No surprise or upward Sharpie revision on Friday night as the actual US jobs print came out and was bad all over, with prior results also revised down, giving a clear run to a September rate cut by the Fed and possibly two more by the end of the year. Wall Street held steady as they tried to work out how this is good for stock prices while the rest of the economy slows down as the USD fell back to new lows against most of the majors while US Treasury yields pulled back sharply again. Not helping commodity markets outside of gold and silver were reports of more Saudi led oil supply while the Australian dollar made a six week high to head above the mid 65 cent level against USD.
Looking at stock markets from Asia from Friday’s session, where mainland Chinese share markets lifted strongly going into the close with the Shanghai Composite up more than 1% to get back above the 3800 point level while the Hang Seng Index also made similar gains, up more than 1.4% to get back above 25000 points.
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 was able take heat out of the market for a solid consolidation:
Japanese stock markets also did well with the Nikkei 225 closing 1% higher to cross the 43000 point level, finishing the week at 43018 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 bounced back from their recent selloff with the ASX200 closing 0.5% higher to 8871 points. SPI futures are down slightly due to the mixed finish from Wall Street on Friday night.
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 was worrying but so far short term support is holding:
European markets were unable to continue their slight recovery from recent selling with lower returns across the continent with the Eurostoxx 50 Index finishing 0.5% lower at 5318 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 almost taking out short term support:
Wall Street wanted to go ahead on the poor jobs print but just didn’t have the mettle with NASDAQ finishing flat while the S&P500 was unable to get back above the 6500 point level, falling 0.3% to finish at 6481 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. This attempt at getting back on trend is working well here unless the Fed becomes hawkish after the NFP print which is unlikely:
Currency markets are fully swinging away from the recently stronger USD as they play catchup to the continued poor economic malaise in the US, confirmed by yet another poor jobs report on Friday night. Euro leapt straight back up to its recent weekly highs above the 1.17 level alongside most of the other undollars.
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 held 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 a return could be thwarted by the resignation of Japanese PM Ishiba on the open this morning.
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 possibly return to the previous weekly high:
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 remained above the 65 cent level after a failed attempt at pushing through the recent highs. Friday night saw it move to a new six week high, clearing resistance on the bad US jobs report.
Keeping 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, there was potential for a further rollover if Fed signalling did not become more dovish, but this is looking much less likely so watch for a continued breakout:
Oil markets were trying hard to get positive momentum going but both WTI and Brent crude slid back again on Friday night, this time making new lows on news that the Saudis want to pump more supply through, with the latter pushed down to the $65USD per barrel 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 has lot all support in the short term so watch for a rollover here:
Gold is looking much stronger now as it blows through the previous record highs on the daily and weekly charts and was able to extend those gains on Friday night due to the weaker USD, pushing up through the $3580USD per ounce 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 somewhat built but that series of new lows was too telling. This is looking very solid indeed as more central banks indicate more gold purchases:
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!