Another data drive night with Wall Street pushed to record highs amid an expected initial jobless print and a slightly higher than expected retail sales print, which could have been affected by the inflationary push of tariffs. The USD gained against all the majors except gold with Treasury yields remaining high especially on the long end. The Japanese inflation print today will dominate the economic calendar while the Australian dollar remains weak below the 65 cent level after yesterday’s poor numberwang unemployment print.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets were steady with the Shanghai Composite just above the 3500 point level going into the afternoon session while the Hang Seng pulled back slightly to stay just above the 24000 point level.
The daily chart shows a complete fill of the March/April selloff with momentum building again to make new highs. This is still looking like a strong bounceback with firm support at the 23000 point level as a springboard:
Meanwhile Japanese stock markets were up despite the poor export figures with the Nikkei 225 finishing 0.6% higher to just below the 40000 point barrier at 39901 points.
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 potentially have a pullback:
Australian stocks were really happy about the chance of a rate cut from the RBA given the poor employment print with the ASX200 up nearly 0.9% to get back above the 8600 point level. SPI futures are up nearly 0.4% due to the record highs on Wall Street overnight.
The daily chart pattern is still suggesting further upside is still possible with a base being built here and although daily momentum has eased off from its slightly overbought status its still very positive:
European markets found some life again on trade deal speculation with the Eurostoxx 50 Index closing 1.5% higher at 5377 points.
Weekly support hasn’t moved in a few months but it was never fully breached, giving time for the market to build a base and breakout here back to the pre “Liberation Day” highs. This looks like a strong, if somewhat overdone breakout with some positive momentum to the upside but watch for further retracement on any Trumpian volatility:
Wall Street absorbed the latest economic data as good with the NASDAQ up a strong 0.7% to a new record high while the S&P500 eventually closed some 0.5% higher at 6297 points.
The four hourly chart was looking confused with recent support at the 6200 point level coming under pressure before resistance at the 6350 point level was taken out as it looks like more record highs are forthcoming:
Currency markets this time had to contend with more Fed speculation while absorbing the latest initial jobless claims and retail sales data, both of which did not clear up any inflationary concerns, sending the USD higher against everything again. Euro settled below the 1.16 handle and still looks weak here without much support.
The union currency had been building strength continuously as bad domestic economic news from the US overshadowed any continental slowdown but has reversed that trend and then some in recent weeks. Short term momentum was suggesting a proper reversal with support at the 1.1650 mid level taken out and is still negative and oversold:
The USDJPY pair was able to break through the 148 handle on the recent US CPI print, but is stalling out here without making a new daily high overnight.
I think my contention of a completion of the multi year bearish head and shoulders setup by breaking below the 139 level is off the cards for now, but watch for the inevitable pullback on too much strength here and of the course the TACO trade:
The Australian dollar took a big hit on the weaker unemployment print yesterday, staying below the 65 handle again as too many domestic and USD factors keep the Pacific Peso on a downtrend.
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 were putting in a small bounce on the unexpected spike of OPEC+ production but are still struggling to make significant gains with the trend starting to weaken as Brent crude stay around the $69USD per barrel level overnight.
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 still there if it cannot make a substantive new daily high.
Gold was struggling after managing to get out of its recent hole to bounce back above the $3300USD per ounce level but managed to find some life again overnight to jump back to the $3340 level this morning.
Short term support has been under threat most of the last three weeks with price almost returning to the late June lows as the USD gains strength. Momentum is retracing back from its slightly overbought position to a negative setting so watch for a full rollover below ATR support next:
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!