US retail spending was stronger than expected which gave Wall Street yet another “good news is bad news pause” with a scratch session while European stocks also had a breather. The USD retreated slightly with Euro rising while the Australian dollar continued its small float back above the 63 cent level.
US bond markets saw a rising of yields across the curve with new decade highs as 10 year Treasuries lifted through the 4.8% level, while oil prices took back their recent losses to gain 1% after their Friday night spike as Brent crude almost pushed above the $91USD per barrel level. Gold remained steady with a minor lift above the $1920USD per ounce level.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets stabilised somewhat with the Shanghai Composite gaining 0.3% at 3083 points while in Hong Kong the Hang Seng Index was in a similar boat, up by 0.7% to 17775 points.
The daily chart is still showing a significant downtrend that has gone below the May/June lows with the 19000 point support level a distant memory as medium term price action stays well below the dominant downtrend (sloping higher black line) following the previous month long consolidation. Daily momentum readings had gotten out of oversold mode but this bounce did not become a breakout, so my caution about it turning into a dead cat bounce is coming to fruition here:
Japanese stock markets were able to climb back slightly from the previous session losses with the Nikkei 225 closing nearly 1.2% higher at 32040 points.
Trailing ATR daily resistance was coming under threat in a very fast bounceback and while daily momentum retraced back from oversold settings as price action is following Chinese markets with a typical dead cat bounce pattern forming here. Futures are indicating some further stability returning in today’s session:
Australian stocks were able to edge slightly higher as well with the ASX200 closing up 0.4% to 7056 points.
Despite the mixed session on Wall Street SPI futures are indicating a 0.3% rise on the open this morning with the 7000 point level still under pressure to prove its either strong short term resistance or support once again. The daily chart is not looking optimistic here with medium term price action continuing to move sideways at best, but watch for a breakout to a new daily high brewing:
European markets remain unable to shake off the bad finish to last week with no gains across the continent with the Eurostoxx 50 Index barely up 0.1% to finish at 4152 points.
The daily chart still shows an overall decline with weekly support at 4100 points barely defended, as weekly resistance firms at the 4300 point resistance level. There were signs this bounce was running out of steam as daily momentum remained neutral at best:
Wall Street was also unable to put in a positive session as the NASDAQ went down 0.2% while the S&P500 finishing unchanged at 4373 points.
The four hourly chart shows support building at the 4340 point area with upside resistance quite clear at last week’s high at the 4430 level as short term momentum now bounces back into positive territory:
Currency markets saw a return of a weaker USD overnight, with King Dollar pulling back slightly despite the better than expected retail spending results. Euro again lifted straight through the mid 1.05 level with a new bullish short term move higher.
In the medium term its apparent on the four hourly chart that the union currency is wanting to break above short/medium term resistance at the 1.06 handle and while short term momentum was well overbought price action had started to bunch up and pause in preparation for the CPI print, falling sharply on its release. This could result in further losses back to the previous weekly lows around the 1.04 mid area if the 1.05 handle is not defended:
The USDJPY pair was able to hold onto its breakout above the 149 level overnight, almost making a new weekly high after a recent successful test and rejection of last week’s low at the mid 148 level.
Four hourly momentum shows a retracement from overbought settings with only minor moderation as it sets up for another attempt at getting through the 150 level soon:
The Australian dollar was able to regain some lost momentum after stalling following the release of the FOMC minutes and subsequent US CPI print which had pushed it down to the 63 handle on Friday night, with a small uptrend since the weekend gap open.
While the Pacific Peso remains under medium and long term pressure there is a slow climb out evident with the four hourly chart showing a modest lift here that gets momentum out of oversold readings but up towards recent resistance at the 64 handle proper:
Oil markets were again relatively stable overnight after their big spikes on Friday with a minor 1% gain for Brent crude which eventually finished just below the $91USD per barrel level.
After almost reaching $100 in mid September, price was looking to return to the August levels around the $85 area where a point of control had been established before the recent breakout. Daily momentum is now just back to neutral/nearly positive sessions with support clearly firming at those August levels so we could see a retest of the September highs instead:
Gold remains the best undollar with little change overnight as it holds on to its big surge from Friday night that saw it breakout above the $1900USD per ounce level after absorbing the latest US CPI print with aplomb.
The four hourly chart was showing a very steady uptrend since the previous weekend gap higher as momentum remained positive in the short term. This new breakout puts in a new monthly high with short term momentum extremely overbought and ripe for a pullback back to retest the $1900 level again, but so far no change as it holds at the $1920 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!wrong on your position, so cry uncle and get out!