Stock markets fell back slightly alongside bond yields overnight as risk sentiment remained somewhat muted in the absence of key economic data with a focus on very soft US new home sales data. The USD was off a little after being broadly lower against the undollars on Friday, with the Australian dollar pushed up through the 66 handle to extend its new three month high while Euro also advanced further above the 1.09 handle.
US bond markets saw a slight fall with 10 year Treasury yields pulling back from the 4.5% level to just under 4.4% while oil prices tried to stabilise after the Friday night pullback as Brent crude remains below the $80USD per barrel level. Meanwhile gold pushed beyond the $2000USD per ounce level to over $2014 in a strong sign that support is clearly building for the shiny metal.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets tried to get back into the green near the close but the Shanghai Composite finished down 0.3% at 3030 points while in Hong Kong the Hang Seng Index has also lost some ground, closing 0.2% lower at 17525 points.
The daily chart was showing a significant downtrend that had gone below the May/June lows with the 19000 point support level a distant memory as medium term price action remains stuck in the 17000 point range. Daily momentum readings are retracing back to positive settings with the potential for a fill in rally here towards the ATR resistance at the 18000 point level evaporating:
Japanese stock markets couldn’t get back into the positive mood either with the Nikkei 225 taking back its recent gains to fall 0.5% to 33447 points.
Trailing ATR daily support is a long way below the current bounce that has now exceeded the September highs at the 33000 point level with daily momentum still in the overbought zone but not over-extended. I’m still watching correlations with Wall Street and Yen to see if there is more upside here but a stall is evident:
Australian stocks were unable to gain any momentum with the ASX200 closing some 0.7% lower, breaking the 7000 point support level to close at 6987 points.
SPI futures are barely higher again in line with the wobbly session on Wall Street overnight so we should see the 7000 point level become a battleground for either support or resistance. The daily chart was trying to look more optimistic here in the medium term with short term price action filling a hole against the tide, but its falling over now:
European markets were slightly negative positive across the continent for the first session of the trading week, still hesitant due to the lack of direction from Wall Street with the Eurostoxx 50 Index falling 0.4% to finish at 4354 points.
The daily chart shows weekly resistance at the 4300 point resistance level taken out with this large bounce setting up for further gains if that level can be pushed aside proper. Support at the 4250 level should be quite firm on any pullback but I’m watching the much higher Euro possibly providing a headwind:
Wall Street was sanguine with minor falls as the NASDAQ slipped about 0.1% while the S&P500 lost 0.2% to start the week in a weak position at 4550 points.
Short term momentum was overextended as price action bounced strongly off the recent low at the 4100 point level for the potential for a retracement back to trailing ATR support on the four hourly chart building here. Watch the 4500 point level to hold though:
Currency markets are still seeing a weaker USD with the latest soft US home sales data helping with Euro leading the way well above the 1.09 handle.
The recent consolidation was after the union currency was able to fend off more Fedspeak in recent weeks and remain in a bullish, albeit neutral condition. Support at the recent weekly lows around the 1.06 level was not tested with new short term support upgraded to the 1.07 mid level at a minimum, but there could be a sharp short term reversal here to ATR support:
The USDJPY pair is now retracing a majority of its recent bounce back after consolidating at the mid 149 level without making a new daily high to now fall below the 149 level proper.
Four hourly momentum has punched its way out of nearly extreme oversold settings to become positive, but not yet overbought with price action now rolling over from the lack of a proper push higher:
The Australian dollar was not just resilient but lifted even further high overnight with USD still not really pushing it around like other pairs with price action breaking out above the 66 cent level for a new three month high.
The Pacific Peso remains under medium and long term pressure but was able to test the mid 63 level following the RBA’s recent rate hike with momentum now overbought and looking very positive as we start a new trading week, but watch for a potential pullback to the 65 handle proper:
Oil markets remain in flux with the growing conflict in the Middle East and potential OPEC cuts adding to volatility with another down session overnight that saw Brent crude dipping below the $80USD per barrel level before finishing bang on target.
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 still in oversold settings with this failed test of support at the August level setting up for further falls below:
Gold is not just holding on to its recent advances but continuing its two week long uptrend despite the decoupled USD correlation against other undollars, with its recent fallback below the $2000USD per ounce level finding some later dip buyers to push well above that level on the weekend gap open.
Daily support is building again here as the four hourly chart shows short term resistance pushed aside and price action on track with a lot of dip buying potential at any retracement toward trailing ATR support:
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!