Rally in stocks runs into resistance; TRY leads EM retreat

Summary:

• US stocks run into resistance around Dec Fed highs

• DE30: Bayer gains on favourable ruling in India

• TRY leads EM retreat

• ECB member calls crypto a “load of nonsense”

• Top 3 charts of the week: US500, EURUSD and Silver

The US500 has made further gains today, although some selling into the end of the European session has raised the possibility that the recent rally could be running out of steam. The region from 2589-2624 provided support on several occasions before being broken below last month, and the rally seen on the day of the December FOMC meeting peaked back at the lower reaches of this level. For these reasons one could suppose that this may now offer resistance and any reversal signals from here up until 2624 could provide attractive entry opportunities for those looking to short. Having said that a break above 2624 would open up the possibility of further upside, with a push to 2823 not out of the question should this occur.     

Bayer (BAYN.DE) is one of the best performing DAX stocks today. As the reason behind good performance of the company’s shares one can name a favourable ruling that its subsidiary, Monsanto, won in India. Namely, the India’s Supreme Court ruled that Monsanto’s patent for genetically-modified cotton seeds is valid. Earlier, the Delhi High Court ruled that items like seeds or animals cannot be subject to patents. Now a lower court will look whether other companies infringed the patent or not.

Emerging market currencies are clearly down on Tuesday led by the Turkish lira, down more than 2% on the US dollar. The lira slides as the president of Turkey refused to meet US National Security Advisor during his visit in Turkey after the US refrained from withdrawing its troops from Syria. Other major losers include South African rand (USDZAR +0.9%) and the Hungarian forint (+0.65%).

Today’s trading in the cryptocurrency market has been quite mixed so far. Three largest virtual currencies - Bitcoin, Ethereum, and Ripple - have not experienced major price movements on a daily basis. The capitalization of the whole cryptocurrency market stands around the $137 billion handle while Bitcoin accounts for nearly 52% of this value. Ardo Hansson, the governor of the Bank of Estonia and the member of the ECB Governing Council, delivered some remarks about cryptocurrencies speaking at the conference called “5 Years with the Euro” in Riga, Latvia. Hansson told that cryptocurrencies would die as a “complete load of nonsense”, as Bloomberg reports. “The bubble has already started to collapse and maybe we should just see how far this collapse goes, and what is left when we’ve reached a new kind of equilibrium”, said also Ardo Hansson as Bloomberg agency reports. “I think we will come back a few years from now and say how could we ever have gotten into this situation where we believed this kind of a fairy-tale story”, the governor of the Bank of Estonia added.

The top 3 charts this week are the US500, EURUSD and Silver nad can be viewed here.