Yen strengthens overnight and stays firm in Asia following another day of sharp pull back in stocks. DOW tumbled -167.16 pts, or -1.01% and is now trading in negative territory from weekly perspective. It should be noted that DOW just made new record high three days ago. S&P 500 also dropped -0.94% and down from last week's close. US equities were pressured by selloff in small-cap shares as well as Wal-Mart's earning miss. Asian stocks follow with Nikkei down -247 pts at the time of writing while HK HSI is down -147 pts. There were additional selling on news that China's bad loans surged the most, quarterly, since 2005. Technically, USD/JPY breached a key near term support level of 101.32 and would now be heading back to key support zone at 100.61/75.
S&P 500 dropped sharply after hitting new record high of 1902.17 this week. The index is staying above 55 days EMA for the moment, and is well inside the medium term rising channel. There is no indication of a trend reversal yet. Nonetheless, we'd like to point out bearish divergence in daily MACD, which suggests continuous loss of upside momentum. It would likely be hard for S&P 500 to sustain above 1900 handle even in case of another rally. And, sustained break of the 55 days EMA would bring focus back to the channel support.
On the data front, Japan industrial production rose 0.7% mom in March versus expectation of 0.3%. Eurozone trade balance is expected to wide to EUR 17.3b in March. US will release new residential construction data. Building permits is expected to rise to 1015k in April while housing starts is expected rise to 985k. U of Michigan consumer sentiment is expected to rise to 84.5 in May. Canada will release international securities transactions and is expected to rise to CAD 7.21b in March.