Stocks continue to love the US election non-outcome as both Europe and Wall Street surged overnight while Treasury yields retraced sharply lower as the hope of any stimulus faded with a locked or GOP senate (same thing really). Currency markets calmed down slightly with USD still in defensive mode, as oil prices continued their rebound alongside gold which remains just above the $1900USD per ounce level.
Looking back at share markets in Asia from yesterday’s session where the Shanghai Composite had a flat session, finishing with a scratch result at 3277 points while in Hong Kong the Hang Seng Index fell back 0.2% to 24886 points. The daily futures chart shows a big surge however that could be filled here on the open, with a solid close above the high moving average, a clear sign of an upside breakout:
Japanese stock markets moved the most, catching up from the previous sessions with the Nikkei 225 closing 2% higher at 23785 points. Futures are suggesting another big lift on the open this morning well above previous strong resistance at the 23700 point level as daily ATR support at the 23000 point level has held firm:
The ASX200 escaped the volatility with a small retracement, down a handful of points to finish at 6062. The daily chart is ready to re-engage here above 6000 points with a possible post-election bounce up to the 6200 point level, but this might be thwarted by the far too high Aussie dollar:
European markets had another extremely positive session on short covering with the German DAX closing another 2% higher to 12234 points. The daily chart is still wanting to show a bottom developing here but price must clear the prebreakdown level at 12500 points before getting excited:
Wall Street was swinging between a Trump or Biden victory, with futures suggesting the latter is more preferable with the S&P500 closing 2.2% higher to 3443 points overnight in a very large reflation trade. This takes price back to the late October highs that broke down prior to the end of the campaign. This is way overbought of course and if any further election chaos occurs, I can see a retracement easily happening:
The NASDAQ is having the biggest surge, up nearly 4% in a single session, taking it back to the early October levels after recently getting back above the 11000 point level proper. The next stage is clearing the downtrend from the August bubble like highs (upper black sloping line) at around 12000 points:
Bitcoin’s breakout is now pushing aside the $14000 level which takes it past the 2019 nominal high (upper black horizontal line). I’m continuing to watch the low moving average as intermediate support here, with $13000 a good uncle point going forward for the brave:
Currency markets are remaining slightly weak against USD as Euro swings slightly higher again to remain above the 1.17 handle after only reaching a monthly low recently. The four hourly chart is now showing a potential build up for a new breakout towards the 1.1750 level but like a lot of other undollar assets, the question is this sustainable post-election:
The USDJPY pair is effectively unchanged but slightly lower and recoiling from its very large election volatility as it remains unable to significantly break above trailing ATR resistance on the four hourly chart. Momentum was never properly overbought and is still negative so this could be forecasting further falls ahead back down to the 104 handle proper:
The Australian dollar finished the overnight session with a new weekly high, almost reaching the 72 handle again amid the US Election volatility. The question remains is this sustainable so watch for the former weekly high at the 71.40 to act as temporary support for the rest of the week:
Oil continues to gain ground with Brent surging back above the $41USD per barrel after previously breaking through resistance at $40 and bouncing off the September lows. The daily chart is still showing momentum only in a swing reading, not yet positive with the previous session lows at the $41.60 level proving new resistance:
Gold is hanging on to its re-inflation here, staying just above the key $1900USD per ounce level overnight as the volatility whipsaws around that point of control. The four hourly chart shows some steadying at that level as momentum regains a positive balance, but can price rebound from here? I’m watching the basic session lows at around $1890USD per ounce to hold 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)
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!