The November US jobs print came in slightly higher than expected on Friday night but was still weak with Wall Street finishing with mixed results although rate cut chances increased for the December meeting. European shares continued to climb although the German DAX took a breather as French volatility stepped in on their political imbroglio. The USD fell back on the NFP print with Euro initially breaking through the 1.06 level before a late retreat while the Australian dollar slumped below the 64 cent level on the rate cut dynamic between the Fed and the sleep at the wheel RBA.
US Treasury 10 year yields edged slightly lower to the 4.15% while oil markets continued their reversal following the Syrian rebel news with Brent crude drifting back below the $71USD per barrel level. Gold however was relatively calm as it stayed in it sideways mood, remaining just above the $2630USD per ounce level.
Looking at markets from Friday’s session in Asia, where mainland Chinese share markets had a better finish with the Shanghai Composite up more than 1% at the 3404 point level while the Hang Seng Index was up nearly 1.6%, closing at 19860 points.
The Hang Seng Index daily chart shows how short term resistance was finally being pushed away with a huge breakout above the 19000 point level that then set up for a run at the 20000 level in the response to PBOC stimulus last month before a massive retracement. Price action however is again setting up for another potential breakdown if short term support breaks:
Japanese stock markets however were in retreat mode with the Nikkei 225 more than 0.8% lower at 39063 points.
Price action had been indicating a rounding top on the daily chart with daily momentum retracing away from overbought readings with the breakout last month above the 40000 point level almost in full remission. Yen volatility remains a problem here, with a sustained return above the 38000 point level from May/June possibly on the cards as positive momentum is building.
Australian stocks are also feeling the heat of lower iron ore prices with the ASX200 closing 0.6% lower at 8420 points.
SPI futures are down at least 0.3% despite the fall in Australian dollar and the still upbeat Wall Street on Friday night so this pause may turn into a slight selloff this week. The daily chart pattern and short price action suggests a rollover could be underway but there is a lot of support at the 8400 point level:
European markets continued their strong rebound but the sessions were mixed across the continent as French shares gained the lead while the German DAX finally had a breather, with the Eurostoxx 50 Index eventually closing 0.5% higher at 4977 points.
This was looking to turn into a larger breakout with support at the 4900 point level quite firm with resistance just unable to breach the 5000 point barrier. Price had previously cleared the 4700 local resistance level as it seeks to return to the previous highs but momentum is now way into overbought mode on its way back up to the previous weekly highs near the 5000 point level:
Wall Street absorbed the jobs print quite well to broadly remain on trend although the headline Dow Jones pulled back slightly at the close with the tech heavy NASDAQ doing the heavy lifting, gaining more than 0.8% as the S&P500 eked out a 0.2% positive return, finishing at 6090 points.
Price action is still looking extremely positive but perhaps the Orange Santa rally is not yet running out of steam as the 6000 point level might turn into support going forward:
Currency markets were increasing in volatility due to political and macro tensions emanating everywhere, not just in anticipation of Friday’s NFP print. The jobs result pushed USD lower at first before King Dollar stabilised as Euro tried to breakout above the 1.06 level before pushed back to its start of week position above the mid 1.05 handle.
I still contend we are still likely on our way back to parity as traders start to price in the now very unclear future for the continent so watch out for this to turn into a dead cat bounce if the 1.06 handle is not attacked again this week:
The USDJPY pair is trying to get out retracement mode but its recent modest rebound has been pushed aside by Yen returning to strength, pushing below the 150 level on Friday night.
Short term momentum remains quite negative with price action unable to make new short term highs so this is setting up for a further breakdown here below the 150 level in the coming sessions, but watch for another potential recovery bounce:
The Australian dollar is facing more pressure on the upcoming trade war, let alone the rate cut dynamic that won’t break until February at least as it was slammed below the 64 cent level after failing to make good on any recent USD weakness.
The Pacific Peso could come under even more pressure here on reweighting risks and the lack of action from the RBA as it wants to hold through to Feb/March next year:
Oil markets are not anticipating much support from OPEC as Brent crude was pushed down to almost cross below the $71USD per barrel level on Friday night for a new monthly low.
The daily chart pattern continues to tighten like a spring with short term momentum definitively in negative territory as medium term price action still supports a downtrend with my contention of another sharp retracement forthcoming if the $70-72 zone is not defended:
Gold is starting to crumble under pressure again following its swift selloff down below the $2700USD per ounce level in previous weeks as it fails to hold on to the mid $2650 level on Friday night but managed not to make a new weekly low.
Price action had been accelerating in confidence as new levels of support were being created for the shiny metal regardless of USD strength but this pullback and rebound both are fighting too much under the $2700 zone so I’m skeptical of a new breakout here:
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!