By Chris Becker
Risk markets are slipping as confidence slips away that President elect Trump can continue to lift stocks, dragged down by US banks especially as USD continues to drop and Treasures are bid sending yields lower. The commodity space was more bullish as oil jumped on Saudi cuts and gold pipped above the strong resistance level at $1200USD per ounce.
First to Asia yesterday where the Shanghai Composite lost nearly 0.6% in a sliding move well below its high moving average, finishing at 3119 points. I’m watching this setback closely for signs of a reversal as price heads back to strong support at 3100 points proper:
The Nikkei slump over 1% due to a much stronger Yen, settling at 19134 points, as the consolidation here between support at 18500 points and 19600 continues. My target remains the 20,000 point level with a possible pullback to support, but with Yen surging overnight today’s session could provide that buying opportunity:
Local shares have been effectively treading water sitting just below the 5800 points level on the ASX200, but iron ore, gold and oil shares should get a boost today . SPI futures are indicating that too with a positive open expected. Continue to watch the high moving average here to hold on to profits:
On to Europe, where stocks were mixed again, with peripheral bourses down 0.5%, the FTSE putting in a scratch session while the DAX slumped over 1 percent. After making a new daily high previously, this has sent longs reeling, but there’s no new low here either, so its wait and see using ATR daily support at 11400 points as the uncle point:
US stocks are not confident at all with even the record highs on the NASDAQ abating for the moment, as various sectors weigh up the Donald’s lack of information at the recent press conference. The S&P500 slipped 0.2% after falling further in the session before a late rebound. Note how on the four hourly chart below the series of lower highs, which may presage a break lowed. I’m watching ATR support here at 2256 points to hold:
On to currencies, where the volatility continues in USD trade with Pound Sterling moving up to the 1.23 handle before slammed down to just above 1.21 as USD bulls came back in late in the session. As I keep saying, this volatility is great for us intrasession traders, not so much for defining a rhyme or reason:
The picture may be clearer with Euro as comments from ECB mandarins that growth will be stronger this year. The Euro leapt up to the 1.07 handle after clearing resistance at the series of highs at 1.062 before coming back a little. There’s more potential upside here if noises from the Fed and Trump aren’t co-ordinated soon:
Yen strengthened all through the Asian and European sessions, heading down to 113.80 or so before finally selling off in NY to finish here at 114.60 or so. This might turn into a swing long position but the potential is only up to the low at former support at 115.30 at best:
The Aussie dollar continues to love the Trump Effect and is eager to push above the 75 handle against USD but couldn’t make it stick overnight. It fell back to finish at 74.90 which needs to hold because this move is way overdone – note how far above the previous smoother trendline where the recent breakout is – that can’t be sustained. I’m watching the low moving average area around 74.40 to hold:
Oil had a melt up as the Saudi’s announced actual production cuts were happening overnight, so WTI lifted straight through the $53USD per barrel level. With momentum now positive, I’m looking for the previous resistance level at $54.50 or so as the next target:
And to gold, which finally got through the $1200 level but like the Aussie at 75 cents couldn’t make it stick as profit takers knocked it back to just below. This remains very strong resistance and if breached we could see a big run up to $1350-$1400, the 2016 highs:
Glossary of Acronyms and Technical Analysis Terms:
ATR: Average True Range – measures the degree of price volatility averaged over a time period
ATR Support/Resistance: a ratcheting mechanism that follows price below/above a trend, that if breached shows above average volatility
CCI: Commodity Channel Index: a momentum reading that calculates current price away from the statistical mean or “typical” price to indicate overbought (far above the mean) or oversold (far below the mean)
Low/High Moving Average: rolling mean of prices in this case, the low and high for the day/hour which creates a band around the actual price movement
FOMC: Federal Open Market Committee, monthly meeting of Federal Reserve regarding monetary policy (setting interest rates)
BOJ/Abenomics: Bank of Japan, economic policy/direction enacted by PM Shinzo Abe
DOE: US Department of Energy
Uncle Point: or stop loss point, a level at which you’ve clearly been wrong on your position, so cry uncle and get out!