USDJPY resisted by multi month downward trendline

USDJPY is currently trading at a multi-month downward trendline, seeing resistance at 91.80. This can be considered good resistance as the trendline actually goes back a long way..

Please see the weekly chart below to have a graphical feel:



As to where the USDJPY might fall, if it does really fall, the next likely support is at 90.50 - the 23.6% level between the '09 high and low (on the weekly chart).

This level provides good support because it kept the USDJPY afloat during Oct and when broken through on the downside eventually, it provided good resistance in Dec when the USDJPY surged (after NFP). Areas where support turned into resistance are often significant because orders tend to congest around there.

Please see chart below.

US STOCKS TOPPING OUT

US stocks seem to be topping out based on a couple of technical indicators.
Please see chart below.



There is currently this phenomena of a divergence between the S&P500 price and both the Rate of Change (ROC) and MACD indicators. As the S&P500 heads higher, the ROC and MACD indicators are making lower highs. I drew lines joining the tops of these indicators and found there is some consistency in both indicators signalling that momentum (hence strength) of the advance is weakening. More likely than not, the bears would take over the market soon.

Also, the tapering off of volume (chart below) points to a growing disinterest in the market.



On the other hand, because of near term volatility and the fact that volume is tapering off, it might actually be easier for the market to make another push higher before turning back down - for this, I'd use the blue lines drawn above the ROC and MACD indicators to gauge when the S&P500 will meet resistance.

New Immediate Resistance Level - 1,121 (50% Retracement of '08 high - '09 low)

The 50% retracement (1,121 on the S&P500) could provide strong resistance to this whole rally as in past recessions, the 50% halfway mark between the pre crisis high and crisis low usually sees some stalling of stock indices, followed by months of gradual down moves.

In fact, this level is just 2.6% higher from where we are now, so how the next few days will pan out will be interesting.

The alternate scenario may happen going into the Christmas season is that a Santa Claus rally causing a break above 1,121 will open the way to immediate targets 1140 and 1185, another 4.3% or 8.4% upside respectively though this is the more unlikely scenario for now.

NFP - 6 Nov 09

The mother of all economic data, the non farm payrolls figures showed that the US lost 190k jobs, slightly above the 175k expected. However, the real wet blanker to risk sentiment is that the official unemployment rate surged to 10.2% from 9.7%, a shocking deterioration of the labor market. Estimates are for a decline to 9.9%.

What do I see for the next few weeks for the markets?

- The USD will remain on the defensive as expectations are growing that the Fed will push back hiking rates.

- US stocks to pull in more of a correction as high unemployment will hurt consumer spending and investors' sentiments, but rangey trade overall expected . Only outperforming economic data can move stocks another leg higher. I think the S&P500 might hit a peak of 1,225 (and I mean the peak) as highlighted in a previous post 'How high can stocks go?'; before we see a 15-20% correction like in previous recessionary recoveries

- The fact that stocks remained bouyant inspite of the NFP outcome goes to show that the level of liquidity in the financial system is enough to float anything you throw into it at the moment. It takes tightening expectations for this liquidity to be drawn out, which might take place during Q1 '10

- Gold and AUD to maintain attractiveness, with the latter expecting to enjoy further rate hikes going forward (as indicated by the RBA in its minutes today). This too, to take place as long as the fed doesn't give a stronger hint to raising rates/ or when the US unemployment rate improves

Post FOMC

The Federal Reserve's rate decisions and statements are very important for the markets and cannot be underestimated. Their actions determine to a good extent the amount of liquidity that remains in the system and this will affect risk assets i.e. stocks.

The fed funds rate decision or statements about impending changes affect yields on US treasuries, which ultimately influences the decisions of central banks around the world because US treasuries are the mainstay of global central banks' reserves.

As expected, the FOMC kept its key rate at 0 - 0.25% for an 'extended period' in order to nurture the still fragile economy, citing that credit to households is still tight and that labor markets isn't yet in recovery. This 'extended period' phrase is key to the outlook of any rate hike - and it seems the FOMC has pointed out that it will look to inflation and the unemployment rate to improve before changing the phrase.

A change in the phrase to perhaps 'considerable period' (ala Greenspan some years ago) will have the most impact on USDJPY as the USD and JPY have the closest (and lowest) yields. It will surge on a fed funds rate hike.

