Overnight saw Wall Street was uneasy with a lack of confidence and direction as trade “negotiations” continued via threats from the Oval Office, including an early morning barb against Australian exports which will likely see pharmaceutical stocks here locally suffer on the open.
Remember to keep all eyes on the US Treasury market with 10 year yields lifting again while the USD was mixed against the majors as Euro, Swiss France and the Australian dollar pushed King Dollar around the latter holding on to its post-hold gains from yesterday’s RBA meeting.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets were able to accelerate in the afternoon session with the Shanghai Composite pushing 0.7% higher to almost crack the 3500 point level while the Hang Seng was 1% higher to get back above the 24000 point level.
The daily chart shows a near complete fill of the March/April selloff although momentum has now reversed after being slightly overbought as price action meets trailing support at the 23000 point level. This was looking like a strong bounceback with firm support at the 23000 point level as a springboard but resistance is building into a rollover here:
Meanwhile Japanese stock markets are also somewhat positive although the Nikkei 225 remains below the 40000 point barrier.
Daily price action was looking very keen indeed as daily momentum has accelerated after clearing resistance at the 36000 point level with another equity market that looks very stretched and breaking out a bit too strongly here. Watch ATR support continue to ratchet up but also for this rally to have a pullback:
Australian stocks were doing well but lost their gains on the RBA hold as the ASX200 slips more than 0.2% lower. SPI futures are flat due to the unease on Wall Street overnight.
The daily chart pattern is still suggesting further upside is still possible as the inverted head and shoulders pattern is nearly complete with the RBA cut helping boost this but correlation with other risk markets will come into play here – watch as daily momentum has eased off from its slightly overbought status but still very positive:
European markets rebounded across the continent again with the Eurostoxx 50 Index closing 0.5% higher at 5371 points.
Weekly support hasn’t moved in a few months now indicating a lack of upward momentum with a potential rollover accelerating as daily momentum remains oversold. The market has not broken below the 5200 point level proper so we could see a small rally from here back to the previous highs:
Wall Street couldn’t make any gains with the NASDAQ putting in a scratch session while the S&P500 stumbled 0.1% lower on the Trump Tariff Tirade, finishing at 6225 points.
A big beautiful bounceback was seeing the 6000 point level brushed aside as everyone bought everything as the asset owners all got their tax cuts entrenched forever and a day. However the market is having a harder time swallowing the non existent tariff deal extravaganza so it looks like another manufactured dip here is underway:
Currency markets had been selling off King Dollar given the weakening domestic situation in the US but are facing some headwinds although Euro was able to hold somewhat just above the 1.17 level while Pound Sterling was knocked down to a two week low.
The union currency has been building strength continuously as bad domestic economic news from the US overshadowed any continental slowdown. Medium term and short term momentum was in its favour but this could be turning into a proper reversal so watch support at the 1.1650 mid level next:
The USDJPY pair is still on an upward trajectory as it passed through the 146 handle overnight before stabilising this morning.
I still contend we need to watch for any sustained break below the 139 level which completes a multi year bearish head and shoulders setup that could see the 110 to 120 level revisited. However we could see this one off reaction to the NFP and tariffs push into a false rally up to the 148 level just as we did in June, so watch out for TACO:
The Australian dollar was relatively weak going into yesterday’s RBA meeting after looking like holding on to the 65 handle but the surprise hold saw a small sign of life return to the Pacific Peso before slowly rolling over again this morning.
Stepping back for a longer point of view (and looking at the trusty AUDNZD weekly cross) price action has remained supported by the 200 day MA (moving black line) after bouncing off a near new five year low. Keep an eye on temporary support at the 63 cent level and also the series of lower highs in recent weeks of signs of less internal support:
Oil markets have seen a small bounce on the unexpected spike of OPEC+ production with Brent crude now breaching the $70USD per barrel level overnight but only just.
The daily chart pattern shows the post New Year rally that got a little out of hand and now reverting back to the sideways lower action for the latter half of 2024. The potential for a return to the previous lows is building further:
Gold was playing catchup to other undollars as it tries to get back above the $3400USD per ounce level, however it again retraced down to $3300 overnight in signs of capitulation building.
Short term support had firmed immensely in recent sessions showing real strength but momentum became considerably overbought so this was inevitable as price action has reverted back to the uptrend line from the April lows. The desire to climb back above the recent weekly/monthly highs and still have another crack at the $3400 level is almost gone:
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!