Macro Morning

By in Australian Dollar, Australian Shares

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See the latest Australian dollar analysis here:

Macro Afternoon

Wall Street refound its lost confidence overnight as the Georgian senate races got underway as a selloff in Treasuries – sending 10 year yields nearer the 1% magical level – embiggened stock bidding, lifting the S&P500 to a new high.  Oil prices surged on a post OPEC+ announcement that the Saudis would make some production cuts, while gold and iron ore rose slightly. Bitcoin was eventually able to hold on to gap higher and made a new record high yesterday, heading above the $34000 mark with the daily chart still in bubble mode:

Looking at share markets in Asia from yesterday where the Shanghai Composite was floating along towards the close but managed to lift at the end, up 0.7% to definitively clear the 3500 point level and close at 3528 points. Meanwhile in Hong Kong the Hang Seng Index followed along, lifting 0.6% to 27649 points. The daily chart is showing a great breakout that could have more legs, although as I mentioned yesterday, momentum is clearly overbought and ripe for a pullback, but support at the 26000 point level is extremely firm:

Japanese stock markets continued to fall in the wake of a stronger Yen, the Nikkei 225 losing another 0.35% to finish at 27162 points.. Futures are suggesting a stop to the selloff with mild upside, but the stronger Yen is still weighing here, with the potential for a proper pullback to or below 27000 points still a consideration:

After gapping down at the open by over 0.5% the ASX200 eventually finished with a scratch session, closing only 0.1% lower at 6681 points.   SPI futures are supportive of some potential upside today although the daily chart remains in a sideways bent without much upside potential yet, so we still need some better momentum readings before getting too excited:

European markets were under pressure again, although the non-European FTSE is still bouncing despite the lockdown, up 0.6% while the German DAX pulled back to finish 0.5% lower at 13651 points. The higher Euro weighed on markets here with the surging Wall Street not helping post close futures much at all. I still contend we require another solid push above the previous highs above 14000 points, as daily candle price action is not yet convincing:

Wall Street finished with new record highs as the Georgia special elections pointed somewhat to a Democrat victory (gun company stocks surged….what a world). The S&P500 closed 0.7% higher to 3726 points and while the four hourly chart remains volatile, its still on trend as this swing trade is filled in. I still remain skeptical of a proper fill as we look through the elections and onto Trump’s removal:

Currency markets are seeing reduced volatility as volumes start to increase post NYE, with the latest US ISM PMI exceeding expectations and sending the USD lower against most of the majors. Euro lifted and nearly matched its previous session highs just below the 1.23 handle in what looks like a buildup to a breakout, with support firming at the low moving average near the 1.22 mid area:

The USDJPY pair however remains in a rut with more Yen buying sending the pair down to a new weekly low, still retracing well below key support at the December lows, and staying below the 103 handle throughout the whole session. The downward trajectory continues as four hourly momentum remains quite negative, with the February extreme lows nearer the 100 handle at parity possible in play here:

The Australian dollar joined in the USD melee with a big surge up through the mid 77 level to a new monthly high, helped by the buoyant mood in commodity prices. This has been a great test of support at the 77 handle proper as momentum picks up in the short and medium term with a probable charge at the 80 cent level firming each day:

Oil surged on the Saudi cut in the wake of the OPEC+ meeting, with the Brent crude contract up more than 3% to finish at the mid $53USD per barrel level, almost matching the pre COVID February 2020 level (upper horizontal black line). Medium term support is firming here obviously and the proper breakout above the $52.50 area that I’ve been mentioning for awhile is indeed confirmed:

Gold is still moving higher, albeit at a more sustainable pace, lifting up to but not through the $1950USD per ounce level overnight. I still contend that a small retracement is coming but the  nominal November high at the $1970 level is still the overall target in this move:

 

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

  2. NikoMEMBER

    And reduced my exposure in everything by a lot. In the past my instincts served my right and again I start to be scared. Despite gold and copper having very bright long term future if market corrects all miners will be dragged down.
    If I am wrong I still have some exposure to NCM (decent one) and some in ALK. Very small positions in CEL and PXX.
    Sold the rest.

    • NikoMEMBER

      could be. The Big Man needs both seats so Dems can push $7tn stimulus through. If Rep get one senator in then stimulus package will be lot smaller and lot less greener.

  6. NikoMEMBER

    Despite Georgia race looking tight it seems Dems can win both seats once votes from the big cities are counted for. Not sure why these votes are left for last though.
    Stop the vote, stop the vote…

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