Japan's inflation (or deflation) report out this week indicated that the government expects deflation until 2011, meaning the BoJ will likely not raise interest rates until then, so the yen will be the last in the developed world to enjoy a rate hike, putting the currency firmly as the ultimate funding (carry trade) currency for the foreseeable future.

Going back to the fed, even when they are focusing on both the inflation and unemployment rate for monetary guidance, I feel the bottleneck for a rate hike will be unemployment. Because it is hard to determine the peak and the fed historically wait a while longer after the peak before indicating a willingness to raise rates, there is likely to be a good time of waiting - which, to pro dollar investors, is really an 'extended period'. In another words, this fed looks to me to be a pretty dovish one for now, disregarding the change of incoming hawkish voting member(s) next year.

Friday's expected NFP figure is 175k job losses and a rise to 9.9% in the official unemployment figure. The government said unemployment rate is expected to peak above 10%.

Hence, for now, as long as stimulus is in place and extended by governments supporting risk sentiment, I feel the dollar will remain on the defensive and perhaps decline further against its major counterparts going into 2010.

My EURUSD forecast for week ending 8 Nov

The most significant econ data of the week is the US Q3 advance GDP which at +3.5% beat estimates of +3.2%. This is largely a positive for risk sentiment as it marks the bottom of the economy and within the reading’s components; indications were of broad based recovery.

Looking into the details, household spending actually rose 3.4% even as household income fell 3.4%. It seems that instead of de-leveraging, families are returning to spending quite quickly (namely durable goods) and that suggests that this increase in spending might not be sustainable. That number can be largely attributed to cash for clunkers (new cars purchases with a government grant) which just expired.

Meanwhile, residential investment increased for the 1st time in 3.5 years as prices stabilized with help of 1st time home buyers tax credit (again, more government grants) helping real residential investment to rise an astonishing 23.4% after a drop of a similar magnitude in the 2nd quarter. Hence, Q3 will mark the turnaround in the housing market after the subprime crisis. Its sustainability is also questioned but to a lesser extent as the federal govt is likely to continue with the tax credit program until late 2010.

Prior to the release of the GDP data, we saw some risk aversion in the market during which Goldman Sachs downgraded GDP to +2.7%. EURUSD broke below 1.50 firmly and USDJPY came close to breaking the 90 support level as investors pared carry trade.

An observation is that the yen is coming back as the main funding currency now instead of the dollar as short term yields on the dollar at close to 1% is proving very attractive vis a vis yen assets, giving USDJPY support this week (which kept above 90 for the most part). But I the feel the main pair to watch for dollar direction is the EURUSD, the fact that it is now trading below 1.50 for 4 running days goes to show that mkt has been pricing an eventual recovery in the US economy which was confirmed by the GDP release and by extension, the unemployment rate.

Recently there has also been market talk in the WSJ and FT about the fed preparing to change its ‘extended period’ language and the suspicious may think this was induced by some in the fed to prepare the market for an eventual change in language.

In the FOMC meeting next week however, I think the fed will still keep its ‘extended period language’ because recovery is in its early stages and to do otherwise would be disruptive. But they will put more weight and words describing the recovery of the economy and maybe suggest more winding down of securities purchases in light of better corporate funding and financial conditions. QE has ended and would be a thing of the past. All these are dollar supportive as these have to take place before removal of the ‘extended period’ phrase. So even if PMI data and earnings in the earlier part of the week are good, any dollar sell off would be contained. Rangey trading is expected.

My expected range for EURUSD next week (ending 8 Nov): 1.4650 (50 day moving average) - 1.50 (I doubt the market is willing to take on risks before the outcomes of the FOMC on Wed and NFP on Friday.

How high can US stocks go?

I just took a look at the S&P500 weekly chart to see the next target point(s) should the bullish run continues.

It seems that the next important target is 1120 (red line), which has proven also to be a good resistance/support level for the broad equity index dating all the way back to 1998.

1120 happens to also be the 50% retracement level between last year's high and this year's trough, hence highlighting the significance of this level. Its like ISM's 50 expansionary/recessionary cutoff.

If the upward trend continues, the market should have less gyrations between 1080 (red line) to 1120 as this space in between looks quite clear historically. I've gotten the level 1080 from the confusing 'rays' - which I highlighted as brown lines. These are gann lines and show the natural support/resistance levels like Fib lines do.

In terms of momentum, it seems things are going well for the current trend. Volume continues to be higher than usual (vs pre- 3Q '08) and this means good interest in the equity market on the way up. Rate of Change (seen by the ROC section at the bottom) have ascending lows so this spells good momentum.

