Macro Morning

By Chris Becker 

Wall Street took back its previous mild losses overnight while European bourses were hesistant to move forward despite a supposed “new deal” for Brexit and a possible ceasefire in Syria.  While US stocks gained, Treasuries gravitated around the 1.80% level again, as Brent and WTI crude oil prices lifted solidly on the ceasefire news.

Looking at the action on Asian markets yesterday, where the  Shanghai Composite spiked again on the open but still can’t hold onto any gains, closing a little lower to 2973 points while the Hang Seng Index continued its post breakout rally, lifting 0.7% to be at 26848 points, almost cracking resistance at 27000.  Momentum is gaining here above the positive level, so I’m watching the high moving average as continued support for a breakout:

Japanese share markets were mixed given the sideways move on Yen overnight plus the poor lead from Wall Street with the Nikkei 225 closing 0.1% lower at 22451 points. The daily chart is pausing here after the blowout pattern with futures mixed given the good Wall Street lead but slightly stronger Yen overnight. I’m watching the high moving average around around 22300 to come under pressure soon:

The ASX200 sold off the most, losing nearly 0.8% in the wake of the unemployment print as expectations for more rate cuts from the RBA took the rug from underneath, finishing at 6684 points. SPI futures are down nearly 15 points again despite the positive lead on Wall Street, so the market will continue to remain just below the September highs:

European stocks were mixed to say the least overnight as the continued barrage of nonsense from Boris and Brussels battered the bourses! The German DAX was ready to breakout out to new highs but was pulled back alongside the peripheral markets, losing 0.1% or so but gained slightly in futures. I’m still watching that multi-month resistance area here at 12700 points to come under pressure:

Wall Street got out of its temporary poor mood and advanced slightly, taking back the previous losses with the S&P500 finishing just below the 3000 point mark. The daily chart continued to build into a stable price pattern for a return to the September highs, but momentum is not that strong yet to go all in:

Volatility on currency markets is gaining however, with Pound Sterling spiking through the 1.30 handle before coming back, while a similar ramp up on Euro saw it get through the 1.11 handle in a blowout move. Momentum is coming back from its extreme overbought stage and is still ripe for a pullback but the overall trend for the union currency remains up:

The USDJPY pair is stalling from its recent rally, falling back to the mid 108’s overnight as Yen buyers stepped in finally. Local resistance at the 108.40 level and ATR support should hold here in the medium term but a short term dip is not out of the question. Momentum is only slightly overbought so there is potential for more upside here:

The Australian dollar advanced again post-unemployment print with the City pushing it to a new weekly high before running out of puff just above the 68 handle. This is a substantive breakout but only in the short term, with consolidation likely back down to the high moving average at the 68.10 or so area likely:

Oil is finally getting some satisfaction with a solid bid overnight seeing the WTI contract pushing back above the $54USD per barrel level, getting the market somewhat out of its depressed mood. I still contend there’s no longer term pattern to work on here – swing trading only:

Finally to gold, which remains under pressure and is still below the downtrend line but is finding a little bit of buying support as it hovers around previous daily ATR support at the $1491USD per ounce level. I would still contend we’re moving to the previous resistance level at $1425 as part of a bull market dip, with $1470 or so the uncle point:

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!

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