Macro Morning

See the latest Australian dollar analysis here:

Macro Morning

Bad news is good news as Friday night’s NFP (non farm payrolls aka US unemployment print) was so bad, it was good news for stocks as Wall Street headed to record highs in the middle of a severe pandemic and growing recession. Why? Because worser jobs figures equals betterer stimulus chances coming from Congress which means = more Maseratis for Wall Street traders. Commodities kept pushing higher with intra-year and yearly highs for oil, copper and iron ore, while the USD gained only a little ground.

Looking at share markets in Asia from Friday’s session where the Shanghai Composites continued to struggle but managed a scratch session to finish at 3444 points while in  Hong Kong the Hang Seng Index was off at first but rallied at the close to finish 0.4% higher at 26835 points. The daily chart is ready to re-engage above the last nominal high above 27000 points as price support continues to firm here at the 26500 point level and daily ATR support at the psychologically important 26000 point level remains untouched, so watch for a breakout above the high moving average next:

Japanese stock markets went nowhere with the Nikkei 225 selling off into the close, finishing 0.2% lower at 26751 points Futures are suggesting a modest start to the trading week with the daily chart still caught in a stonking rally, momentum is slowing down and ready to invert as resistance at 27000 points is building:

The ASX200 continued its advance well above the 6600 point level, closing up 0.3% to 6634 points.  SPI futures are up at least 30 points so we should see a similar gain to Wall Street’s on the open this morning, with traders wanting to push the market back above the 6700 point level as part of the Christmas (with Mitch McConnell as Santa Claus = vomit) rally:

European markets were this time united with relatively strong moves across the continent as the USD pulled back Euro a little, the German DAX lifting nearly 0.4% to close at 13298 points. While this market remains in stall mode, support is still firm at the low moving average in the short term and ATR daily support at 12800 points in the medium term, but I remain cautious about the inability to push above 13300 points:

Wall Street was the star of course with the NASDAQ up by 0.7% but industrials beat tech stocks with the S&P500 closing 0.9% higher to a record high of 3699 points. This market remains well overbought above the key psychological 3600 point level and ready to go to the moon on a blowout trade if it can maintain this momentum level. But its all news dependent, so volatility will remain high:

King Dollar is still having mixed results across currency markets with the Canadian Loonie the best on Friday night while Euro pushed slightly lower on the NFP print, but its all relative given the strong rally of the last week or so. This overstretched breakout is way overdone and while pressure in the short term should equate to a mean reversion trade, I’m still cautious of a weaker USD in the next week or so macro-wise. I’m still watching the low moving average at the 1.2120 level for signs of a breakdown through four hourly ATR support though:

The USDJPY pair has bounced back after its recent collapse, heading back above the 104 handle in the wake of the jobs print but this looks like a weak swing up trade only. There is considerable resistance at the 104.40 level to overcome next and momentum remains negative on the four hourly level:

The Australian dollar was unable to continue its own breakout, remaining stuck well above the last weekly high at just above the 74 handle despite being considerably overbought with no downside evident yet.  Four hourly ATR support is lifting and may even switch to the 74 level proper soon:

Oil prices are finding strength with Brent crude up 1% to finally cross above the $49USD per barrel level on Friday although I note this a one-off warning sign on the daily candlestick that could be putting in a top signal. 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 still trying to fightback, but was unable to extend its bounce on Friday night, settling at the $1838USD per ounce level as the pre-breakdown lows at $1860 seem a bridge too far. 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. @ Stewie Griffin
    Still sticking to my thesis that it needs 25-30% drop on here based on the weekly RSI and gap that needs filling.
    The drop is based on fib retracement AND bottom exponential line AND gap which give me 3 confirmations that this correction will happen. Still agonising to watch it constantly test highs.

  2. Bankers & Traders Deemed “Essential”, Will Receive Priority Access For COVID Vaccines

    Must keep market going ………