Stock Market Trading: 28 February 2014
A flat start is expected in Europe as investors remain devoid of directional bias.
Despite Janet Yellen encouraging reasonable overnight gains in the US, European traders haven't been swayed out of their cautious indecision and neither the bulls nor bears have managed to take a firm grip of the markets.
Although there are some fairly big releases today, traders may want a quiet end to the week as Chinese Manufacturing PMI will be out on Saturday, Non-Farm Payrolls is up next week and there is still huge uncertainty about events in Ukraine.
Acknowledging that the US economy is losing momentum as data indicates mixed results, Federal Reserve Chair Janet Yellen was quick to point out that the strategy on QE could be altered going forward.
The announcement was well received by the markets as it showed that the new Chief wants to stay in control, with the Dow Jones rallying 92 points to 16,292 as a result.
Stock Market Trading: 27 February 2014
We are expecting to see further losses at the start of this morning's European session as sentiment remains firmly cautious.
Yellen's upcoming testimony this afternoon may be partly to blame for the hesitancy, but she is not expected to rock the boat.
Instead, perhaps there is a larger concern about the reports of 150k Russian troops lacing up their boots near the Crimea.
With armed men already seizing government buildings in the area, expect the markets to start considering all kinds of scenarios.
A timid rally in the morning session was quickly reversed in the afternoon, but neither swing was particularly convincing.
The Dow Jones chart
shows that the index closed just 15 points lower at 16,200, with investors reluctant to add to their existing long positions for fear of a sudden, sharp correction.
Stock Market Trading: 26 February 2014
European stock markets are set to struggle on the open as directional conviction evaporates.
A flat finish in the US and mixed trading in Asia highlights the trepidation that traders are feeling at these lofty levels.
Where we go from here is anyone's guess and traders will be looking for cues before embarking on the next leg.
However, with all the bearish flash points in the world at the moment, and the ever-present possibility of hidden black swan events, traders are well aware that a downward move is at least as likely as a rally.
A surprise drop in US consumer confidence dented investors' optimism yesterday, limiting any attempt at a move higher.
In addition, house prices rose at a slower than expected pace which also invited a more cautious approach going forward.
As a result, the Dow Jones
ended just 12 points higher at 16,216, although the bulls seem to in control of the futures markets this morning.
Stock Market Trading: 25 February 2014
A rally in US healthcare stocks drove the Dow Jones 92 points higher yesterday to 16,205, almost completely reversing the sharp selloff seen at the end of January.
Despite this, European equities are set to start the day with a modest pull back as traders become more cautious over recent gains.
Even though sentiment currently has a bullish slant, traders are wary of these levels as it was only a month ago that we were on the same trajectory when emerging market jitters suddenly slammed us into the floor.
Whilst the latest data has been fairly mixed, online spread betting
investors seem to be more at ease about the US economy being healthy enough to sustain stimulus cuts.
This has meant that the bulls have been quite content to shrug off the negative figures and rally on the positive.
However, as markets teeter around new highs again, the bulls will be looking over their shoulders for any geopolitical risks hurtling towards them.
With allegations that Russia is beefing up its military presence in the Ukrainian region, perhaps traders are concerned about an escalation in the conflict?
Stock Market Trading: 24 February 2014
European equities are set to start soft following weak leads from the US and Asia.
There have been some Chinese jitters after reports of banks restricting lending to property companies in an attempt to head off a housing bubble.
Whilst this may be seeing some short-term weakness, a move away from property speculation as a main driver of growth and towards a more diverse range of industries is probably a good thing in the long run.
With traders set to take overnight weakness in their stride, we'll be looking towards today's German IFO survey for direction, with the metric expected to show that their economic outlook remains firm.
After an initial rise, the Dow Jones dropped towards the close on Friday, ending 12 points down at 16,113 on the back of worse than forecast existing home sales data.
Meanwhile, Fed comments about the stimulus cuts seem to suggest that 'measured steps' does not mean slowing the pace of tapering.
As a result, some investors may fear that cutting too quickly will threaten the recovery.
The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced.
By Jonathan Sudaria, 28 February 2014