Beyond 1120, the next objective is 1220, which historically has been a good resistance/support levels for years dating past.

In terms of support, the first line of defence has always been the 12 wk mva (red mva) - a representation of the quaterly average of prices (some funds do window dressing every quarter btw). That currently stands at 1024, where the mkt bounced up from last week. The next level of support will be on the gann line, but because we are pretty far away from that now, let's leave this story to another day if the bear does comes to eat up the bull.

My GBPUSD forecast

For the Gbp especially, it is hard to see much further upside from where we are at now (GBPUSD spot 1.5887) when policy makers appear to lean towards a weaker sterling. (King saying that a weak Gbp is beneficial - Thur 24 Sep 09)

To be sure, the UK economy is running huge public debts - to the tune of a level which rating agencies like Moody's usually flashes red lights for a possible downgrade.

But at the moment, the UK will keep their AAA status.

Right now though, PM Brown has said he will not unwind quickly the levels of debts until he sees the recovery becoming firmer and more sustainable.

My thinking is.. with the poor fiscal outlook and debt levels as the UK's, it will probably take some years to deleverage and finally achieve a more prudent balance sheet.

Even if the economy does pick up, the currency is likely to underperform the Eur and the dollar. For the latter, the reason being the US is expected to push itself out of recession faster than the UK. For the former, well, at least no central banker wants to talk down the currency in such a direct way.

The pound used to be one of the highest yielding currencies in the developed world and has been a big favourite for the carry trade.

But we might be seeing a permanent change occuring right now. The Gbp may not return to as strong as it was before, given it needs time to sort out its public debt and groom other parts of the economy to replace the sputtering financial industry and contribute to taxes.

So I'm out on a limb here, saying that in the medium term, we might see parity in the EURGBP (spot now is 0.9216).

My forecast for GBPUSD anyway, is 1.5600 (Dec '08 congestion high) to 1.6230 ( near neckline of double top reversal).

My EURUSD forecast this week

The focus of last week had been on the relentless move to the year's high for the currency majors like Eur, Nzd, Aud and of course, the stock markets.

And then came the correction following the FOMC statement on Wed 23 Sep 09 and the pound led decline on Thur. Recall: BOE chairman Mervyn King said a weaker Gbp will help the UK rebalance its economy towards one more dependant on exports. **GBPUSD fell 1.6% (a massive 200 plus pips down move) following that.

The feeling of euphoria that drove the markets higher for several weeks now is seemingly checked and can only be boosted by the occasional M&A activity like today - we hear Abbott and Xerox making multi billion dollar offers for Solvay and Affiliated Computers Systems respectively. The Dow now trades +137 pts and the S&P 500 +1.7% at print. Other than that, we will be in limbo until Q3 earnings are out from next week onwards.

Compared to the previous FOMC's statement, Wednesday's statement highlighted further recovery in the housing market and the fed deemed fit to slow down mortgage securities purchases until end Q1 '10. This effectively leaves the US unemployment rate as the main factor for the USD outlook.

This Friday, the Non Farm Payroll will be released and judging from the trend of better Jobless Claims in the past month or so, there might be a chance for a surprise. The U/E rate is expected to increase to 9.8% from 9.7%.

So I think, together with the slight rise in the dollar index recently, we'll see a firmer comeback in the dollar this week - confirming that a better than expected NFP will boost the dollar.

My expected range for EURUSD this week is 1.4500 (early Sep support) to 1.4850 (shouldn't break last week's all year high)

Aug 09 Non Farm Payrolls

The marquee event of the week is of course the non farm payrolls release. Coming in at -216k, it represents the slowest decline in the layoff rate in several months. However, the official unemployment rate rose to 9.7% from 9.5%.

My initial reaction was of a bearish one as I thought, ok, so even if the NFP fell less than expected but the labor force could not build on its improvement in the last release, so the market will have to bear the brunt of what even the fed feels is the biggest headwind facing the US economy today.

My feeling was proven right in the first hour and half after the release. The FX majors sold off against the safe havens of the USD and the JPY. Futures traded lower. I rode on a little bit of gains but of course, in hindsight, my view was wrong.

The market decided to see the brighter side of the NFP release and risk taking came back, pushing stocks and higher yielding currencies higher against the dollar. By the end of the night, the dow added about 100 pts.

