Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Insert fear/panic quote here. The only thing you can predict about markets at the moment is that they’re unpredictable with yet another night of big falls on Wall Street, as the risk complex teeters once more. Today in Asia is going to be hectic plus the added bonus of seeing what the RBA is going to pull out of their hat’s this afternoon with the emergency meeting. Helicopters coming? The bond market suggests so..

Looking at Asian share markets yesterday,  where the Shanghai Composite gapped higher at the open was up 1.3% going into the close, but then fell over itself to slump in the last hour of the day, falling nearly 2% to close at 2728 points. Meanwhile the Hang Seng Index was putting in a scratch session after starting lower in the day, before it too succumbed to fear and closed 4% lower at 22291 points. The daily chart has clearly flopped over again as the inability to get back above the previous bull sessions and above the last capitulation level at 24000 points has negated any bottom pattern:

Japanese share markets tried to lift as well with the Nikkei 225 up 0.5% towards the close before slumping alongside other Asian markets, dropping 1.7% to 16726 points. Futures are pointing to a further retracement today and a retest of the very recent lows here, despite a weaker Yen overnight:

The ASX200 was keeping everyone on edge with a 6%+ drop after rallying over 6% previously. This remains nuts and doesn’t help confidence one bit, as late selloffs keeping traders fearful, closing the market out below the 5000 points barrier. SPI futures are suggesting a 70 point drop on the open today but with the RBA meeting coming up there maybe more upside volatility:

European markets were quickly put back on the deck after the Asian session with the broader Eurostoxx 50 falling nearly 6% while the German DAX finished only 5.5% lower to 8441 points. As I said previously, there was  no indication here of a real bottom, with daily momentum still extremely oversold and price unable to get any traction despite any short covering. More to follow:

Wall Street was even more volatile with intrasession moves of 8% or lower overnight before a small recovery at the close saw the S&P500 only lose 5.2%, taking back all of the previous session gains to close at 2398 points. Because of the break of the previous uncle point below 2400 points, I still contend there’s more downside here:

Onto currency markets where volatility continues to spike with the USD comeback turning into a rout with Pound Sterling falling again to another yearly low while Euro fell through the 1.09 handle before a very slight recovery overnight. Again, as a risk proxy, Euro is doing a good job here – only upside here is for the exporters in a few months (quarters?) time. I’m watching the high moving average on the four hourly chart for signs of life, but its not promising:

The USDJPY pair however is not providing its usual risk proxy status with another rally overnight pushing it above last Friday’s closing point, finishing this morning above the 108 handle. Whiel there’s a nominal double top bearish pattern forming here on the four hourly chart, there’s no evidence of a slowdown in USD strength, but watch for a possible retracement below the 107 level:

The Australian dollar remains in freefall, this time dropping below the 59 and then 58 cent level overnight to settle at the 57.80 level going into today’s RBA meeting and numberwang figure drop this morning. How long can the Pacific Peso go? The next support level is just below 50 cents at the 2000 low – still great news for exporters – if they can survive this recession:

Oil put on another selloff overnight with both Brent and WTI crude falling sharply with the latter moving to below the $24USD per barrel level. The daily WTI crude chart is showing a race to the bottom with momentum remaining extremely oversold there’s no upside signs here as the price war continues – this battle is being ignored by most, and could get violent:

Finally to gold, which after an epic ride following the weekly megaphone pattern saw a tight session overnight that saw it finish below the $1500USD per ounce level, remaining well below the previous December-February support level. Gold was lagging equity markets here but has played catchup, notably price support is building at these levels, corresponding to the pre-December breakout:


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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