Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Stimulus packages are pumping air into the carcass that is the dead cat like a bagpipe, with Wall Street rallying on hopes that the cheques from Congress will save the next quarterly earnings bell. The fact that initial jobless claims came in at over 3 million was swept under the rug, as were the growing piles of dead bodies in tent-city morgues just down the road in NY. Interestingly, the daily White House COVID-19 press conference is being held after the close, which has been in the past a great entry point for short sellers.

Looking at Asian share markets yesterday, where the Shanghai Composite looks set to close with a scratch session currently at 2782 points while the Hang Seng Index has fallen about 0.7% or so to 23394 points, unable to keep above above its high moving average on the daily chart and hence still in swing mode only. The daily chart is still showing significant anchoring and firming support but I still contend this will stall out at around 25000 points:

Japanese share markets had the steepest falls, after gaining 20% in the last couple of days, the Nikkei 225 closed 4% lower recede back below the 19000 point level. Futures are indicating a return back to the previous swing highs back at 19000 and depending on sentiment here in Asia could see a push back up to the very important 20000 point level:

The ASX200 was the only market to advance, moving 2.3% higher to finish at 5113 points. SPI futures are up another 4% this morning as the fear of missing out (FOMO) doubles down going into the weekend with the next target above at 5600 points:

European markets continue to have solid sessions, albeit at a more sustainable pace, with the Eurostoxx 50 closing 1.7% higher while the German DAX was again the laggard, only advancing 1.3% to finish at exactly 10000 points. The daily chart of the DAX was showing a possible bottoming picture here and now the FOMO phase is slowly coming into play, but notably the magnitude of advances is a lot lower compared to the rest of the relatively uninfected other equity markets (notably Wall Street):

Wall Street had another orgy of buying with all three major bourses up 6% or so, the broader S&P500 eventually closing 6.2% higher to 2630 points. The daily chart shows the return to the 2600 points level which equates to the monthly/yearly 2008 uptrend line with the next target being the next step up/down at the 2800 point level:

Onto currency markets where volatility is picking up again with the USD retreating against almost everything as Euro accelerated into the 1.10 handle. This swing trade that started on Monday is replicating moves in equity markets but is now getting ahead of itself in the short term, so despite a break above trailing ATR resistance I’m watching for a potential short term inversion:

The USDJPY pair fell through the bottom of the ascending triangle pattern on the four hourly chart yesterday and then continued to selloff overnight to finish this morning near the 109 handle, again not showing any correlation with the overall risk complex. I’m watching for a potential breakdown below trailing ATR support:

The Australian dollar continues to be helped by somewhat temporary USD weakness with another push higher to the 60 handle. With risk markets spiking all along the complex, the double top pattern on the four hourly chart is poised here for a breakout above the 60.70 level:

Oil remains the market to watch that next to no one is watching with a pullback again overnight, as the WTI contract slipped to finish just above the $23USD per barrel level. The daily chart is still showing a nominal bottom forming at the $20 level, but price action is now pointing to a revisit of those lows as no new session highs are being made. Its illustrative that this commodity is going nowhere as OPEC+ continue to battle it out and actual demand is falling like a cliff and storage areas are filling up fast. Be ready for another 50% plus leg down:

Finally to gold, which after peaking above the $1600USD per ounce level remains relatively steady as daily momentum cools off, but still remains on the positive side. I’m still waiting for some consolidation here before calling a new rally in place, as this still looks like short covering to me until the recent highs are fully cleared:

 

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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