some economic data announcements, among others. The S&P 500 index remains relatively close to its May 20 all-time high of 2,134.72. The nearest important level of resistance is at around 2,130-2,135. On the other hand, support level is at 2,100. There have been no confirmed negative signals so far. However, we can see negative technical divergences:
Expectations before the opening of today’s trading session are negative, with index futures currently down 0.6-0.8%.
The European stock market indexes have lost 1.4-1.9% so far. Investors will now wait for economic data announcements: Challenger Job Cuts report at 7:30 a.m., Initial Claims, Productivity at 8:30 a.m. The S&P 500 futures contract (CFD) is in an intraday downtrend, as it trades close to the level of 2,100. The nearest important level of support is at 2,090-2,100, marked by recent local lows. On the other hand, resistance level is at 2,120, among others, as the 15-minute chart shows:
The technology Nasdaq 100 futures contract (CFD) broke below the level of 4,500. The nearest important level of support is at around 4,480, marked by previous local lows. On the other hand, resistance level is at 4,530-4,550, as we can see on the 15-minute chart:
Concluding, the broad stock market extended its short-term consolidation on Wednesday, as the S&P 500 index got closer to its late May all-time high again. There have been no confirmed negative signals so far. However, we continue to maintain our speculative short position (2,098.27, S&P 500 index), as we expect a downward correction or an uptrend reversal. Stop-loss is at 2,140, and potential profit target is at 1,980. You can trade S&P 500 index using futures contracts (S&P 500 futures contract – SP, E-mini S&P 500 futures contract – ES) or an ETF like the SPDR S&P 500 ETF – SPY. It is always important to set some exit price level in case some events cause the price to move in the unlikely direction. Having safety measures in place helps limit potential losses while letting the gains grow.
Thank you.
Paul Rejczak
Stock Trading Strategist
Stock Trading Alerts
At the recent Canadian Investor Conference in Vancouver, the Investing News Network had the chance to speak with Frank Holmes, CEO of US Global Investors (NASDAQ:GROW), about the gold price, gold stocks and the overall state of the market.
So far this year, Holmes hasn’t seen any real surprises from the gold price, although he noted that gold is normally a better performer in the second half of the year. When asked about what might push the gold price up, he suggested that a catalyst could be a move from China to make the renminbi a global currency alongside the euro, the yen and the US dollar.
While he admitted that the market is certainly “in a paused stage” due to the threat of rising interest rates, Holmes added that “stocks are still the place to be.”
Speaking a bit about gold companies, Holmes said that he looks for management teams that are “good stewards of capital,” and mentioned royalty companies in particular.
“I always love the royalty companies because you have a competitive advantage with that superior model,” he said. Holmes specifically picked out Franco Nevada (TSX:FNV,NYSE:FNV), Silver Wheaton (TSX:SLW) Royal Gold (TSX:RGL,NASDAQ:RGLD) and Osisko Gold Royalties (TSX:OR) as key companies. “I think that these are great companies for any investor,” he added.
On the junior side, Holmes mentioned that Klondex Mines (TSX:KDX,OTCQX:KLNDF) is “a big holding” for US Global Investors. “The CEO is very much a frugal person in how he runs the business,” he said. “I think that shows up in higher returns on capital.”
Watch the video HERE for more of what Holmes had to say.
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