I guess the market, taking a forward looking view, felt that the slowing job losses is a good sign - that the worse of the US consumer is a passing phase and that now that the overall unemployment rate is closer to it's peak, things might get better from here.

In FX, my bias-ly favoured market, the dollar index lost ground. Looking at price action in the past week, I failed to analyze one thing. The fact that the majors were decidedly rangey was because traders were wary of a more firmly better than expected NFP which will cause a sell off in this currencies against the dollar.

This was what happened in the last NFP release in July. The thinking goes: if the US u/e improves faster than expected then the fed might hike rates earlier, making the dollar a lot more attractive to investors at current price levels. Especially against the yen, as yields on JPY assets are and will be kept low for a longer time.

And now that the thinking has to be shelved for the time being, I am biased to think that the major currencies would build on friday's momentum and advance against the dollar. Especially the Aussie, the only currency whose central bank has given hints interest rate might be hiked going forward.

What do you think?

Trading is a discipline

On hindsight, we are all geniuses. The investor who predicts market behavior correctly after the releases of big news stand to make the money. But, its probably very hard to do that.

The market, being the brain of thousands of investors making decisions to buy / sell at the same time can be very unpredictable, fickle and often both. But, the market is still the most efficient machine to determine what prices of assets should be.

This is the giant machine that I have come to respect and behold.

I used to be a hit and hope, impatient, emotional investor. And hence I have lost a lot of money. And more than what I've planned for.

But I guess this experience in losing has taught me valuable lessons, which I guess I wouldn't internalize as much as if the money was not mine or it was a substantially smaller sum.

Number 1: Be happy to cut losses while they are small. Ironic but I guess this is the most important to me. Its all about the maths, if I can keep my losses contained, I will have a chance of making an net profit at the end of the day. I try to keep my losses limited to 50-100 pips per FX trade.

Number 2: Perceiving the right risk-reward positions gives me a competitive edge. I strive to determine where supply and demand imbalances are and then leave orders at levels which I think are reversal points or, a floor/ceiling in the case of a continuing trend. Technical Analysis is very useful for this. If you ask me, circa 200 pips of an FX profit is pretty decent, or 2-4x your loss limit. You can see a few of these moves within a week in the FX market.

Number 3: Be very patient for the right opportunities. In the market, opportunities will present themselves often. I won't want to chase a price after it has gone higher because I think I've missed out on a good entry. As I said, trading is a discipline, literally.

Number 4: Take profits. 'Nobody ever loses by taking a profit'. Greed is probably the only thing which makes an investor think the price will always continue to go in his favor. In volatile markets like now, I take profits unless there is a good fundamental reason for me to not do so.

Sentiments have changed

The market sentiment has turned for the worst. Dow now trades -160 points or -1.61%. I guess the illiquid situation isn't helping. And also some players (hedge funds story in bloomberg today?) are really putting expressing their bearish views. Dang! On hindight, my sell order at 9460 that wasn't hit really hurt now.

Buy on the rumor, sell on the news.

Just as I have expected, US stocks were well bidded before and just after the release of the ISM manufacturing and New Home Sales data. The Dow traded as high as +60 following getting stuck in the negative zone (-80 at its lowest) as European stock indices were in a dour mood earlier today.

However, it retraced all gains and went back into the red (-20) at the point of writing, as I expected. But my order to sell at 9660 wasn't touched because it just fell out of the offer price. D*mn the huge spread. I got a feeling we won't close too much in the red today anyways (> -40 pts Dow), as buyers will eventually come into the market on bargain hunting, pushing up prices in this still illiquid market.

Well, its true that with these data, the US appears to be well on the cusp of emergence of recession. But then, so is the Eurozone.

So why the massive stock sell off today? Its because of the suspicion that stock valuations are getting ahead of themselves and that we may not recover as promptly as once thought, given the high unemployment in the US and the EZ. To recover quickly, consumption needs to recover at a good pace but that remains to be seen and u/e and credit flow are the bigger headwinds.

Still, the market is trading on news day after day while waiting for more volume/liquidity to return to the market to push us out of the current trading ranges we're seeing (in FX and stocks).

Have a good day ahead!

USDJPY halfway 'house'

USDJPY is currently trading at a critical support level (93.50) - line highlighted in orange, which from the chart below, is about the mid way point of the wild range of 87 (dec 08 low) and 101 (apr high) we've seen since the crisis started.

