Wall Street continued the TACO trade overnight led by tech stocks while a series of high inflation data in the US failed to get the USD moving higher with all undollars continuing the structural “off-America” risk trade with the Australian dollar making another new high. Gold surged again alongside silver while oil prices fellback and US 10 year Treasury yields were steady.
Looking at stock markets from Asia from yesterday’s session, where Chinese share markets are down slightly in the afternoon session with the Shanghai Composite staying just above the 4100 point level while the Hang Seng Index was up a little bit at 26639 points.
The daily chart of the Hang Seng Index showed a lot of wish washy action around the 26000 point level in the last couple of months with some recent weakness now turning into strength. However the latest small bounce off support has now reversed as resistance overhead is too strong although momentum is still positive:
Japanese stock markets have bounced back sharply with the Nikkei 225 up nearly 2% to almost get back above the 54000 point level.
Daily price action wavered a little during the BOJ hike in the previous weeks but has firmed up strongly with the 50000 point level forming key support although it has gotten ahead of itself. This was looking like a launch point through longer term overhead resistance but the selloff in Japanese bonds and the election snap call is worrying here:
Australian stocks are doing well with the ASX200 up nearly 0.8% to 8848 points. SPI futures are down slightly and the higher Aussie dollar may weight on the market despite another rally on Wall Street overnight.
The daily chart pattern shows that short term support has been reinforced after a period of hesitation before Christmas with a bounceback above resistance at the 8800 point area building but this is not yet confirmed as a solid breakout:
European markets were less hesitant across the continent as the Eurostoxx 50 Index closed nearly 1.2% higher to 5956 points, trying to get back on track after the breakdown of the recent rally.
The market had been failing to make headway in recent months due to the too high valuations but short term support was very solid and has pushed well above recent highs to start 2026 stronger than expected. Watch for any support levels to be built here after the Davos Diatribe:
Wall Street is lifting as well due to earnings and the latest inflation figures with the NASDAQ up nearly 1% while the S&P500 lifted around 0.5% higher, closing at 6913 points.
The market manipulation here has been interesting to watch from the inverted J pattern bottoming out at the 6800 point level on the four hourly chart and now this one sided bid to take the market up to – but not through – the gap down level. Is this a dead cat bounce?
Currency markets are moving further into anti-USD mode with volatility in USD seeing a continued lift in Euro overnight as other major undollars play catchup.
The union currency was snapped back below the 1.17 handle previously after stalling out at the mid 1.17 level but has now re-engaged to the upside with a new weekly high bouncing off short term ATR support:
The USDJPY pair pushed well above the 157 handle on the new year sessions, despite stronger inflation in Japan with a move above the 159 level at the start of the week continuing to be pushed down into the 158 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. A little too much heat has been taken out after being overbought but this could be one undollar that accelerates down the tubes:
The Australian dollar has soared higher alongside gold due to USD weakness, now pushing above the 68 handle on overall “Sell America” volatility where it made a new 15 month high.
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 short term support is shoring up as overhead resistance is pushed aside here:
Oil markets have been on a multi week/monthly downtrend prior to the Venezuelan invasion but shot out of the gate last week with some big gains but have since settled into a sideways pattern. Brent crude was starting to move higher again with a small breakout above the $65USD per barrel level but this has been quenched again:
Gold was in a holding pattern, albeit with a very bullish bias above the $4600USD per ounce level after some heat was taken out of silver prices last week. There was some volatility around the Trump Davos dementia drivel but the shiny metal has lifted ever higher again, pushing right through a new high above the $4900 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:
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!