Trader View from Toronto: What Dominates a Tense Week

07/07/2017 2:59 am EST

Focus: STRATEGIES

Ziad Jasani

Managing Director and Partner, Independent Investor Institute

It’s been a tense week among world leaders,  military and diplomatic leaders and economic forecasters. All of this makes fund managers nervous about the rest of 2017, asserts Ziad Jasani, of the Independent Investor Institute, Toronto, in his weekly Trader video.

This week is dominated by:

  • Geopolitics (Japan’s Abe losing control, North Korea flaring, Qatar deadline, Italy-exit)
  • Manufacturing data (Global)
  • US monetary policy (Wednesday, Friday)
  • US Jobs (Thursday, Friday)
  • G20 meetings (Friday/Saturday;
  • Fund managers nervous about back-half growth risks.

We ended last week acknowledging that ACWI (Global Equity Market) remains in a minor swing-low formation above its 50-Day Average with the potential for +3.1% to new all-time-highs, wherein the US is likely to get the lion’s share of any market bounce. 

However, we recognized that the recent Commodity-rally is likely to slow down as the USD strengthens and Bond yields rise on the backs of last week’s Central-Banker “take your ice-cream away” moment (meaning reducing liquidity/raising rates).

If we close the week above 2,440 on the S&P 500, 2,475 is in our sights; the TSX in this scenario likely gets a back above its 200-Day Average (15,278). If we close the week below 2,415, we’re likely moving into a pull-back (-3% to -5%) at a global level, wherein iShares MSCI Emerging Markets Index (EEM), TSX, Nasdaq, Russell 2K are likely to under-perform the S&P 500.

Equity swing structure:

IShares MSCI ACWI Index ETF (ACWI) (TL World) in Swing-Low off 50-Day Average with +3.1% room to new all-time-highs (while ACWI remains above 50-Day Average).

S&P 500 remains in consolidation band 2,445-2,415, wherein a close below 2,411 (50-Day Average) implies a move towards the 200-Day Average (2,295) -5.5% away. However, a close above 2,440 implies a stretch to new all-time-highs 2,475 (1 Std Error mark on 52-week routine).

TSX remains in downtrend from mid-April, and under 200-Day Average 15,278, but above support of 15,175-110.

View the latest video from Ziad Jasani of the Independent Investor Institute here

Related Articles on STRATEGIES