Archive for category: DEVELOPED MARKET EQUITIES

May 2013 recorded the low for the Turkish 10 year government bond yields. Year-long downtrend was reversed with the breakout above 7.2 levels. Yields broke above 1) downward sloping trend line at 7.0 2) flat horizontal resistance at 7.2 and 3) 200-day moving average at 7.1. Sharp rally carried the yields to 9.5 levels. Since the beginning of July, 9.5 has been short-term resistance. However, chart formation (ascending triangle) suggests higher yields towards 10.5 levels unless we see a breakdown below 8.6 levels in the coming days/weeks. For the time being 10 year bond yields are in a short-term consolidation. Technical outlook is positive for the yields and negative for the bonds, as the 10 year yield established its uptrend above the 200-day moving average. During any pull back strong 7.60-8.60 area will act as strong support. Breakout above 9.5 levels will target 10.5 in the short-term.

Is this a base formation or a short-term consolidation before the major break down and the resumption of the downtrend? Turkey’s XU 30 Index is holding above its 5 year-long uptrend and a break below 85K could turn into a sharp correction. Latest consolidation below the 200 day moving average has been weak and the counter trend moves had difficulty to close the gap between 100K and 105K. It is important to note that the index is testing its long-term trend for the 4th time over the analyzed period and a breakdown below this strong support will signal further downward pressure. Technical outlook would turn bullish only if the index recovers above 95K levels which is the 200 day moving average.

It’s been an eventful month so far in Istanbul. Anti-government protests resulted in a sharp sell-off in Borsa Istanbul. Protests can continue for sometime and markets can stay volatile. While it is difficult to understand the price action during these type of event-driven markets, support/resistance levels could be helpful in managing risk. XU 30 index slipped below its long-term (200 day) average at 97,200. This was also the lower boundary of the upward trend channel. Failure to push above the long-term average will be a clear sign of weakness and could result in further downward pressure towards 76,000-91,500 range. The uptrend that has been intact since the beginning of 2012 is damaged and for us to discuss positive price action and improving technical outlook, the index should breach above 97,200 levels in the following weeks.

Today we will update our jobless claims data. Since 2009, U.S. jobless claims have been declining from 650K levels to 350K. This has been a strong downtrend and reached levels that proved to be major support over the past decades. 300-350 area is strong support. Higher jobless claims data over the next few months could signal a major turning point that could result in weak job market. Currently unemployment rate stands at 7.5%.

U.S. jobless claims spiked higher in the May 11 week, up 32,000 reaching 360,000. Earlier analysis showed a long-term chart of the weekly jobless claims, reaching strong support levels. Over the past 4 years jobless claims moved from one extreme to another.