Wall Street rebounded overnight in what looked like a short covering exercise but barely managed to cover the Friday night losses while the USD remains on the ropes as it only moved higher against Swiss Franc as the likelihood of the Fed cutting rates much sooner increases. US Treasuries again saw further moves lower across the curve in yields while the Australian dollar remained steady just below the 65 cent level.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets are up strongly going into the close with the Shanghai Composite up more more than 0.5% to almost get back above the 3600 point level while the Hang Seng Index has put on nearly 1% to close just below the 25000 point level at 24733 points.
The daily chart shows a complete fill of the March/April selloff with momentum reversing after failing to make new highs. Resistance at the 25000 point level has turned into a reversal here with support coming up at just below the 24000 point level soon:
Japanese stock markets were the odd ones out with the Nikkei 225 closing more than 1% lower to finish at 40311 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. ATR support has been ratcheting up for awhile but the potential for a pullback is building although futures are more promising this morning:
Australian stocks were unable to make any headway with the ASX200 closing dead flat to remain below the 8700 point level. SPI futures however have surged more than 1% higher on the rebound on Wall Street overnight.
The daily chart pattern was suggesting further upside still possible with a base built above the 8500 point level but daily momentum has eased off from its overbought status:
European markets came back smartly with rises across the continent sending the Eurostoxx 50 Index up nearly 1.5% to finish at 5242 points.
Weekly support hadn’t moved in a few months but has now been decisively breached, with the market unable to get push any further above the pre “Liberation Day” highs and now react sharply to Trumpian volatility. There could be daylight below but momentum does seem quite oversold so this might be overdone:
Wall Street rebounded as well with the NASDAQ lifting nearly 2% while the S&P500 was pushed 1.5% higher to close at 6329 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 more record highs were made. However ATR support on the daily chart has been clearly broken here taking out all of the previous month’s gains with price action suggesting a fill but this could reverse smartly:
Currency markets remain against USD after Friday night’s poor NFP print with only Swiss Franc in the doldrums overnight as the latest US factory orders print also came in underwhelming. Euro is holding at its Friday night highs just below the 1.16 handle proper.
The union currency had been building strength continuously as bad domestic economic news from the US overshadowed any continental slowdown but had reversed that trend in recent weeks. Short term momentum was suggesting a proper rout with a new weekly low at the 1.14 handle but this is a strong reversal that may have more upside:
The USDJPY pair lost a little more ground after a small gap higher over the weekend, settling just below the 147 level this morning making a sharp contrast from hitting a new monthly high at the 150 level in late July.
The previous price action was sending the pair beyond the March highs and had the potential to extend those gains through to start of year position at the 158 handle but the jobs surprise puts this all on the backburner:
The Australian dollar recently took a big hit on the weaker unemployment print and struggled to not make new weekly lows on more USD strength, but only managed a relatively small lift on Friday night as its likely the RBA cut will cut first before the Fed.
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, as this reversal is not that impressive as momentum remains negative in the short term:
Oil markets were seeing a follow through of the previous session breakouts with Brent crude pushed up towards the $73USD per barrel level but Friday night saw it come off sharply to finish below the $70 level instead and it continued this downtrend overnight to finish below the $69 level.
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 rally up to the $80 level after making new substantive daily highs was gaining traction but needs more support in the short term:
Gold like other undollar’s reversed course on Friday night on the NFP print, soaring back above the $3300USD per ounce level to make a new weekly high and extended these gains overnight to finish at the $3375 level.
Short term support had been under threat most of the last three weeks with price almost returning to the late June lows as the USD gained strength. Daily momentum is getting back into the positive zone but only just, as this needs more 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!