A turgid twenty-four hours on risk markets as traders and bewildered algo’s absorbed the first US presidential debate debacle, with Wall Street finally lifting on more stimulus hopes which should translate into a somewhat positive mood here in Asia on the open. Last night saw two major releases, first German (and hence European) unemployment figures which came in a little lower than expected and then the final 2Q GDP print in the US which was on the nose but also on the money. ADP private sector job figures did better than expected but currency markets were relatively quiet as Euro remained subdued, but Pound Sterling broke out alongside the Australian dollar.
Looking at share markets in Asia from yesterday’s session where the Shanghai Composite was down 0.2% to 3218 points while in Hong Kong the Hang Seng Index was the only bourse in the green, closing 0.8% higher at 23459 points. Price is bouncing off an oversold low here and wants to clawback above the August lows at 24000 points. This swing play could continue but momentum readings are still dicey until we get back above the high moving average:
Japanese stock markets were sharply down with the Nikkei 225 closing 1.5% lower at 23185 points as Yen buying becomes dominant. Strong resistance at 23300 points remains the level to watch with futures suggesting a mild uptick this morning, but short term support at the 23000 point level needs to hold again for any medium term directional move:
The ASX200 was the worst off as Aussie traders shook their collective heads at the orange pigeon dance, selling off more than 2% to close at 5815 points. SPI futures are up about 15 points so it all depends on local sentiment to keep it swinging back below the 5800 point barrier. The 6000 point resistance level remains extremely firm with another downleg to 5700 points possible:
European markets stumbled again with the FTSE and German DAX both finishing 0.5% lower, the latter closing at 12762 points. Daily price action is completely contained within a falling moving average band to the downside, although ATR daily support at the 12400 level remains firm. I’m watching for a further selloff that retests that level tonight as momentum remains negative:
Wall Street had a mixed reaction to the debates with futures suggesting a fall before the open but then a late rebound on stimulus hopes saw all three bourses rallying, with both the NASDAQ and the S&P500 finishing around 0.8% higher, the latter closing at 3363 points to remain above the key psychological 3300 point level. The four hourly chart shows a desire to breakout again but what thwarted later in the session with futures indicating slipping confidence as price approaches the former weekly highs (solid upper black horizontal line) at the 3400 point level:
Currency markets were relatively stable around economic releases and the debate with Euro stalling from its strong bounce off the weekly low, remaining slightly above the 1.17 level. The upside breakout to watch is above this week’s session highs above 1.1740 with tonight’s EZ-wide unemployment print a possible catalyst for it to catch up to Pound Sterling and other undollars:
The USDJPY pair is very slowly rolling over here following the weak USD meme, retracing back to last Friday finishing levels below the mid 105 zone. Momentum had been nicely overbought but is now reverting to the zero level, so watch for a further break below the low moving average for a potential swing back down to trailing ATR support:
The Australian dollar is now surpassing Euro in direction as it continued to lift above the 71 handle overnight, now nicely overbought in terms of momentum. I had expected a stall out as the Pacific Peso approaches the mid 71 level but there are no signs here yet. Watch today’s PMI print for a possible catalyst:
Oil futures bounced back on some good production and demand figures with Brent markers pushing back above the $42USD level again. I continue to note that the daily and four hourly chart still hasn’t shown a break above trailing ATR resistance so this remains a swing play only until the $43 level is decisively broken:
Gold was a little flat overnight with silver selling off down to the $23USD per ounce level while the former tried to maintain itself just below the $1900USD per ounce level. Note the short term resistance at all the recent session highs at that level where a lot of short positions are building. The longer term price pattern still exhibit a classic breakdown pattern:
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!