By Chris Becker
More record highs on Wall Street as already discounted positive news about COVID-19 therapeutic treatment was doubled down again, this time across Europe with the much higher USD helping offset domestic currencies. Oil prices broke out due to the double hurricane threat to production in the Gulf of Mexico, while other commodities eased off alongside bond yields as risk leapt higher.
Looking at share markets in Asia from yesterday where in mainland China the Shanghai Composite is gliding along without much effort, closing 0.2% higher to 3385 points while in Hong Kong the Hang Seng Index has taking its Fridays bounceback even further, pushing 1.7% higher to 25515 points. Price is ready to push higher again at resistance around the 25400 point level but note the long tails above on the daily chart that is indicative of selling pressure ahead:
Japanese stock markets put in more modest sessions however, with the Nikkei 225 closing 0.2% higher at 22985 points. Futures are indicating a better return today as Yen sold off slightly overnight, but resistance at or around the 23000 point level on the daily chart needs to be cleared substantially to beat the late May highs:
The ASX200 did a little better, up 0.3% to 6129 points but still listless as earning season rolls on. SPI futures are up at least 40 points following the Wall Street surge as again, natural resistance at the May highs remains the level to beat (upper black horizontal line) with the daily chart looking very bullish and ready to breakout here. Today’s earnings include a stonking lot Alumina (AWC)
Ansell (ANN), Oil Search (OSH), Seven West Media (SWM), Stockland (SGP) etc:
European markets have thrown caution to the wind with a big surge across the continent, with most markets up 2% or more. The German DAX advanced 2.3% higher to 13066 points as Euro fell against USD. The daily chart was painting a troubling picture here, with a rounding or triple top bearish pattern building and requiring a full clearance of the 13000 point level. We’ve had the clearance Clarence but still not a resumption of the previous daily highs – but you can’t be anything but bullish here can you roger roger?
And the reason is Wall Street is advancing yet again to ever higher record highs, getting high off the already discounted highs of the past. The S&P500 gained 1% to over 3400 points to a yet another new record high, again back above its previous record high while the NASDAQ did the same. The four hourly chart shows a great breakout here above the 3400 point level that is considerably overbought but none of that matters – buy buy buy:
Currency markets are dancing again in favour of USD coming into the Jackson Hole conference and the expected remarks of Fed Chair Powerll. Euro had a head fake up towards the 1.19 handle, round-tripping from its weekend opening start point and then back again late this morning. While momentum moves back to an oversold, watch for a potential small swing play higher before the conference as volatility is rising:
The USDJPY pair had a minor breakout above its very tight trading range, heading up towards the 106 level and starting to encroach on the previous week intrasession high. Four hourly momentum has finally switched to a positive picture, so watch for a follow through session above the high moving average here this morning as the strong USD meme persists:
The Australian dollar was unable to move around again, with last night’s session seeing a head fake move back to the 72 handle before heading down back to the weekly low at the 71.60 level. Note how price is right on the daily uptrend line (black line at the 71.40 intersection) and could struggle to maintain this nascent support level:
Oil futures are lifting strongly due to the shutdown on oil rigs in the Gulf of Mexico and the biggest US refinery in the wake of two hurricanes barrelling down, with both Brent and WTI markers up over 1.5%, the former shooting well above the $45USD per barrel level. The four hourly chart shows Brent coming straight back to its former resistance level and recent daily highs, which could breakout higher if the storms get worse:
Gold remains unable to get anywhere, still sitting just above previous four hourly support at the $1930USD per ounce level as USD firmed further overnight. The bearish head and shoulders pattern has fully formed on the four hourly chart providing short positions an opportunity to get in if support at the $1930 level breaks:
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!