Risk markets were unable to move much overnight as the latest US initial jobless claims came in slightly higher than expected (until revised by Sharpie by the Fanta Fuhrer) while a lot of Fedspeak around the slowing US economy led Wall Street to closed mixed at best. Oil prices pushed lower while the USD was mixed or lower against the majors as the Bank of England cut rates – but only just – by 25 basis points. The Australian dollar stayed above the 65 cent level while US Treasuries again saw yields lift slightly across the curve.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets were up only slightly with the Shanghai Composite remaining above the 3600 point level while the Hang Seng Index has put on more than 0.6% to extend above 25000 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 at the 24000 point level holding:
Japanese stock markets were doing better despite the higher Yen with the Nikkei 225 closing 0.6% higher at 41023 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 waning:
Australian stocks were the worst in the region this time, with the ASX200 closing just 0.1% lower at 8831 points. SPI futures are down 0.3% again although this time Wall Street failed to provide a lead overnight.
The daily chart pattern was suggesting further upside still possible with a base built above the 8500 point level but daily momentum has regained its overbought status:
European markets are still rising with more confidence and momentum overnight with the Eurostoxx 50 Index up more than 1.2% to finish at 5332 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 however couldn’t get back on track with only tech stocks rising as the NASDAQ lifted just 0.3% while the S&P500 finished dead flat at 6340 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 following a succession of poor US domestic economic prints with last night’s higher initial jobless claims and a lot of caution from Federal Reserve officials sending the “King” lower again. Euro is now extending above its Friday night highs to hold above 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 is getting pushed below its recent point of control at just below the 148 level as it threatened to break below the 147 handle instead following its sharp retracement on Friday night from the latest US jobs print.
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 managed to hold above the 65 cent level overnight even though 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 declined on Friday night with Brent crude continuing to fall back again overnight, this time almost crossing below the $66USD per barrel level in an accelerating downtrend.
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 is continuing its relatively strong bounceback after getting back above the $3300USD per ounce level to make a new weekly high in the wake of the poor NFP print last week and extended those gains again overnight to finish just below the $3400 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, as support builds 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!