Cheers to All the Fathers

It's tough to be a father, the world expects us to be "Superman", we ought to be 24/7 call center agent to our children care; carpenter, plumber, electrician at home at the same time clown and magician to our children even when we have a bad day and most of all always on-line ATM machines even when we could hardly fill up our car gas tank; we ought to love the mother of our children faithfully at all times and be delighted by our children in everything.

Just the other night, my son hugs me and whisper "Dad, I want to be like you", it encourages me and at the same time scares me, I don't know about you but when you're imperfect like me, these six words should scare you; this reminds me that on top of all the roles I mentioned above, fathers ought to be role models to their children and this for me is the most difficult part of being a father.

To all fathers out there, give yourself a pat in the back, it's not easy and absolutely impossible to be a perfect father but the mere struggle to be one should already merit 'a pat in the back' and whether we like it or not, we will continue to be 'superhero' of our children. Cheers to all the Fathers!!!!

Two Elements Keeping US Equities Afloat

The –395pts dropped in Dow Jones last Friday set the frailty tone for the trading week as Wall Street shed another triple digits loss on Wednesday but recovered towards the end of the week to closed only -0.04% week-on-week (well off its’ intra-week low). There were two key elements that kept US Equities from falling: the tech sector and the strengthening of the US Dollar:

NASDAQ COMPOSITE

The tech index has been the leading indicator for the other two US Indices for a while now, it led the rise from recent March pit with better than expected bottom line margins during the earnings report season; and with recent pull back, Nasdaq only retraced 38.2% from May peak while DJI and S&P 500 retraced 61.8%.

US DOLLAR

The greenback has recovered convincingly from its’ March trough due to growing expectations of a potential FED rate hike within the year and recent hawkish comments by the FED and US Treasury on strong dollar policy further boosted the US Dollar rally; technically, the US Dollar Index is steadily climbing inside an upward channel and seeks to retest its’ 200MA resistance, this will be the 3rd time in 13 months it will try to break above its’ 200MA resistance which also served as downtrend resistance line and a successful break-out from its downtrend resistance line can be a prelude to a trend reversal.

COMMODITY and US DOLLAR DIVERGENCE

On the other hand, the imbalances of supply and demand forces in the commodity realm propelled the commodity index to its’ highest level but it was the steep fall in the US Dollar that fueled the ‘bubble-like’ craze in the commodities as investors bought up commodities to hedge against a weakening dollar; now, should the US Dollar indeed has a valid change in trend it will definitely cause a divergence or at least stall the commodity boom and this will tame inflation and relatively bring back stability in the stock market.

RISK TOLERANT BEHAVIOR CAUTIOUSLY REMAIN

In spite of the recent sharp drops in the stock markets, interestingly, risk tolerant behavior cautiously remain. Risk indicators such as the 10years US Treasury and Japanese Yen evidently proved this: 10years US Treasury yield continues to trend upward after it moved above its’ historic downtrend resistance line and Japanese Yen firmly above 108 levels and last Friday it closed above its’ 200MA after staying below 200MA for a year

US EQUITIES: RESILIENT BUT DOESN’T MEAN SMOOTH SAILING

In conclusion, the two elements that provided strong support for US Equities for the past weeks namely: the tech sector and the strength in the US Dollar and coupled with a potential easing of commodity prices due to a strong dollar may continue to contribute to market resiliency but it doesn’t mean smooth sailing for the coming week; US Indices at technical over sold levels are due for a bounce but these bounces maybe cap, in particular the technical bounce in S&P 500 Index maybe cap between 1370 to 1375 levels, these are immediate resistance levels; moreover, 10years US Treasury, Japanese Yen and US Dollar Index charts are all in technical over bought levels, hence, pull back for these three leading indicators should be expected and these may drag US Equities with it. Subsequently, markets will look for guide at upcoming FED meeting (end of June) and the result of the FED meeting could be pivotal point or trigger for the market’s next big move.

GREATER CHINA MARKET

Moving on, it was a bearish week for Greater China Markets led by Shanghai A-share Composite Index which broke below key 3000 strong support level paving the way for more downside pressure for the index with next key Fibonacci support level stands at 2500 levels, but there should be technical bounce as its’ RSI Indicator already at extreme over sold levels.

Likewise, we have a bloodbath at Hangseng as the Index fall –7.42% week-on-week but hefty gain in Wall Street last Friday and potential technical bounce in Shanghai market may provide some relief in the battered Hangseng Index. However, bounce maybe cap near 23,100 levels and the Index next strong support is already at 21,400 to 21,050 levels.