Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Wall Street continued its rebound overnight, with the NASDAQ nearly back to an all time high and the best quarter recorded in over 20 years. This was despite two damning testimonies to US Congress from Dr Fauci about the coronavirus spread and Fed Chair Powell’s stating that a full recovery is unlikely even if the Trumpflu doesn’t get further out of control. Window dressing is probably to blame here, with the USD falling slightly with bond yields lifting and undollar assets lifting as well, particularly gold which lifted through the $1800USD per ounce level.

Looking at share markets in Asia from yesterday where the Shanghai Composite bounced back to recover most of Monday’s losses to be up 0.8% to 2984 points while in occupied Hong Kong the Hang Seng Index accelerated at the close to be 0.5% higher to 24427 points. Futures aren’t looking so good however, with another test of the recent daily lows likely,  support that must hold here below the low moving average at the 23500 point level:

Japanese stocks did some window dressing with a modest lift on the Nikkei 225, up nearly 1.3% to 22288 points. Futures are indicating a small retracement this morning with the daily price chart still looking weak here with a series of lower daily highs and very low volatility, suggesting a sharp move either way is due soon. Watch daily ATR support at the 21500 point level and the high moving average for those signs:

The ASX200 had a solid end to the financial year with the market lifting more than 1.4% to 5897 points to almost take back its previous losses. SPI futures are down nearly 10 points so this will be a very interesting session to start the new financial year – expect a lot of rebalancing out of sectors and into hot stocks, but again I warn that ATR daily support and the recent lows at the 5750 level which still must hold here:

European markets had a mixed session with differing views on the latest EZ CPI print, with the German DAX closing 0.6% higher to 12310 points as other bourses fell back or tread water. Momentum remains relatively flat here with price still poised above daily support but trying to get back to the recent session highs. I’m still watching for a sharp retracement below 12000 points or a breakout above the 12500 local resistance level:

Wall Street was green across the board with the NASDAQ leading the way again, while the S&P500 eventually closed 1.5% higher right on 3100 points. The four hourly chart shows a breakout from last week’s small downtrend but resistance clear at the 3100 point level with a lot of hesitation and lack of buying breadth quite evident here. I still contend we could be in for a big breakdown below 3000 points soon:

Onto currency markets where the volatility was not as helpful with a series of failed breakouts, particularly Euro which oscillated around the EZ wide CPI print release, moving below the 1.12 handle before returning to where it started nearly 48 hours ago. The former weekly lows remain the target here this week so watch the low moving average for signs of another inversion in the short term:

The USDJPY pair was more successful in pushing higher, almost reaching the 108 handle with a solid breakout above the symmetrical triangle pattern on the four hourly chart. This sets up for another leg higher but there is a hint of resistance at the 108 level to watch closely for signs of a potential rollover:

The Australian dollar finally got out of its depressed mood and broke above the recent session highs to get back above the 69 handle again – just. The new financial year may bring some rebalancing of positions here too so I’m watching for a proper move above the 69 level to solidify this breakout:

Oil prices were relatively quiet overnight with Brent futures nearly unchanged to be just below the $42USD per barrel level, after a recent modest bounce off the recent daily lows. Daily momentum is still flat, but positive for now, with a breakout above the high moving average at $43 or so required before another legup in this ridiculous rally:

Gold put on a new daily high, with futures briefly sneaking a look above $1800 while spot prices finished at the $1781USD per ounce level overnight, edging higher to continue its recent breakout. Price is well above the previous nominal highs and sets up for further upside, as momentum remains in a solid overbought mood here as it begins to reign in the next target at the 2010 highs above $1800 and maybe on to the record nominal high above $1900?

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!

Comments

  1. migtronixMEMBER

    Well I deserve to get shredded, along with Stomper and a couple of others, for our TSLA calls.

    There was a dude a couple of years ago defending it at $300 when we watched it go to $180. To that guy I owe a bow and I take it.

    $1080 WTF?

      • migtronixMEMBER

        Can’t recall the handle, which is rare. I recall the exchanges, he was all in on the battery tech and thought everyone will be driving teslas except they’d be driving themselves of course!

        Most of the whole thing was Stomper and I saying Full Self Driving in 6 months was pure BS – so there’s that!

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