By Chris Becker
Wall Street was again pushed higher by tech stocks as the NASDAQ nearly up 1%, as the USD fell to a new two year low against almost everything as the risk complex sharpens its concentration into bubble like territory with Treasury yields also down to record lows. Meanwhile European stocks continue to be very cautious while commodities were very mixed as Brent and WTI crude fell slightly, iron ore shot higher, alongside undollar assets like gold, Bitcoin (above $12000) and the Australian dollar.
Looking at share markets in Asia from yesterday where in mainland China, the Shanghai Composite had a relatively weak session before lifting going into the close, up 0.4% to 3451 points while in Hong Kong the Hang Seng Index was basically unchanged to close at 25367 points. This keeps price just above the high moving average on the daily chart and momentum ticking along but not yet seeing a stronger trend develop:
Japanese stock markets slipped as lack of confidence and a higher Yen bites, with the Nikkei 225 closing 0.2% lower at 23051 points. Futures are indicating another slow start this morning with price starting to retrace below the high moving average and heading towards the 23000 point support level to put it under pressure but not yet broken:
The ASX200 was the odd one out, gaining nearly 0.8% to 6123 points despite a 2% fall from Westpac on its shocking 3Q report. SPI futures however are down several points despite the ebullient mood on Wall Street, as resistance at the May highs remains the level to beat. Watch for Dominos Pizza (DMP), CSL and Tabcorp (TAH) in today’s earnings:
European markets fell slightly across the continent with the German DAX falling 0.3% to close at 12881.The daily chart was looking firm here last week with solid momentum but the rounding or triple top bearish pattern continues to form here ominously, requiring a full clearance of the 13000 point level pretty soon to get out of trouble:
Wall Street just can’t be stopped, with the S&P500 was pushed 0.2% higher at 3389 points, now matching the the pre-pandemic highs (solid black horizontal line) beating all expectations as this bear market recovery is now complete:
And then NASDAQ hit a new record high – again – with the monthly chart looking very very bubblicious:
Currency markets are moving in one direction as well as the USD went to a new two year low against everything, with Euro almost breaking through the 1.20 handle overnight before moderating to be at the 1.1930 level this morning. This remains a nice bounce from last week’s low that is still sustainable even though well into overbought territory, but without any other catalysts, not much to get in the way, but I’m watching for tonights EZ CPI print to make a possible change:
The USDJPY pair continued its start of week falls, but found some modest support at the last week lows near the 105.50 level in a deceleration pattern. Whether this can hold is another thing with USD weakness really baked into continued concerns around deflationary impacts in Japan on COVID-19, so watch for another potential break below here:
The Australian dollar was able to just beat its previous weekly highs above the 72 handle overnight, following through on its solid weekly opening move but had some oscillation around the US housing starts print and ran out of puff at the 72.40 level. I’m watching for the tell tale signs of a swing move back below the high moving average as four hourly momentum gets extremely overbought and tips over back to mean:
Oil futures still can’t gain traction with the Brent once more oscillating around the $45USD per barrel level, with WTI futures pushing up towards but not above the $43 level last night. The daily chart of Brent still shows a market unable to capitalise on its previous weekly breakout above the $44.30 level with considerable resistance overhead, but support remains nice and tight at the $44 level:
Gold is getting back its mojo, with a solid breakout at the start of the week now pushing it back above the $2000USD per ounce overnight. With a minor wobble to finish the session, we should see a follow through again today with support very clear at the $1930 level going forward:
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!