A staid night on the economic calendar with Wall Street closing at new record highs while European stocks played catchup as it seems the impact of US inflation is being discounted sharply by market players while the Fed continues to signal caution. The USD remains on the ropes against all the majors with Euro hitting the 1.17 handle again while an increase in US oil inventories is seeing an already weak oil price pull back further overnight to new weekly lows on the WTI and Brent markers. The Australian dollar is being very resilient with a surge back up to the mid 65 handle while Treasury yields pulled back across the curve with the 10 year losing 5 basis points to retreat below the 4.3% level.
Looking at stock markets from Asia from yesterday’s session, where Chinese share markets are lifting again going into the close with the Shanghai Composite pushing well above the 3600 point level while the Hang Seng Index was finally playing catchup as it launches more than 2% higher to get back 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 breakout play here with support at the 24000 point level as the springboard:
Japanese stock markets are seeing a strong bid as well with the Nikkei 225 rising more than 1% to 42331 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 the poorest performers again this time due to the CBA Division of Megabank slumping, with the ASX200 falling 0.4% to 8842 points. SPI futures are up slightly due to the strong lead from Wall Street overnight.
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 finally found some mojo as confidence returned across the continent with the Eurostoxx 50 Index closing 1% higher overnight to finish at 5388 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 was able to eke out new record highs again although the gains were relatively modest with the NASDAQ up just 0.1% while the S&P500 finished some 0.3% higher at 6466 points.
The daily chart still looks like a stairway to heaven with the 6500 point barrier coming up very fast again as short term momentum drives back into well overbought status:
Currency markets remain against USD following a succession of poor US domestic economic prints with calls for a September cut form the Federal Reserve increasing in the wake of the consensus CPI print. Euro and Pound Sterling among others remain stubbornly higher with the former pushing above the the 1.17 handle proper overnight.
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 down below its recent point of control at the 148 level on temporary Yen weakness following the Japan/US trade “deal”and USD weakness around the CPI 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. There could be another attempt here to get back to the 150 handle in the short term however:
The Australian dollar was largely unchanged by the recent but well expected RBA cut where it held above the 65 cent level but then even pushed higher following the US CPI print to exceed its recent weekly highs nearer the mid-65 handle.
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 there is potential for a rollover if Fed signalling does not become more dovish:
Oil markets failed to stabilise overnight with Brent crude pushed below the $66USD per barrel level for a new weekly lows, lacking any upside momentum.
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 a lot more support in the short term:
Gold is still failing to revive its recent bounceback amid concerns that the stupid Trump regime tariffs will extend to the shiny metal as it holds well below the $3400USD per ounce level, largely unchanged by the CPI print unlike other undollars as it closes around the $3350 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 was getting back into the positive zone, as support was being built but the life has gone out of this recent rally:
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!