Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

It was all about the stimulus last night as the electoral college voted in Biden as President, and Senate Leader and all round a$$hole on two legs Mitch McConnell congratulated the new president, sending risk markets higher on the prospect of no more stumbling blocks within Congress. Reality will be different, but markets run on perceptions, not reality. Commodities did better with oil and gold advancing while Bitcoin continues to push itself above the $19000 level wanting to get back to its historic highs.

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite was down about 0.3% going into the close before recovering with a scratch session to finish at 3367 points while in Hong Kong the Hang Seng Index was off by nearly 1% but only managed to scrape in with a 0.7% loss to close at 26207 points.  The daily chart is still tracking sideways as momentum flat lines, with the lack of new daily highs still weighing on sentiment. I’m continuing to watch ATR daily support at the 26000 point level, which will be the uncle point going forward:

Japanese stock markets are also pulling back with the Nikkei 225 closing 0.2% lower at 26687 points. Futures are suggesting a better start today with the daily chart still poised here as resistance at 27000 points still proves too tough to beat, so watch the low moving average at the 26400 point area as a potential launching point:

The ASX200 has taken back its solid start to the week, down 0.4% to 6631 points and still unable to make a move above the 6700 point level.  SPI futures however are upbeat on the Wall Street hopium with traders ready to advance the Christmas rally and get it back on track above the 6700 point level, but we need a solid close above the high moving average before getting excited:

European markets were relatively mixed with the FTSE losing ground on more Brexit ructions while the German DAX stood out, gaining 1% to close at 132623 points, while other peripheral markets went nowhere. This market looks set to break out of stall mode with a new daily high and solid momentum behind it, with a clear uncle point ready to go at the 13000 point level proper:

It was a straight 1% plus advance across Wall Street overnight for all three bourses with the S&P500 finishing at 3694 points, almost matching its earlier week start out the gates. The four hourly chart shows a nice spike following the recent big rollover that has bounced off last week’s intrasession low at 3630 points, now acting as short term support. The next level to beat is obvious at 3700 points on the upside:

Currency markets are seeing volatility track a little lower although Pound Sterling is having none of that with a big spike again overnight, with Euro going almost nowhere and sitting near its recent session highs. Momentum is positive and slightly overbought on the four hourly chart, where I’m watching for the low moving average and Friday’s session lows at the 1.2120 to hold in the short term:

Another round trip for the USDJPY pair overnight, as it failed to gain momentum after its volatile start to the week with traders buying up Yen sharply overnight, pushing the pair back below weekly support at the 103.60 level (solid black horizontal line below) Momentum never went positive as I warned previously with price action continuously spelling more downside volatility – and here we are:

The Australian dollar was able to make a move higher, but not create a new session high for the week, getting back to the mid 75 level again. This remains a big blowoff trade with momentum extremely overbought so watch for a low probability but still potential reversion below the low moving average at the 75.10 level or handle itself if a new daily high can’t be made soon:

Oil prices continue to find strength with Brent crude lifting slightly to finish again above the $50USD per barrel level. Momentum remains nicely overbought but not overly so with the trend still moving above the low moving average since the breakout in early November – will we see a proper new session high above $51 next:

Gold is finding a bit more life after deflating into the low $1820’s earlier in the week, now pushing up to four hourly resistance at the $1850USD per ounce level. Four hourly momentum has switched to positive but this run maybe out of puff before it even begins, so watch for another rollover and a pullback below the $1825USD per ounce level:

 

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. Anecdata apropos of nothing :

    The town I’m in South of Coffs Harbour seems to be approximately 50 percent busier than pre COVID on what now appears to be a permanent basis.

  2. It appears that the narrative now is that the worst is over and we are in a new cycle and bull market………with the market at record highs. What on earth is going on.

    • A bull market with the S&P at record highs, and yet I hear of miles long lines of people at food banks in the US as huge numbers face winter with no jobs.

      https://www.thedrinksbusiness.com/2020/12/110000-us-restaurants-have-closed-due-to-covid/

      Think how many people worked at those closed businesses, and how many other people worked in their support infrastructure through second and third order effects like the truck drivers who aren’t needed to move produce around etc.

      The economies of the US, Australia and others have been grossly distorted by government support, mortgage holidays, suspension of insolvent trading laws etc so on the surface things seem Just Fine and the “markets” (which are not actual markets in any sense of the word) are booming. Underneath that shiny surface there’s a lot of pain. I can’t see how this can end well.

    • Yup, those stats do not have anything of the bcnich type indicators in them at all! Crash is OFF it seems. Or really the govt effort to paper over the crash is going to trudge this onward and upward.

      • And once Dems “win” Georgia we will never see another crash or more than 100 point dip ever. 100 point dips will be allowed so reporters can say “markets are taking breather” as if these are athletes running a race where runners are allowed to take short breaks.
        $7tn green deal coming.

  3. c’mon guys …. get with the message – all’s good, we’re almost back to ‘normal’. Pretty soon the jets will start landing again and we can really start pumpin’.

    Nothing to see here folks, just like the GFC. Was all really a northern hemisphere thing ….

  4. Stewie GriffinMEMBER

    Will BTC make one last dash for new highs over the Christmas to New Year break?

    Last week finished as a hammer – the long tail was built back over the weekend with the usual step lower liquidity (and manipulation). On the daily it is looking a little like a H&S, but the right shoulder looks to be a little stronger atm and may push back to the highs. If it does it might raise a flag for new ath – especially if it can make it through to the weekend and to the start of Christmas week.

  5. The brick wall is approaching fast but until then unicorns and rainbows are the order of the day.