Friday night saw the release of the latest US PPI print which kept Wall Street contained as bond yields fell back across the curve while the USD dropped initially but then strengthened. European shares rebounded from their mid-week dip while Euro itself fell back slightly alongside the Australian dollar which still can’t get above the 67 cent level.
10 year Treasury yields further retraced below the 4% level while oil prices lifted marginally with Brent crude finishing nearly 1% higher to just above the $78USD per barrel level. Gold however had a surging breakout, lifting well above its recent decline to finish the week out nearly above the $2050USD per ounce level.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets closed lower in afternoon trade as the Shanghai Composite remained below the 2900 point barrier at 2888 points while in Hong Kong the Hang Seng Index was down nearly 0.4% to 16244 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 still near oversold settings as price action wants to return to the October lows, with little chance of stabilising here:
Japanese stock markets were still moving to the upside with the Nikkei 225 up 1.5% to 35577 points capping off a great week.
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 remaining extremely overbought. Correlations with a stronger Yen are breaking down here with a selloff back to ATR support at 32000 points unlikely as the November highs are wiped out in this breakout:
Australian stocks were unable to gain momentum, with the ASX200 failing to get back above the 7500 point level, closing 0.1% lower at 7498 points.
SPI futures are hovering around a flat open, replicating the Wall Street experience on Friday night. The daily chart is no longer 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 able to rebound after starting to falter mid week with some good gains across the continent as the Eurostoxx 50 Index finished more than 0.7% higher at 4480 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 neutral session ahead so watch daily support which should remain strong here:
Wall Street did not like the slightly softer PPI print with scratch sessions across the board as the NASDAQ finished dead flat while the S&P500 closed a few points higher at 4783 points.
Short term momentum is now retracing out of overbought territory on the four hourly chart, with a very strong breakout pushing through trailing ATR resistance. Support has been strong at the 4700 point level proper but its obvious that the December highs are building as very strong resistance:
Currency markets absorbed the latest US PPI print without too much volatlity with a rebounding USD pushing most of the majors down for the session. Euro fell back to the 1.0940 level, failing to make a new weekly high.
The union currency was looking weak but with the potential for a swing trade higher before the print but short term momentum has now switched back to negative as price action is still well below trailing ATR resistance after bouncing off the December lows:
The USDJPY pair also had no confidence to the upside as Yen strengthened instead with a mild retracement back below the 145 level.
Four hourly momentum is now neutral as the medium term trend (sloping black line) remains broken here with price action almost exceeding last week’s high, but I think this move was a little too fast so watch for a possible retracement:
The Australian dollar continues to look weak having absorbed the US CPI print in the previous session with a breakdown as it remains below the 67 cent level.
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 as traders still have another month for the RBA to come back from holidays. Turn this chart upside down and you’d be bullish:
Oil markets saw a small lift on Friday night but couldn’t hold on to most of it, as Brent crude remains contained well below the key $80USD per barrel level with the downtrend also entrenched.
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 but is having another go here despite a possible retest of the December lows nearer the $70USD per barrel level soon:
Gold however was the brightest note with a solid breakout above the two week long downtrend, hitting the $2050USD per ounce level and holding on to those gains.
Watch for a small retracement here although Asian markets may boost this higher on the weekend gap open with $2040 level as solid support going forward:
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!