Wall Street and other risk markets continue to drift into holiday mode as a Santa rally gets underway in precious metals while the USD continues to face endemic pressure. Yen continued to pullback after a big move on Friday while the Australian dollar finally made its way back above the 67 cent level following the release of the December minutes by the RBA yesterday.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets saw a solid bid at first but gave it up in afternoon trade with the Shanghai Composite finishing flat at 3919 points while the Hang Seng Index pulled back 0.1% to 25744 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 tried to build but failed to push aside resistance. The latest small bounce off support does not have a lot of momentum here so I continue to be wary of another dead cat bounce forming:
Japanese stock markets were treading water after a few big sessions and the firming Yen with the Nikkei 225 close just 0.1% higher to 50412 points.
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 looked very stretched and setup for a small correction before the BOJ meeting. The Friday bounceback and weakening Yen is setting up for another attempt back at the 50000 point level:
Australian stocks did very well in afternoon trade with the ASX200 up more than 1% to 8795 points. SPI futures are down a few points despite the solid session on Wall Street overnight.
The daily chart pattern shows that short term support has been abandoned, as momentum builds for a broader selloff but watch for some stability that could turn into a bounceback above the 8700 point area:
European markets were choppy again as volumes diminish across the continent with the Eurostoxx 50 Index finished up just 0.1% to 5749 points.
The market had been failing to make headway here due to the too high valuations but short term support was able to handle the pressure before finding some buyers to stabilise, as this could turn back into a revisit of the recent highs:
Wall Street continues to lift slightly higher with the NASDAQ up 0.5% while the S&P500 gained 0.4% to close at 6909 points.
The four hourly chart showed a steady if not exciting climb back to recent highs with somewhat firming support but that nascent trendline was broken recently but support had steadied before the Fed meeting. The bounceback has been good so far in the short term but overall the market looks peaky:
Currency markets were in a holding pattern due to the looming break over the New Year but are now moving against King Dollar again despite the recent volatility around the BOJ rate hike. Euro continued its bounceback overnight after dwindling down to the 1.17 handle proper as it almost broke through the 1.18 level while Pound Sterling and Canadian Loonie also made new monthly highs. Must be that well performing US economy?
The union currency was pushed down to the 1.17 handle where after threatening to break has now built above that as short term support to launch back to its previous highs:
The USDJPY pair exploded out of the gate more than 200 pips to the 157 handle on Friday night but has nearly given up all those gains in recent sessions, falling back to the 156 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 and this recent volatility repeated this move. This could get more exciting in the next few sessions but its significantly overbought in the short term:
The Australian dollar was weakening all last week to stay well below the mid 66 cent level but found some a lot of buying support at the 66 handle proper to breakout above the 67 handle early this morning.
Price action was not looking good for the Pacific Peso in the medium term as the interest rate differential squeeze sent it back to the doldrums, but this has inverted as the RBA moves to a much hawkish position. A new monthly high as we head into the new year:
Oil markets have been on a multi week/monthly downtrend with Brent crude recently pushed below the $59USD per barrel level with the small lift on Friday night extended overnight to push back above the $62 level.
The daily chart pattern shows an extended downtrend that is coming under threat but this really just getting back to the trendline proper and not yet a breakout:
Gold is now using the $4300USD per ounce level as support and made a new high overnight to finish at the $4445USD per ounce level.
As I previously mentioned that after some stability, another large upside potential move was looming again for the shiny metal as the desire for USD dwindles and here we are, albeit very overbought:
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!