Macro Morning

See the latest Australian dollar analysis here:

Elon Musk may have just saved Bitcoin

The Pfizer vaccine surge is consolidating after two nights of modest reaction from Wall Street, as tech stocks continue to selloff in the wake of the US election. The closely watched German ZEW survey last night weakened with more news of a slowing recovery across the continent still unable to dampen European stocks which led the charge overnight. Treasury yields are still elevated, with the 10-year barreling in on a new high closer to the 1% level while oil prices came back more than 2% and gold lifted nearly 1% as it tries to recover from a very painful sharp retraction.

Looking back at share markets in Asia from yesterday’s session where the Shanghai Composite was looking to have a scratch session, before selling off at the close to finish 0.4% lower at 3360 points. Meanwhile in Hong Kong the Hang Seng Index was able to find yet more buyers, closing 1.1% higher at 26301 points, further advancing from its big breakout last week.  The daily chart shows this big surge still bringing a lot of upside volatility to the technical picture as momentum is nearly off the charts in extreme overbought mode. Daily price action is setting up the first stages of a stall here so watch for a retracement below the 26000 point level as a warning sign:

Japanese stock markets were slightly sanguine however with the Nikkei 225 barely closing 0.2% higher at 24871 points. Futures are suggesting a probable pullback here on the open this morning as this market is obviously way overextended and ripe for a retracement as the euphoria surrounding the vaccine news dies down:

The ASX200 put in a modest 0.6% rise after being up more than 2% earlier in what is still a solid session, closing at 6340 points. The daily chart is a repeat of other equity markets with the big vaccine surge now turning into a pause as traders catch their breath and look around to see if anyone else is going to buy more Momentum is extremely overbought so watch for a small pullback below the 6300 level as confidence aligns with Wall Street expectations:

European markets had some very solid returns however, mainly with peripheral bourses, with the German DAX closing 0.5% higher at 13163 points. The daily chart is showing price almost at the August highs, having filled all of the October dip with momentum not yet in extreme overbought state despite the big rises of late. I’m still expecting a small retracement here on stability grounds before another move higher as Euro strength weighs:

Wall Street took a deep breath following the Pfizer news with the S&P500 actually finishing nearly 0.2% lower at 3545 points, back down to its October highs. The four hourly chart shows a market unsure of direction, although the bias is still long – watch for the 3500-3515 support zone to come under pressure soon, as it must hold:

The NASDAQ is flashing warning signs however, falling sharply immediately after the vaccine news and again overnight, off by more than 1.3% to 11553 points. The pattern here on the daily chart where price action has been unable to clear the downtrend from the August bubble like highs (upper black sloping line) is telling, with momentum already in rollover phase:

Bitcoin’s breakout is now pausing just above the $15000 level after its huge blowoff trade marks time in possible readiness to get back to the 2017 bubble highs. I still contend that longer term technical analysis indicate this could be the first stage of a new blowout. Maybe $30,000 next?

Currency markets are remaining somewhat anti-USD as Euro consolidates following its flip on the vaccine news, steady here just above the 1.18 handle overnight.  The four hourly chart shows momentum retracing to more appropriate levels and price action still above trailing ATR support at the high 1.17’s so the next stage is watching for a breakout above the high moving average at the 1.1840 level:

The USDJPY pair is also in pause mode following its mammoth surge post vaccine, with price action tightening around a point of control at the 105.30 level overnight. Momentum is poised here but the series of lower session highs is coiling up the volatility for either a breakout or breakdown:

The Australian dollar likewise is unchanged, still holding on just below the 73 handle in a very low volatility action.  The question remains if the medium term uptrend is sustainable so watch for the former weekly high at the 71.40 to act as firm support and the low moving average on the four hourly chart here at the 72.50 level as short term support/inflection:

Oil prices have come back strongly following the post election blues with Brent now matching its September/October stalled highs just below the $44USD per barrel level. This has been a big reversal but not unexpected as oil likes to play fast and loose with the volatility – the key area to watch is that solid red line to the left – can it be sustainably breached for a proper uptrend?

Gold is still licking its wounds, having been smacked down hard on the vaccine news and recovering only slightly to be just below the $1880USD per ounce level overnight. The four hourly chart shows momentum still in an oversold stage with price barely hanging on above the October lows, where a new lower bottom is likely to be formed:

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!

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  1. I am watching Copper and Nickel prices. I think these two commoditites will be good indicators on how close US, EU, Japan, S Korea and China are on launching some kind of coordinated fiscal stimulus targeting green tech.
    And price of coal is good to watch to know how close we are to launching some clean coal stimulus. Don’t be afraid..

    • re: renewables I have recently bought some: ETHI, NEW, GNX, 14D, PLL, RFX, DOW, CXO

      Oh, by the way: I’m sick of trading now; I’m going long, and hedging as required. My days of reluctantly trading are almost done…I’ll probably still do a little 😛