Friday night saw most stock markets rise including the NASDAQ which put in another record high despite obvious concerns that asset prices are overextended, but traders are betting on forthcoming cuts from the Federal Reserve amongst others in the battle against the Trump regime’s tariffs. The USD was mixed or lower against the majors although the massive tariff slog on Switzerland has seen Swiss Franc take a small dive while Pound Sterling and Euro kept at their recent highs. The Australian dollar stayed above the 65 cent level but wasn’t able to extend its recent highs.
Looking at stock markets from Asia from Friday’s session, where mainland Chinese share markets were steady going into the close but the Shanghai Composite fell back slightly to remain just above the 3600 point level while the Hang Seng Index pulled back sharply, down nearly 1% to retreat below 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 stall play here with support at the 24000 point level holding:
Japanese stock markets were able to do much better with the Nikkei 225 closing nearly 2% higher at 41823 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 is not stopping:
Australian stocks were again on the back foot, with the ASX200 closing 0.3% lower at 8807 points. SPI futures are flat despite Wall Street putting in very strong leads on Friday night.
The daily chart pattern is suggesting further upside still possible with a base built above the 8500 point level as daily momentum has regained its overbought status:
European markets are still rising but not with uniformity or higher confidence with the Eurostoxx 50 Index closing just 0.3% higher to finish at 5347 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. There could be daylight below but momentum was quite oversold so this might be overdone:
Wall Street got back on track with tech stocks leading the way as the NASDAQ lifted nearly 1% to a new record highwhile the S&P500 finished more than 0.7% higher at 6389 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 that is likely to continue back to the previous high:
Currency markets remain against USD following a succession of poor US domestic economic prints with expectation of cuts coming from the Federal Reserve holding back the “King” lower again. Euro was able to extend above its previous 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 but was able to see a small blip higher on temporary Yen weakness following the Japan/US trade “deal” as it almost got back above the 148 handle on Friday night.
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 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 further on Friday night with Brent crude 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 tried again to get back above 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!