US stock markets lifted due to some optimism returning to the Old World with the German DAX rallying while the absense of economic news was vastly overshadowed by the start of the US elections as the USD continued its falls following the Iowa surprise polling over the weekend. Euro continued its rally above the 1.09 handle while the Australian dollar brushed off the RBA hold to lift above the 66 cent level.
US bond markets rallied somewhat with lower yields across the curve as 10 year Treasuries lost more than 6 points to get down to the 4.25% level while Brent crude remained above the $75USD per barrel level. Gold wasn’t able to take advantage of the weaker USD, staying around the $2740USD per ounce level.
Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets were up strongly going into the close with the Shanghai Composite gaining more than 2% to extend beyond the 3300 point level while the Hang Seng Index also extended more than 2% to close at 21006 points.
The Hang Seng Index daily chart shows how short term resistance was finally being pushed away with a huge breakout above the 19000 point level that then set up for a run at the 20000 level in the response to PBOC stimulus. Price action is again bunching up at the 20000 point level setting up for another potential breakdown if short term support breaks, but this looks more promising:
Japanese stock markets returned from their holiday with the Nikkei 225 lifting 1.4% to close at 38600 points.
Price action had been indicating a rounding top on the daily chart with daily momentum retracing away from overbought readings with the breakout last month above the 40000 point level almost in full remission. Yen volatility remains a problem here, with a sustained return above the 38000 point level from May/June possibly on the cards as positive momentum is building.
Australian stocks were the worst performers in the region as the ASX200 closed more than 0.4% lower at 8131 points.
SPI futures are down at least 0.4% due to the wobbles on Wall Street overnight and its likely trading volumes will be light given the election night. The daily chart pattern was potentially signalling a top as short term price action suggests a pause at least with momentum retracing from overbought status, however the medium term picture still looks firm but this rollover could extend further so watch the 8100 point zone closely:
European markets were helped mainly by the German DAX which rallied and helped gains across the continent as the Eurostoxx 50 Index closed nearly 0.5% higher at the 4870 point level.
This was looking to turn into a larger breakout with support at the 4900 point level quite firm with resistance just unable to breach the 5000 point barrier. Price had previously cleared the 4700 local resistance level as it seeks to return to the previous highs but momentum is still oversold despite the solid Friday finish with price action still below previous support:
Wall Street was able to shake off the election volatility with tech stocks leading the way as the NASDAQ lifted more than 1.2% while the S&P500 put on 1% to finish at 5773 points.
Price action had a small breakout on the previous NFP print but the sequential hurricanes and Middle East tensions took a toll before election volatility is swinging it lower again. We can expect more volatility as the election results come in tonight with momentum only barely positive here:
Currency markets are still in a flux between last week’s NFP print and last night’s US election but the once dominant USD is coming under pressure with Euro rallying further after breaching the 1.09 handle on the weekend gap higher.
The union currency had been structurally supportive before the Fed meeting and US jobs report but a double plunge indicated more weakness in the short term as momentum collapsed into the oversold zone with a breakdown of short term ATR support as well. Overhead resistance has been breached at the mid 1.08 level with momentum overdone already so this could be a short term move if it fails to beat the previous breakout high:
The USDJPY pair however has rolled below key short term support at the 152 handle after failing to make a convincing move higher late last week, as the USD overall weakens as the election volatility continues.
Momentum has reverted back into oversold mode with further BOJ/Gov’t machinations also keeping Yen volatile so watch for trailing ATR support at the 152 handle to turn into possible resistance here:
The Australian dollar has miraculously come back from a weekend gap higher on the Iowa polls, hitting the 66 cent level in the Asian session before rebounding overnight alongside other undollars to finish at the low 66 level this morning on USD weakness.
During June the Pacific Peso hadn’t been able to take advantage of any USD weakness with momentum barely in the positive zone but that has changed in recent weeks with price action finally getting out of the mid 66 cent level that acted as a point of control. This is looking a lot better given the RBA wants to hold through to Feb/March next year, but wait and see:
Oil markets remain somewhat high in volatility with some OPEC shenanigans and election tensions as Brent crude continued its move above the $75USD per barrel level on USD weakness.
Short term momentum remains in negative territory as medium term price action still supports a downtrend with my contention of another sharp retracement forthcoming if the $70-72 zone is not defended:
Gold was unable to hold on its recent new record highs or break through the $2800USD per ounce level during last week and is flittering around here as it bounces around support at the $2740 level instead.
Price action had been accelerating in confidence as new levels of support are being created for the shiny metal regardless of USD strength but as I’ve been saying, it will be interesting to see what happens in the US election as momentum remains in negative settings:
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!