Playlist: US SPX500

Show less
Morning Call: Softer dollar boosts commodities, stocks
21 September 2018 at 7:40 GMT
Morning Call: Bringing it all back home
05 September 2018 at 7:56 GMT
Morning Call: Trump opens fire on China, EU
31 August 2018 at 10:31 GMT
A closer eye on Fang stocks — #SaxoStrats
Kay Van-Petersen
06 August 2018 at 11:18 GMT
Trading tips week 14 - technical analysis: Kim
James Kim@Saxo
03 April 2017 at 7:33 GMT
Trading tips week 50 - technical analysis: Kim
James Kim@Saxo
12 December 2016 at 13:18 GMT
Video / 31 March 2017 at 7:23 GMT

From the Floor: Oil shorts 'feel the pain' — #SaxoStrats

   • Oil reversal to upside through the week has left shorts feeling 'the pain' — Hansen
   • WTI heading into resistance at $50-50.90/barrel area, support at $48.75/b — Hansen
   • Gold scrabbling around for support at $1,236/oz and $1,228/oz — Hansen
   • Global equities rebound continues but S&P500 not yet convincing — Garnry
   • S&P 500 call shifts to neutral but rise still capped below falling trendline — Garnry
   • Bunds rising despite risk-on moves as markets discount ECB action — Boye
   • Markets may be dismissing ECB action in 2017 prematurely — Boye
   • China PMI's hit near-five year high but earnings disappoint — Su
   • Grains markets get ready for likely market-shifting report this evening — Hansen

By Martin O'Rourke

Pain sailing

It's been quite a remarkable recovery in oil prices this week after a drift towards $45/barrel had begun to look very likely but the ship turnaround has not been without pain with short positions catching it in the neck.

"We've had weeks of longs suffering but the strong recovery coupled with a triple bottom on WTI has meant the shorts are feeling the pain," says Saxo Bank's commodities chief Ole Hansen on the line from Portugal. "The triple bottom has given buyers enough confidence to start picking it up again."

"The rally has also happened while the dollar has been rising indicating that there is some underlying strength in the market," says Hansen, pointing to additional price-supportive factors in new supply issues out of Libya and Opec's willingness to keep its message on production costs live and present.

Brent crude was at $52.44/barrel at 0655 GMT. WTI was at $49.59/b.

WTI rise given strong platform by triple bottom
Source: Bloomberg

"The market looks like it is coming back into some balance now with resistance for WTI in the $50-50.90/b zone," says the commodities chief. "A close above $50/b would affirm the case and even if there is downside, it would have to go all the way to $48.75/b before we could say this is a change in the picture."

"There is still a risk it could drift lower though."

It's a different outlook for gold which, having failed repeatedly at the $1,261/oz resistance, is looking over its shoulder for support at first $1,236/oz and then $1,228/oz.

"Gold is in trouble and with the gold/silver ratio at a four-week low and the dollar strengthening, that is reducing upside potential," says Hansen.

Question marks

The global equities rally that effectively brushed aside US president Donald Trump's failure to get his healthcare bill passage through Congress as nothing more than a mild inconvenience, has continued unabated, helping S&P 500 cross that critical line at 2,350.

"S&P500 is above 2,350 but it is still below the falling trendline that we have been highlighting for a while now," says Saxo Bank's head of equities strategy Peter Garnry. "This doesn't feel like a robust rally yet."

Garnry's position on S&P has moved to neutral but no more as the trendline dynamic remains the fundamental dynamic in the direction of the US index into the weekend.

Garnry is much more sanguine about the prospects for Europe where easing inflation in Germany at 1.5% year-on-year versus 1.9% expected reaffirms his belief that this is a better bet for now.

"As far as inflation is concerned, there is also the oil price factor which has to be taken into account," says Garnry. "If we see oil prices more or less stay at the same level over the next few months, then the inflation input from oil will be at zero by June."

Disappointing earnings results out of China overnight, where Hang Seng China Enterprises, China Railway Group and PetroChina all missed targets reports Shiyun Su from the Saxo's Singapore hub, casts some doubt over the underlying strength of the global equities push, offsetting China's best PMI performance in nearly five years in the process.

S&P500 rally not yet able to breach the falling trendline
Source: Bloomberg

Easing inflation in Europe has made its presence felt in bunds which, despite the general risk-on mood, have risen to 161.40, reports the fixed income desk's Michael Boye.

"It reflects a view in the market that there will be a more cautious stance taken by the European Central Bank regarding any more moves this year," says Boye. "We think that while the market is pricing this out, it is far too early too call."

The spread of German 10-year bunds to their US Treasury counterparts Is once again out to nearly 210 points, notes Boye.

Spread just shy of 209 points
Source: Bloomberg

A five-year bond issue out of Papa New Guinea worth $500 million slated to go online this year, could also have market optimists salivating, says Boye.

"Papa New Guinea tried this before and if it is successful, it is testament to the strong underlying demand in emerging markets," he says. "For some though, this will be a sign that the market is getting too heated."

And finally...

It isn't always the most glamorous of segments, but grains will take the commodities front seat this evening when the US department of agriculture releases its keenly awaited crops report.

The market has already priced in a strong-supply report forcing soy beans down 7% and wheat and corn down 5% so any risk is likely to the upside, says Hansen after a shifting in positions from a net long of 400,000 to 90,000 in the shorts position.

"The risk/reward is to the upside but do expect a lot of volatility."

The report will be published at 1600 GMT.

What will tonight's crop report show? Photo: Shutterstock

Martin O'Rourke is managing editor at Saxo Bank

Please speak louder
ashrafj1 ashrafj1
:) yes sound is low
matsuri matsuri
on gold, according to indurty report it should reach $1400 this year (; on WTI, so it seems that we should reach no more than 61,8% so $52 to consider this a correction?
Cat Cat
Hello Ole. Do you know what time the Prospective Planting Report is released today?
Martin O'Rourke Martin O'Rourke
Hi Cat, it is meant to be 1600 GMT. Ole's travelling so he might not see this straight away.
Cat Cat
Thanks Martin. Happy Friday!
Martin O'Rourke Martin O'Rourke
Friday is always happy Cat :-)


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail