Macro Morning: Glass ceiling

By Chris Becker

Stock markets are trying to make new highs with the US and Europe catching up to the Chinese bubble, but last night worries over the ongoing Greek saga and poor earnings results, housing starts and jobless claims in the US sent both back to reality.

Recapping yesterday’s Asian session, it was all sunshine and roses following the “surprising” employment print here locally with the ASX200 up nearly 0.7% while the Shanghai Comp surged nearly 3% up to almost 4200 points, accelerating its gains. The Nikkei barely moved finishing a few points higher with its entrenched daily trend possibly under threat here on a momentum rollover:

Chart Nikkei225, D1, 2015.04.16 22:19 UTC, VantageFX Pty Ltd., MetaTrader 4, Real

The SPI futures are only pointing to a 6 point loss on the open although I fear/hope that could extend in the opening hour or so particularly the banks/financial index which is highly correlated with moves on the DAX (more below).

In Europe as the 10 year German bund approaches 0% yield (down to 0.08% last night) the Eurostoxx 50 index lost 1.4% on Greek contagion fears as most stock markets had a solid down day. As I mentioned yesterday the DAX had potential to rollover with this years trendline broken on a bearish engulfing daily candle, off nearly 2%:

Chart DAX30, D1, 2015.04.16 22:34 UTC, VantageFX Pty Ltd., MetaTrader 4, Real

The weekly chart shows support at 11,900 points to the key level to watch on a weekly close.

In the US, the battle continues between the bears and the bulls as the earnings season rolls on with hard technology stocks dragging bourses down as the energy sector scrambles to make sense at what could be the bottom in oil prices. The S&P500 basically finished unchanged while the futures dragged it down in after-hours trading:

Chart SP500, D1, 2015.04.16 22:44 UTC, VantageFX Pty Ltd., MetaTrader 4, Real
A series of divergences on this daily chart paint a confused picture. Lower volume is translating into very low daily ranges and hence volatility, always a sign that higher volatility is around the corner as the market range trades and hits solid resistance at 2100 points or so.

The US dollar might be putting in a double top here on the daily chart of the Dollar Index (DXY) as it went backwards again last night on Euro and Cable strength as Yen went sideways:

dxy

Although the picture for euro is looking increasingly stretched on the upside with a bearish megaphone forming on the four hourly chart as the union currency takes a peek over the 1.07 handle but meeting heavy resistance overhead:

Chart EURUSD, H4, 2015.04.16 22:52 UTC, VantageFX Pty Ltd., MetaTrader 4, Real

Cable (GBPUSD) rallied as well extending its huge move this week from a nadir of 1.4580 to finishing last night at 1.4930 but hitting resistance at these levels in the pre-election cycle:

Chart GBPUSD, H4, 2015.04.16 22:57 UTC, VantageFX Pty Ltd., MetaTrader 4, Real
Yen didn’t provide similar opportunities and basically finished where it started yesterday morning at just below the 119 handle as the real performer in Asia was the Aussie dollar:

Chart AUDUSD, H4, 2015.04.16 23:06 UTC, VantageFX Pty Ltd., MetaTrader 4, Real

Well I got the “upside potential here is poor” call wrong as it flew through the strong resistance at 77.40 following the “good” jobs report but thats why you always consider going the other way when trading! The Aussie surged yesterday and then doubled down again in the London session breaking through 78 cents were it finds itself this morning. The next level of resistance and where I’d be looking for a very high risk/reward short entry is the 78.80 to 79.30 zone.

The commodity complex didn’t initially respond to a weaker USD until very late in the session where WTI and Brent both rallied over $2USD per barrel, the former now at $58 and making good on its recent breakout although very overbought:

Chart CL-OIL, D1, 2015.04.16 23:11 UTC, VantageFX Pty Ltd., MetaTrader 4, Real

The daily move in gold is flat with a finish just below $1200USD, albeit with a pre-NY rally and a huge selloff post-NY squaring the gains and only of note for intraday traders. The daily trend remains completely sideways with a slightly bullish bias.

There is little data locally as we finish another week. In the European session its UK unemployment and the final CPI print for the EZ while in the US, amid the earnings season its March CPI and Michigan consumer confidence that will be the focus. See you next week!

Comments are hidden for Membership Subscribers only.