Overnight saw the USD fall back as the latest jobs opening and Fed Beige Book painted a further slowing picture of the US economy as the Trump regime’s sales taxes, grift and general lack of ability in operating a modern government continue to take a hold. Wall Street liked it nonetheless as did bond markets as this weakening picture indicates the Fed may have to cut sooner and deeper to provide stimulus, even though its a two-speed economy and lower interest rates will have next to no effect. The undollars all rallied as a result with gold making another new record high while bond yields pulled back slightly with the Australian dollar heading back to the mid 65 cent level.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets sold off going into the close with the Shanghai Composite down more than 1% while the Hang Seng Index was down 0.6% to remain just above the 25000 point level.
The daily chart shows a complete fill of the March/April selloff with momentum reversing back into overbought territory to try get back to its recent highs. Resistance at the 25000 point level has turned into a breakout play here with support at the 24000 point level as the springboard but this short term reversal is taking a lot of heat out of the market:
Japanese stock markets were not doing well either despite the much weaker Yen as bond yields weigh on the market with the Nikkei 225 closing 0.9% lower at 41938 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 now pausing:
Australian stocks sold off sharply again with the ASX200 closing nearly 2% lower to 8738 points. SPI futures are up 0.4% due to the better lead from Wall Street overnight.
The daily chart pattern was suggesting further upside still possible with a base built above the 8500 point level as daily momentum tried to maintain its overbought status but this decline is worrying:
European markets were able to recover somewhat from recent selling with some better moves higher across the continent with the Eurostoxx 50 Index up 0.6% at 5325 points.
Weekly support has been respected after a brief touch below the 5200 point level as the recent rebound on Euro weakness shows a complete fill. However this market is beginning to lose steam yet again with the recent falls taking out short term support:
Wall Street came back with the NASDAQ lifting by more than 1% while the S&P500 recovered another 0.5% higher to finish at 6448 points.
The daily chart still looks like a stairway to heaven while the four hourly chart shows the 6500 point barrier becoming a little too high to overcome as short term momentum wants to get back into overbought mode. The potential repositioning after this long weekend has occurred so wait for another attempt at getting back on trend here:
Currency markets are swinging away from the recently stronger USD as they play catchup to the continued poor economic prints as undollars bounced back overnight. Euro lead the way as it was pushed back up to the mid 1.16 level 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 weekly support held fire before the Friday night reversal and has to hold here:
The USDJPY pair had headed back to its post Jackson Hole position as Yen weakened against USD due to talk of a potential trade deal but some heat was taken out on the Beige Book reading with a return back to the 148 level overnight.
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. USD weakness was weighing on Yen for awhile here but this reversal has given the pair more strength to return to the previous weekly highh:
The Australian dollar has been largely unchanged by the recent but well expected RBA cut and despite a poor CAPEX print last week the Pacific Peso was building more support as it pushed above the 65 cent level again with another attempt at pushing through the recent highs overnight.
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 further rollover if Fed signalling does not become more dovish, with weekly support still under a lot of pressure:
Oil markets were trying hard to get positive momentum going but both WTI and Brent crude retraced strongly overnight with the latter pushed back down to the $67USD per barrel level after a false breakout at the start of the week.
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 looking much stronger now as it blows through the previous record highs on the daily and weekly charts where on Friday night it burst through to the $3450USD per ounce zone before expanding ever further higher above the $3550 zone overnight.
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 somewhat built but that series of new lows was too telling. This is looking like a solid reversal with a lot of internal buying support in the short term:
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!