Wall Street managed to escape a selloff overnight with the release of not so quite dovish FOMC minutes, but then the wobbles came through bond and currency markets as the Trump regime announced they weren’t releasing the October jobs print while the November print won’t be after the December Fed meeting. The USD went on a tear against almost everything as a result due to the more “neutral” stance of the Fed, with Euro slumping to the 1.15 handle while the Australian dollar flopped after looking more resilient as it cratered below the 65 cent level overnight.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets are lifting slightly back into the green at the close with the Shanghai Composite up 0.2% to 3944 points while the Hang Seng Index was down nearly 0.4%, closing at 25830 points.
The daily chart of the Hang Seng Index shows a complete fill of the March/April selloff with a resumption of buying above 26000 points as momentum builds properly again but I do note some resistance building here, so watch for a proper rollover soon:
Japanese stock markets stabilised somewhat on the new stimulus package but look unsteady at best with the Nikkei 225 down nearly 0.3% to remain below the 50000 point level.
Daily price action was looking extremely keen indeed as daily momentum accelerated after clearing resistance at the 42000 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 as the 50000 point level has been decisively broken:
Australian stocks had a meandering session with the ASX200 eventually closing nearly 0.3% lower at 8447 points. SPI futures are up 0.6% on short covering due to the lack of a continued selloff on Wall Street overnight.
The daily chart pattern was suggesting further upside still possible with a base built above the 8700 point level as daily momentum tried to maintain its overbought status. Short term support has been abandoned, as momentum builds for a broader selloff:
European markets tried to get out of sell mode but it was mixed returns across the continent with the Eurostoxx 50 Index closing just 0.1% higher at 5542 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. The market has been failing to make headway here due to the too high valuations but I’m wary of short term support breaking here as well:
Wall Street just clawed its way out of another dive down with the NASDAQ closing 0.6% higher on anticipation of NVIDIA earnings while the S&P500 put on 0.4% closing at 6642 points.
The four hourly chart shows that resistance at the 6900 point level is still quite relevant after the bounceback from the end of the US government shutdown rally. I was watching for a potential rollover below the 6600 point area here but the symmetrical triangle setup is suggesting a possible dead cat bounce move first:
Currency markets are now swinging back fully to USD strength in the absence of bad economic news from the US – since its all manufactured good news! Euro led the way with a solid selloff that almost took it below the 1.15 handle, with Pound Sterling and other majors following suit on what looks like a more neutral setting going into the December Fed meeting.
The union currency was building strength as it climbed above previous ATR resistance at the 1.1580 area but momentum has switched to oversold settings in the short term with this weakness below the 1.16 handle probably broadening:
The USDJPY pair is shooting up the highest, not helped by a much weaker Yen amid the China/Japan diplomatic stoush with a solid breakout to the 157 handle 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 and this recent volatility has now repeated this move but watch for a probable violent reversal:
The Australian dollar only had a small reprieve in the previous session before rolling over fully to make a new weekly low overnight, heading straight towards the 64 handle on USD strength.
There continues to be some buying support in the Pacific Peso in the short term on the probability of no more cuts from the RBA, but I’m still watching for a rollover below short term ATR support at the 65 handle in the event of a proper risk off event:
Oil markets have been trying to remain stable with a potential breakout building but the Ruzzian/Trump regimes Ukraine war talks are taking some heat out of the market again with Brent crude pushed back below the $64USD per barrel level overnight.
The daily chart pattern shows the post New Year rally has a distant memory with any potential for a rally up to the $80 level completely dissipating. There was potential here for a run down to the $60 level next but it does looks like a floor is being made here at the $63 area:
Gold was having a much better run than other undollars and zoomed through the $4200USD per ounce level during last week but has put in a small reversal to get back below the $4100 level again.
This could be another slightly overdone in the short term ride but then after some more stability, yet another large upside potential move is looming again for the shiny metal as the desire for USD dwindles. Watch for the $4100 area for signs of a further breakout:
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!