After a false breakout to the upside in equity markets early last week, momentum has shifted sharply to the downside.
With that, there has been further weakness in key equity index futures markets in Asian trading overnight. As a result, there are now two key factors that we are watching to judge when the downside has played out and, therefore, when to reinstate LONG positions. Those two factors are: i) key support levels for key equity indices; & ii) the message of our short term ‘fear and greed’ models.
Key events in markets this week include testimony from key central bank governors. In particular: i) Jerome Powell is on Capitol Hill for his semi annual testimony (Tuesday and Wednesday); ii) ECB President Christine Lagarde is speaking later today; & iii) the Bank of England’s Andrew Bailey testifies before the UK’s Treasury Committee on Wednesday. UK labour market data (Tuesday) will be watched closely as will US personal income and spending data for January (due out on Friday).
Various key companies across the global continue to publish results this week including: HSBC & Home Depot (Tuesday); Lloyds, Heathrow Holdings & Nvidia (Wednesday); Standard Chartered, Anglo American and Beyond Meat (Thursday); & key airlines IAG & Norwegian (Friday).