Risk took a nosedive overnight when Trump decided to play the biggest DickCard of political machinations, squashing any hopes of a stimulus package to help the American people (and Wall Street of course) before the November 3rd “election”. The USD immediately spiked against everything while Wall Street took back all its Monday gains with tech stocks hit the hardest. Crude futures rallied but then took back half the gains while gold and silver tumbled as Bitcoin cruised on above the $10,000 level.
Looking at share markets in Asia from yesterday’s session where Chinese mainland markets remain closed but in Hong Kong, the Hang Seng Index was the strongest mover in the region, up more than 0.9% to be almost above 24000 points. The daily chart continues to show a swing play that is now about to meet some resistance at the former 24000 point support level that has to be broken to turn this into a proper uptrend as momentum remains negative:
Japanese stock markets also pushed higher with the Nikkei 225 closing up 0.5% at 23433 points. Strong resistance at 23300 points remain the key level to beat this week, so continue to watch the low moving average to act as short term support as price action gets tighter around these levels. A risk off play is possible so watch Yen safe haven buying as a proxy:
The ASX200 had a relative staid session, gaining only 0.3% in the end to finish at 5962 points. SPI futures are down nearly 20 points on the DickCard that has been offset somewhat by the profligate Budget machinations last night, so we’re unlikely to see a return above the 6000 point resistance level which remains firm and daily momentum is not yet positive:
European markets were a bit mixed after the solid start to the week, with the FTSE barely lifting 0.1% while the German DAX finished 0.6% higher, closing at 12906 points. The daily chart was showing a potential breakout building here above the high moving average or at that 12900 level as price action bunches up above daily ATR support at 12400 points. Daily momentum is still negative here as well:
Wall Street pulled back significantly with the NASDAQ falling 1.6% while the S&P500 finished 1.6% lower at 3360 points, taking back the previous gains. The four hourly chart shows a clear breakout above last week’s price action but the acceleration hit a brick wall on the DickCard play, pushing the bourse back to last week’s pre-Trump hospital visit. Momentum has switched briefly to negative levels but could bounce back as the 3300 point support level remains a firm BTFD level:
Volatility in currency markets was matched with USD gaining solidly against most of the majors, as Euro was pushed back towards the 1.17 handle and now below last week’s price high. The next level to watch is ATR support at the 1.1720 level that must hold or this two week rally could be over:
The USDJPY pair held on vainly with a small pushback but no capitulation as yet, with safe haven Yen buying not yet evident. Trailing ATR support at the 105 handle remains firm here with momentum going from slightly overbought to a mean reversion, which could be presaging a rollover soon:
The Australian dollar was flummoxed on both the new Budget and the DickCard, pushed solidly down towards but not through the 71 handle overnight. This follows a meek reaction to the equally meek RBA meeting, with short term support at the 71.30 level now likely to act as resistance as momentum flips to the negative mode:
Oil futures are building in volatility with another big move overnight that was eventually shunted, with a near 4% increase on Brent that was then pushed back to a near 2% gain to just below the $42USD level. The series of lower daily highs is spelling trouble ahead here as volatility begets volatility – it must break above the $43 level soon or faces a push below $39 swiftly:
Gold was starting to gain traction with a follow through above the $1900USD per ounce level but this was negated quickly with Trump’s DickCard move overnight, sending it back like the Aussie dollar to last week’s mid level and thwarting all the longs that had been positioned for more upside. This could spell another move lower to the $1850 level as long positions are completely unwound in the short term at least:
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!