Overnight saw Wall Street take a hit on tech stock earnings with Apple the next cab off the rank this evening. Microsoft slumped while Meta surged as Tesla stumbled, while European stocks remain hesistant as the war drums are beating in the Middle East. Oil prices continue to surge on the upcoming Iranian/US war while gold finally pulled back from its epic run after being extremely overbought. Other undollars also paused their structural moves against USD with the Australian dollar still holding above the 70 cent level.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets were barely up in the afternoon session with the Shanghai Composite stayaing well above the 4100 point level while the Hang Seng Index finishing 0.5% higher as it continues to make new highs.
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. Momentum is now extremely overbought with price indicating a blowout that could reverse course:
Japanese stock markets were just back in the positive zone with the Nikkei 225 up nearly 0.5% at one stage before finishing flat to stay just above the 53000 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 still worrying here:
Australian stocks were the only ones to stumble across the region with the ASX200 closing 0.1% lower to 8927 points as SPI futures are up slightly despite a fall 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 into what could be a solid breakout:
European markets remain in an hesitant mood across the continent as the Eurostoxx 50 Index closed 0.7% lower led by a big fall in the German DAX, still unable 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 that are coming under pressure here:
Wall Street wanted to stay in a positive mood despite the recent poor consumer confidence print but earnings are proving disappointing as the NASDAQ fell nearly 1.4% while the S&P500 lost more than 0.5% to close at 6940 points.
The four hourly and daily price pattern indicates a failure to push through the recent highs which could be setting up for a rollover ahead:
Currency markets remain in a firm anti-USD mode but remain in a holding pattern after the recent Fed meeting with the extremely oversold DXY Index stabilising after making a four year low. Euro was leading the way with surge above the 1.20 handle but has settled at the mid 1.19 level overnight.
The union currency’s four hourly candle and technicals suggested an extremely overbought condition beforehand as I mentioned so some profit taking here (cough cough) was inevitable but I would suggest trailing support should be supported here:
The USDJPY pair had been through a massive rout lately and into an unbearably oversold condition so no surprise a small bounce back by USD sent the pair above the 153 level in the previous session but its gone nowhere since.
However the start of year position at the 158 handle is way out of bounds for now with this rebound being relatively inconsequential as we await the Japanese elections and other missives from the BOJ. There is a potential for a bounce back to the gap level around the mid 154 handle but its not high:
The Australian dollar had soared higher alongside gold due to USD weakness, extending its push above the 70 handle on overall “Sell America” volatility despite other undollars giving up ground as it remains quite resilient here in the face of a definite rate rise come Tuesday next week from the RBA.
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 now morphed from a sideways pattern to a breakout on the upcoming Iranian war. Brent crude has surged again to move above the $69USD per barrel level overnight but is now extremely overbought:
Gold had been accelerating into a blowoff pattern having blasted through the $5500USD per ounce level in recent sessions but there has been a retreat back to the $5300 level overnight in a wild session. The shiny metal has lifted ever since the Dementia Don Davos drivel with trend lines becoming more and more parabolic – I did indicate a probable top soon but no one is going to short this hence the violent shakeout:
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!