Macro Afternoon

Stock markets have had a generally positive day across Asia, mimicking the small advances on Wall Street overnight as the USD slipped against the majors, although a stronger Yen continues to provide a headwind to Japanese stocks.

The Shanghai Composite has closed down a couple of points to 3239, still unable to gain any headway following the long weekend while the Hang Seng Index cotninues to advance past the 30,000 point level, closing 0.3% higher to 30147, but it has to be said that this looks way overextended:

US and Eurostoxx futures have retreated slightly going into tonight’s session, down about 0.2% or so with the four hourly chart of the S&P 500 still showing some hesitation to get past the previous highs above 2900 points, although momentum remains positive:

Japanese stock markets continue their poor start to the week, with the Nikkei 225 closing 0.2% higher to 21802 points, unable to build above its recent highs. The USDJPY pair is to blame here again with a retracement back to trailing ATR support at the the 111.30 level. The 112 handle remains a bridge too far here for the risk-on pair, which may be signalling a potential end to the bull run on other undollar assets:

Local stocks just finished with a scratch session as the ASX200 advanced a single point to 6221 points, hovering over recent highs but momentum waning. The Australian dollar is partially the reason as it swiftly advanced past the 71 handle and above the previous weekly high, now threatening the weekly downtrend line as short positions unwind:

The economic calendar is relatively quiet tonight with the only release of note being Swiss unemployment.

Comments

  1. Before CB’s controlled everything, Mandelbrot’s theories on volatility clusters created expectancy that the longer the doldrums, the larger the inevitable squalls…..
    Implied volatility in the major FX pairs (ex. GBP) is Near ALL-TIME lows. https://i2.wp.com/macro-ops.com/wp-content/uploads/2019/03/impled_vols_all_time_lows.png

    Volatility in gold as measured by the width of its monthly Bollinger Band is at levels last seen over 17-years ago. https://i1.wp.com/macro-ops.com/wp-content/uploads/2019/03/gold_futuers_1.png

    Whichever way they go, if they run you likely won’t be fishing for sardines….. choose bait & hooks accordingly…… & you might need a bigger boat.

      • It doesn’t deign directions, just that a good burst of Volatility “should” be on the way after this tectonic buildup. There’s a few pairs that have been just pushing against support/resistance for some time waiting for a decider. Triggers could be US China deal. Brexit, Petrodollar, CB’s lose their grip, who knows. Presumably they’d all affect the markets differently directionally & in velocity. It’s safe to expect the big houses war game different scenario’s for it & fundamental screens might help. But it could be as unpredictable as how a pack of panicky feral dogs scatters everywhere when you’ve dropped the lead dog – some just blindly run straight up your barrel – & if you’re quick enough……

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