Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

The NASDAQ stumbled overnight, mainly due to Netflix and Facebook finally taking some profit, while Tesla kept zooming higher, but the rest of risk complex is taking a deep breath at the moment as Fed Chair Powell announced different inflation targeting in his speech overnight. This caused some swinging volatility around currencies, while bond yields spiked somewhat and commodities fell back across the board. Apart from a big but expected drop in GDP for the quarter, other US economic releases were relatively strong which helped industrial stocks a little.

Looking at share markets in Asia from yesterday where in mainland China the Shanghai Composite was able to finally put on a good session, closing 0.6% higher to 3350 points while in Hong Kong the Hang Seng Index is the worst off, down just over 0.8% to 25281 points. Price was ready to push higher again through resistance around the 25400 point level but as I’ve warning all week there’s considerable selling pressure ahead despite the positive daily momentum. Watch for a potential break below the low moving average here:

Japanese stock markets continue to stumble along but a cursory glance at the daily chart shows an uptrend still ready to go as the Nikkei 225 fell about 0.3% to close at 23208 points yesterday. Futures are still indicating another flat start to finish the trading week as resistance at or around the 23400 point level on the daily chart still needs to be cleared substantially to beat the late May highs:

The ASX200 managed to eke out a very small gain, up 0.2% to 6126 points as earning season rolled on while the Australian dollar lost steam. SPI futures are down just over 20 points due to the mellow sessions on Wall Street, so yesterday’s gains looks like evaporating going into the weekend as the daily trend channel rolls into a sideways bent:

European markets stumbled yet again, with uniform losses across the continent. The German DAX took back all of its previous advance to close nearly 0.8% lower to 13096 points on a one day reversal from the previous breakout. The daily chart had been looking like clearing the triple top bearish pattern but this rollover may have legs – watch for any further retracement below the 13000 point level:

Wall Street was mixed with the NASDAQ having a hiccup, daring not to put on further runs with a 0.3% decline with the Dow and S&P500 continued their advance, although the latter only just with a meagre 0.17% gain to 3484 points. The daily chart continues to show a market well overbought and ready to pop even higher, although this is still setting up for a potential KC signal:

Currency markets were quite volatile with Powell’s speech seeing at least 100+ pip ranges in the majors, with Euro shooting up to the 1.19 handle before heading back below to the 1.1750 level. At the end of the session it was unchanged with four hourly momentum still negative but ticking along as evidenced by the lack of no new session highs since the start of the week – still wait and see mode:

The USDJPY pair however was able to sustain most of its volatile upside, heading briefly down to the 105.50 level before sticking at the 106.50 area, making a new intra-session high.   Four hourly momentum is back to being nicely overbought, although it might retrace slightly on the Tokyo open here to the 106.30 level before finding its feet again:

The Australian dollar exhibited similar volatility but also effectively kept on track in its minor uptrend, heading back up to the previous weekly high just below the 72.70 level and clearing  trailing ATR resistance. If it can beat this weekly high the next target above is 80 cents believe it or not:

Oil futures moderated overnight despite the continued threat of Hurricane Laura with both Brent and WTI markers off by nearly 1.5%, with Brent remaining reduced back down below the $46USD per barrel level. This breakout doesn’t look like extending higher and maybe a one off as price gravitates back to the long held neutral positions at or around the $45USD per barrel level:

Gold had a little flutter amidst the USD volatility but could not hold on, falling back to its weekly lows around the $1930USD per ounce level. There’s not much to write about here on the upside yet:

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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  1. migtronixMEMBER

    Sold TSLA. Didn’t quite double but not far shy. For a couple of months that’s enough – I can’t deal with it going to 3k…