Being the centre of all the gyrations in the market, this level has the potential to be the pivot point for the pair going forward.

But for now 93.50 acts as an important support level - it being the neckline for the dec - feb double bottom reversal and supports for March and July sell offs according to the chart. Also, a support line can be drawn from the Dec low to current price and it looks like a nice supportive line for the Jan and Jul sell offs.

From a broader picture however, from April till now, the highs for USDJPY has been getting lower and technically, this spells a bearish market. But going into Sep, we might see some buying. ST resistance should come at a near 95 though, the 50 dma.

Elliot wave theory - downard momentum for the USDJPY

Just another note:

The Elliot wave also can be applied to the USDJPY monthly chart. The Elliot wave is made up of 5 mini waves, which stages I've highlighted in the chart above.

Usually, the final wave (5) tends to be stronger as by the commencement of wave 5, the buyers in the market (waves 2 and 4) have already been exhausted, leaving more selling power in the market.

If this were true, wave 5 might have good momentum in the run down towards to 90.

The Rate of Change component also point out that any buying in the previous months has lacked the strength to even come close to overturn the overall downward move, having been capped at the zero level and still heading downwards.

USDJPY's 2 yr downtrend

Discovered something on the USDJPY: below is the monthly USDJPY chart.

I joined the peaks of the pair dating from Q307 till now (2 yrs) and saw that the pair has been strongly resisted by the downward trendline (blue). With the global recession remain until at least 2010, I think this downtrend is likely to remain in place until the end of the year..

In recent months, the pair has been hugging to the resistance line more tightly, but on a month end basis, could not close above it.

The highs were also rather 'obedient' and did not move that much above the trendline.

The largest outbreak was only about 90 pips and was due to the last NFP report and after that, USDJPY 'normalized' downwards. That high was 97.75 vs trendline resistance of 96.84 (Aug).

ADX shows a strong number - 35 and that means a good trend is still in place and will take time to undo.

And IF assuming that the downtrend will remain in play, these are the levels below which the USDJPY should close on a month end basis.

Aug 09 - 96.84
Sep 09 - 95.92
Oct 09 - 94.86
Nov 09 - 93.87
Dec 09 - 92.75

Story of the week

Lets see if the latest theme in FX has got the legs.

With the US enjoying an improvement in residential property sales, better than expected construction of single family homes, GDP outpacing expectations of -1% vs -1.5%, it seems now that the US economy is on the cusp of recovery ahead of the EZ and the UK.

And then, the Fed will raise rates, making dollar assets more attractive that Euro denominated ones as USD yields outperform.

That's why the dollar has seen good strength against the single currency Euro and Sterling Pound. The GBP of course, is still reeling from the BOE's decision to increase the printing of an additional GBP 50 bn for QE - to ease monetary conditions in the UK.

A few banks have been calling for a stronger dollar on the back of the US' recovery story, but none has predict this to happen so soon. In fact, 1.47 - 1.50 is a popular target for the EURUSD pair before analysts see a return to 1.30 by start - mid 2010.

Anyway, let's see how far will the current theme run.

Good support for the EURUSD and GBPUSD should come at 1.40 and 1.63 - the support line of the congestion trading in Jun-Jul 09.

I'd be buying from these levels as I see that there are still headwinds facing the US economy - declining commercial real estate values, rising unemployment and already high valuations of stocks.

Main Street looks good

The earnings from corporate America so far have been better than expected and the outlook announced by some of these firms add to optimissm that the global economy isn't so bad afterall.

The worst is truly over.

These major firms beat expectations, pushing the stock indices higher pre NY open:

Caterpillar - construction
Coca Cola - consumer
Merck - pharma
Du Pont - chemicals

Whether or not analysts have put the earnings bar too low is one thing (they might have been too much on the conservative side), but at the moment, stock valuation at current prices do look attractive.

Goldman Sachs and some other banks raised their year end target for the S&P 500 to slightly above 1000.That's an additional upside of 4.4% from here (957.05 at print).

It looks like we're leaving the Mar crash well behind.

Its not all that rosy in the banking sector

Yes its not all that rosy.

No doubt every major bank that reported Q2 results had reason to be proud of itself as the earnings easily beat estimates; there's little reason to be upbeat about future earnings.

This is especially so for the banks which has big consumer businesses like Citi and BoA. Firstly, Citi and BoA avoided losses in Q2 only because respectively, they sold Smith Barney brokerage and China Construction Bank stakes profitably.

