Friday night saw a fall in bond yields and the USD in the wake of a softer than expected consumer confidence and ISM manufacturing print in the US, but this didn’t stop equities all across the complex pushing to new record highs. Wall Street zoomed higher alongside European stocks with the weakening USD giving the Australian dollar a reprieve to get back above the 65 cent level.
10 year Treasury yields fell back alongside others on the yield curve to retrace below the 4.2% level, while commodities all rose due to the weaker USD with Brent crude up 2% and gold soaring above the $2080USD per ounce level.
Looking at markets from Friday’s session here in Asia, where mainland and offshore Chinese share markets had somewhat of a breather with the Shanghai Composite up just 0.3% while the Hang Seng did a little better, moving 0.5% higher to close at 16589 points.
The daily chart was starting to look more optimistic with price action bunching up at the 16000 point level, ready to possibly make a run for the end of 2023 highs at 17000 but as I warned previously, watch for any retracement down to the low moving average that could presage a full breakdown to the long term trend:
Japanese stock markets were the front runners with the Nikkei 225 up 2% to almost push through the 40000 point level.
Trailing ATR daily support was never threatened by price action after this bounce went beyond the September highs at the 33000 point level with daily momentum getting back to overbought readings with a significant breakout. A selloff back to ATR support at 32000 points remains unlikely as the November highs are wiped out in this breakout but I’m cautious of a strong pullback here on any volatility:
Australian stocks moved higher as well with the ASX200 up more than 0.6% to break the 7700 point level, closing at 7745 points.
SPI futures are up 0.2% due to the strong result on Wall Street on Friday night. The daily chart was looking firmer with the medium term uptrend and short term price action coming together to take out the previous December highs. As I said previously, watching for any continued dip below the low moving average could see a significant pullback but watch ATR support which has been defended so far:
European markets finally all rose together with the German DAX leading the way with the Eurostoxx 50 Index eventually finishing 0.3% higher at 4894 points.
The daily chart shows price action still on trend after breaching the early December 4600 point highs but daily momentum has now retraced from being well overbought with futures indicating a further pullback this evening. This is looking to turn into a larger breakout but watch for any falls below the low moving average or ATR support proper:
Wall Street extended its recent positivity on the back of the inflation print with the NASDAQ up more than 1% while the S&P500 finished 0.8% higher to close at 5137 points.
The daily chart previously showed short term momentum trying to get out of oversold territory with a nascent bearish double head pattern plus a break below the daily trend line from the January lows broken. While I was wary of short term momentum again floundering, the boost above ATR support at the 5050 level could setup for a larger breakout above last week’s high:
Currency markets were somewhat anti USD before Friday night’s US economic data prints which saw the DXY Index lose more than 0.3% with Euro again trying to breakout above the 1.08 handle overnight but without much momentum.
The union currency is still at a new monthly high with a view to getting back to the 1.09 handle as momentum was overbought in the short term and price action breaking out as well before last night’s wobbles. Watch for any pullback to the 1.0820 level and any test of the 1.08 handle itself however:
The USDJPY pair remains the most volatile after being the most stable for several weeks with an attempted breakout above the 150 mid level thwarted later in the session, now threatening to gap over the weekend below the 150 level proper.
This was looking very optimistic as Yen sold off due to BOJ meanderings but momentum is still considerably volatile and setting up for a violent swing back through the 150 level proper:
The Australian dollar had been pushed back below the 65 handle and stayed there for the latter half of the week before Friday night gave it a slight reprieve to head above that level – albeit likely temporarily.
The Aussie has been under medium and long term pressure for sometime with the short term moves above the 65 level unable to set up for another breakout with short term momentum really painting the picture of internal weakness here. Watch for and signs of a new four hourly session low:
Oil markets are trying to regain their December highs with Brent crude almost able to exceed the Friday night lows at the $83USD per barrel level as it continues to come up against the previous weekly high.
After retracing down to trailing ATR daily support at the $77 level, price is still above the weekly resistance levels that so far have held from the January false breakout with the short term target the late January highs above $84 still the next target:
Gold is now doing a sterling job to get out of its formerly depressed state following the US CPI print, this time soaring on the weaker USD to punch through the $2080USD per ounce level overnight and get well back on trend.
Daily momentum is positive and almost overbought but still positive with short term support at the $2000 level the critical area to watch with a further session highs and a bounce above short term ATR resistance required to stay on trend:
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!