Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Wall Street stalled out at record highs again overnight with tech stocks retreating slightly as no news of the proposed stimulus from Congress pulled USD back again. US Treasury yields made a new monthly high as they barrel into the 1% level while commodities saw some upside action with oil gaining over 2% alongside copper and iron ore.

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite eventually closed with a scratch session, down a handful of points to 3449 while in Hong Kong the Hang Seng Index was down 0.1% to 26532 points. The daily chart is now showing a failed rising bearish wedge pattern as price support firms here at the 26500 point level and daily ATR support at the psychologically important 26000 point level is untouched:

Japanese stock markets also went nowhere with the Nikkei 225 barely moving at 26800 points. Futures are suggesting a flat open this morning in line with stalled risk everywhere else. The daily chart remains caught in a stonking rally, with momentum still not abating and ready to get to more new nominal highs – this can only end well of course:

The ASX200 absorbed the GDP news without much fuss, closing only 0.1% higher to 6590 points.  SPI futures are down nearly 10 points going into the open this morning, and although traders want to get back above the 6700 point level there is a growing chance of a retracement here if the stall continues:

European markets were all over the place with the FTSE gaining over 1% while the German DAX dropped over 0.5% to close at 13313 points. Yet another market in stall mode, this time at its own September highs as traders await for someone else to push for a breakout above 13300 points:

Wall Street wavered until the end with the NASDAQ slipping a few points while the S&P500 managed to put on only 5 points to finish 0.1% higher at 3668 points, still keeping well above the key psychological 3600 point level. The daily chart does not show a stall like others, with momentum nicely overbought, and price action still all above the high moving average trending higher as trailing ATR support remains a long distance away:

King Dollar is having mixed results across currency markets with Euro pushing higher yet again on the glimpse of better unemployment results across the continent as it breached the 1.21 handle earlier this morning. This breakout is way overdone and should come under pressure again in the short term in a mean reversion trade, but there’s nothing to stop it right now:

The USDJPY pair shows USD strength on the other side with a marked breakout overnight that matched, but failed to exceed last week’s high at the 104.70 level before getting ahead of itself. This still sets up for more upside in the short term, with the low moving average not yet touched in this uptrend since the start of the week and the uncle point going forward:

The Australian dollar also had a breakout, this time actually sticking above the last weekly high at just above the 74 handle in a very strong and possibly overbought move.  Four hourly ATR support remains firm at the 73.40 level and the price pattern is not yet indicative of a clear breakout so I’m watching for another close above the 74 level:

After slowly consolidating from their blowoff stage, oil prices are finding some more strength with Brent crude up 2% to be back above the $48USD per barrel level overnight. As I said previously, if it can continue this mild deflation it has the potential to stabilise here although there always remains the chance of a violent reversal so watch the low moving average at the $46 level very closely:

Gold is trying to fight back with another bounceback extending its move above the $1800USD per ounce level overnight but still well off its pre-breakdown lows at the $1860 level. I still contend that the previous large breakout level at $1750 from mid-year is still the next target below if this swing move higher can’t be sustained:

 

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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Comments

  1. Most investors have no idea what’s actually in SPY or whether it is cheap or dear. They just call it “the market”…If investors don’t know what they own, if they don’t know what the ETF they just bought owns, if they don’t know the basic fundamentals of the assets they purchase, how could it possibly matter whether they are cheap or dear? And just so you understand, I am not talking here about just retail, do-it-yourself investors. What I’ve said above applies almost equally to most of the people in my industry. Not all and certainly not the best, but a very large majority have no idea what they are actually buying. And why would they bother to find out when, for the last decade at least, it really hasn’t mattered?…Whether you call it expensive, very expensive, outrageously expensive, insanely expensive, or just plain nuts, the one thing “the market” is not, is cheap. Or even reasonable for that matter. But that doesn’t mean stocks are about to fall.

    https://alhambrapartners.com/2020/12/02/tesla-isnt-a-car-company/

    • En pointe……. think Bitcoin too (…… pauses ready for incoming fanbois cries of angst)

    • I’ve just had a 2 week tour of some pretty sophisticated US software that strongly focusses on FA ($2kpa USD). Along with all US shares, it slices & dices all those ETF’s all ways possible to divine which are the best fundamental winners in each one. Then you can just pick the eyes out of them (or all shares) & pay the extra friction for each good’un. Even this mob don’t ignore MOMO at the end of the day though, they try to match both for outperform with some safety. Some nicely straight lined the “V” that the general market just had. But a lot dipped to varying degrees.

      I’d take it over a broker, but it’s time intensive like all DIY strategies…… & you need a good pile to make it worthwhile.

  2. migtronixMEMBER

    It’s not a bad feeling seeing your company listed as the top gainer (10%) for the day after they’ve rolled out the product you’ve been working on all year 🙂