They took more credit losses in the last quarter for the consumer businesses and expects this part of their business model to remain weak for the forseeable future. And that means, improving next few quarters' earnings will be challenging.

FT says Citi and BoA suffered USD 12.4 bn and USD 16.4 bn in credit costs in the last quarter.The economy must pick up fast for them to continue to do well but I think there's more de-leveraging to be done by the US consumer, the recession will be around for some time.

In contrast to investment banks like Goldman and JP Morgan, whose capital markets businesses are their earnings lynchpins, have lesser consumer related baggage.

So that doesn't sound too upbeat for stocks to me. Afterall, the S&P500 is made up of a larger group of firms that has little to do with the investment banking giants like GS and JPM and if earnings don't look too good, the euphoria will not last long.

Stocks will need more other reasons other than the bank-led surge to move another leg higher.In the following days, regional banks will too, announce Q2 earnings and these banks being more exposed to the American consumer would likely not do so well.

But the good news is... Initial Jobless Claims on Thur point to a firming to some extent of the labour market. The claims fell at a record pace as sackings in the auto and manufacturing industries have already been carried out earlier in the year.

Although Continuing Claims, an estimate of still unemployed people is at a record high, Non Farm Payrolls numbers should improve going forward.

Till then, the market is still focused on the rest of the earnings season.

We're slowing down

I don't have to say again what happened in the last 2 days.

Earnings announced thus far have outperformed very well, sending stocks and higher yielding currencies higher against the dollar and yen. If you were long in this market, good for you.

Today, there had been a wet blanket thrown into the mix - the CIT group's impending bankruptcy filing. Talks with government officials broke down, apparently because the company could not find a way to restructure and save itself going forward.

I'd say its politics. Afterall, they let Lehman, GM, Chrysler go, what's more a relatively small company like CIT.

A lender to many small and medium sized businesses, CIT's bankruptcy represents the wider tough credit picture the US economy is facing - which puts a drag on the recovery process.

This is a different problem from that which the bulge bracket investment banks face. The small and medium sized business are the largest group of employers in the US. If these businesses could not get credit, more people will get laid off.

The market mysteriously lost its euphoria. During the asian trade, the Dow traded negative.

Also because I believe the market's 3% surge during last night's trade was also to price in JP Morgan's better than expected Q2 earnings announced just today. True enough, when JPM's news was out, its stock actually fell on profit taking.

From here there are plenty of choppiness to be expected as some big firms have yet to announce earnings.

I'd advise against going too long from here.

Wild swings

What a day to start off the week

During the asian and early europe session, risk aversion was the call of the day as doubts about the global economic recovery came flooding back into the market. GBPUSD, a reasonably correlated currency pair with stocks, fell to as low as 1.6032 from an open near the 1.62 level, a 170 pips fall.

The over 2% fall in the Nikkei 225 started the ball rolling as PM Aso lost in the Tokyo election, which is widely seen as a national poll verdict for the ruling party. It seems the ruling party will be heading out of the government, sooner or later.

USDJPY once crashed to 91.72 (yes again), bringing down the EURJPY and GBPJPY crosses about 100 and 250 pips! at their lowest.

Then came Ms Meredith Whitney, the analyst who once famously predicted that Citi will cut their dividend payout at the onset of the whole credit crisis last year. She appeared on Bloomberg and CNBC interviews and said Goldman Sachs will outperform expectations. That lent support to risk appetite and gave optimissim that the banks are healing.

The Dow traded feebly within the first hour and then surged higher. At print (Spore time 11:44pm) it trades +130 pts. GBPUSD is just 40 pts short of its open, after recovering much of its losses on the day.

The optimissim is good, however, for it to last, more meaningful hard data has to be seen before we can conclude the US, the world's largest consumption market, has the recovery legs.

I think tomorrow's US Advance Retail Sales is an important econ indicator. The market expects an increment of 0.5%.

Q2 earnings are very important to watch this week as well. Goldman Sachs are out tomorrow (14 jul) before the bell and the rest are as follows for this week:

Intel - 14 Jul - after mkt - estimate: +3.5 / share
JP Morgan Chase - 16 Jul - estimate: +0.153 / share
IBM - 17 jul - +2.01 / share
Citi - 17 jul - -0.321 / share
GE - 17 jul - +0.24
BoA - 17 jul - + 0.088

I'd not bet big ahead of these important releases.