Wall Street tumbled on the latest initial jobless claims numbers and fears that inflationary based rate hikes may not yet be over as everyone awaits Fed Chair Powell’s speech at the Jackson Hole conference tonight. The USD remained stronger against most majors with both Euro and Pound Sterling hitting new weekly lows while the Australian dollar pulled back to the low 64 cent level again.
US bond markets saw a small lift across the yield curve with the 10 year Treasury back up to the 4.24% level while oil prices moderated again with Brent crude just above the $83USD per barrel level as OPEC considers more production cuts. Gold held on to its recent gains just above the $1915USD per ounce level.
Looking at share markets in Asia from yesterday’s session with mainland Chinese share markets were able to put on positive results but fittered away most of these gains into the close with the Shanghai Composite up just 0.1% at 3086 points while in Hong Kong the Hang Seng Index made a significant breakout, closing up more than 2% at 18237 points.
The daily chart is now showing a near complete selloff that has gone below the May/June lows with the 19000 point support level a distant memory as price action stays well below the dominant downtrend (sloping higher black line) following the previous month long consolidation. Daily momentum are still quite oversold despite the rebound so I expect another rollover from here as a dead cat bounce plays out:
Japanese stock markets were able to put in very good sessions, with the Nikkei 225 lifting nearly 1% higher to 32287 points.
Trailing ATR daily support had been paused for sometime now as the market went sideways after a big lift recently, with a welcome consolidation above that level but that has now turned into a proper dip. Daily momentum broke into the oversold levels but has now retraced as price action bounced back from the support zone with the potential for a swing building here, although futures are indicating a major pullback in line with Wall Street overnight:
Australian stocks had a somewhat solid session with the ASX200 closing nearly 0.5% higher at 7182 points.
SPI futures are down more than 1.3% this morning given the big reversal on Wall Street overnight, with the 7300 point level remaining strong as short term resistance. Medium term price action is now moving sideways with the short term pattern looking like decelerating here before last night’s move, so expect a retest of the July lows next:
European markets pulled back their recent gains after first playing a positive catchup as the Eurostoxx 50 Index closed some 0.8% lower at 4232 points.
While the daily chart shows weekly support at 4200 points barely defended, weekly resistance at the 4400 point resistance level has now pushed the point of control well below the 4300 point level. There are signs of stability returning here as daily momentum tries to get out of oversold mode but I remain cautious:
Wall Street slumped, taking back its recent big bounce with falls across the three bourses with the NASDAQ leading the way, down nearly 2% while the S&P500 fell back more than 1.3% to finish at 4376 points.
The four hourly chart is still showing price action well below the previous downtrend channel with short term ATR resistance breached with this breakout that looks like a dead cat bounce. As I said yesterday, a move above the 4400 point level could prove risky going into the Jackson Hole meeting:
Currency markets are still pushing against USD without any luck as the run to King Dollar continues as we await the Jackson Hole conference Powell speech. The release of the latest initial jobless claims strengthened the USD against almost everything with Euro returning to the 1.08 level this morning.
The union currency really needed to have a strong return above trailing ATR resistance just below the 1.10 handle in recent weeks but failed despite a mid week rally to decline back to the previous weekly lows just above the mid 1.09 level. Short term momentum is back to being oversold as price action remains below the August lows:
The USDJPY pair is no longer on a technical uptrend, even with a small surge overnight that failed to return to the recent highs just below the 146 level.
Four hourly momentum shows a return to neutral/positive settings but overhead ATR resistance and the previous highs at the 146 level which have turned into short term resistance have not been breached, so I expect another rollover if there’s no change in direction from the Fed:
The Australian dollar had been under the pump against King Dollar for sometime here although a possible bottom was brewing at the 64 handle given no new session lows since Friday, but the recent breakout has been thwarted again, with a return to the low 64 level overnight.
Four hourly momentum had briefly switched to overbought mode but is now negative again as price action from the Pacific Peso looks like returning to the recent lows:
Oil markets continue to unwind their recent bullishness with news of more potential OPEC cuts sending Brent crude lower again to retrace to just above the $85USD per barrel level, barely holding on to its three month high and current uptrend.
Price had been anchored around the December levels – briefly dipping to the March lows – with the latest move matching the small blip higher in May and now putting aside resistance at the $80 level. Daily momentum has retraced below previously overbought readings with price action rolling over – watch short term support at $80 to hold:
Gold was able to hold on to its recent positive sessions, again closing above the key $1900USD per ounce level overnight but not making a new daily high.
The four hourly chart shows the attempt at getting back up to the psychologically important $2000USD per ounce level has been over for sometime now as the recent oscillations turn into a proper unwinding here below $1900. With the downtrend entrenched the potential for a reversal is building in the short term with four hourly momentum now extremely overbought as priece action bursts through trailing ATR resistance:
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!wrong on your position, so cry uncle and get out!