The first full trading day of the new year brought in some volatile results across risk markets with Wall Street faltering as European shares were listless. Yields rose across the curve while King Dollar came back against the majors, with Euro slumping off its recent high with the Australian dollar falling in sympathy.
10 year Treasury yields closed up nearly 8 points higher to well above the 3.9% level while oil prices continued to fall despite further tensions from the Houthis as Brent crude finished just below the $76USD per barrel level. Gold is remaining the most positive undollar, still remaining above the $2050USD per ounce level.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets were unable to advance with the Shanghai Composite remaining below the 3000 point barrier, closing 0.4% lower at 2962 points while in Hong Kong the Hang Seng Index slumped more than 1.5% lower, finishing at 16788 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 remained stuck in the 17000 point range before this new losing streak. Daily momentum readings are finally bouncing out of oversold settings as price action wants to get back above the October lows, but so far there has been only a small chance of stabilising here:
Japanese stock markets have not yet re-opened to start the new trading year with Nikkei 225 futures suggesting a mild pullback below the 33000 point level.
Trailing ATR daily support was being threatened by price action after this bounce went beyond the September highs at the 33000 point level with daily momentum now fully retracing from the overbought zone but wanting to neutralise. Correlations with a stronger Yen are breaking down here with a selloff back to ATR support at 32000 points unlikely so far but a lack of a new daily high is telling:
Australian stocks are slowly building as most traders are not yet back at their desks with the ASX200 closing nearly 0.5% higher to build on the Xmas rally, closing at 7627 points.
SPI futures however are down at least 1% on the falls on Wall Street overnight. The daily chart is still looking very optimistic here in the medium term with short term price action however suggesting a possible reversal underway as daily momentum starts to wane and resistance at the 7600 point level builds. Watch for any dip below the low moving average:
European markets were all over the place overnight, still unable to get out of their post Xmas rut with the Eurostoxx 50 Index finishing 0.2% lower at 4512 points.
The daily chart shows weekly support remaining firm at the 4480 point level but a failure to make a new high above the early December 4600 point level is starting to drag overall momentum down with a full retracement now below overbought settings. Futures are indicating a possible rollover so watch daily support very closely in the sessions ahead with volatility rising:
Wall Street also was lopsided with the Dow moving slightly higher while tech stocks slumped as the NASDAQ lost nearly 1.7% alongside the S&P500 which closed 0.6% lower at 4742 points.
Short term momentum is now retracing out of overbought territory on the daily chart, indicating the Xmas rally is likely over with price action dipping well below the low moving average band. The next step to test here is trailing ATR support at the 4700 point level proper which is likely just a consolidation phase on thin trading volume:
Currency markets are accelerating more into USD strength as we await the latest unemployment print with King Dollar pushing back against everything. Euro was the biggest casualty with a major slump down to the 1.09 handle this morning.
The union currency was looking very bullish here but short term momentum retraced solidly from an overbought setting before price action crossed below trailing ATR support with a consolidation around the December lows expected until Friday:
The USDJPY pair continues its own consolidation that is now turning into a possible breakout as it pushes up through the 142 level after bouncing off the weekly lows.
Four hourly momentum is now dicing with bullish settings but still watch for a battle around this area as the medium term trend remains down:
The Australian dollar was having a great run with the bulls pushing it above the 68 cent level but this was only due to temporary USD weakness with the New Year bringing in some reconsiderations of where the Pacific Peso will go in 2024.
The Aussie has been under medium and long term pressure for sometime with the latest rally just a relief valve being let off with short term momentum returning to oversold territory:
Oil markets are rejecting the Xmas rally with a return to downside volatility and the dominant downtrend trend with Brent crude finishing just below the $76USD per barrel level overnight for a new daily low.
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 failed to push above trailing resistance at the $80 level. Daily momentum failed to get out of negative settings and is slowly returning to oversold conditions so watch for a retest of the December lows nearer the $70USD per barrel level soon:
Gold remains the only undollar not really moving in the new year with a further consolidation above the $2000USD per ounce level, holding just above the previous daily highs reached in early December at the $2060 level.
Profit taking may return here so watch the low moving average on the daily chart for signs of another possible dip with daily momentum also waning but still broadly positive:
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!