Wall Street again stumbled overnight following European share markets as traders anticipate the forthcoming US CPI print. A multitude of macro and political events continued to overshadow the US jobs print fallout from Friday night with USD however recovering from some undollar pushback. Euro slid further down alongside Yen while the Australian dollar continued its breakdown below the 64 cent level following the RBA hold yesterday.
US Treasury 10 year yields edged slightly higher to the 4.23% while oil markets stabilised their recent reversal following the Syrian toppling as Brent crude stayed around the $72USD per barrel level. Gold however continued its strong post weekend rally on news of Chinese bank buying in the shiny metal, zooming up to the $2690USD per ounce level.
Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets are having a better session with the Shanghai Composite up more than 1% to extend above the 3400 point level while the Hang Seng Index is up nearly 0.7%, currently at 20555 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 last month before a massive retracement. Price action however stabilised before this massive breakout after what looked like setting up for another potential breakdown if short term support broke, but this is a whole new development!
Japanese stock markets are bouncing back after a little retreat with the Nikkei 225 up more than 0.3% at 39314 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 are the odd ones out as they absorb the RBA hold with the ASX200 closing 0.4% lower at 8393 points.
SPI futures are down 0.3% with the pullback in the Australian dollar and the poor mood on Wall Street overnight which could presage a slight selloff as the trading week continues. The daily chart pattern and short price action suggests a rollover could be underway but there is a lot of support at the 8400 point level:
European markets failed to continue their strong rebound with selloffs across the continent as the Eurostoxx 50 Index eventually closed 0.7% lower at 4951 points.
This was looking to turn into a larger breakout with support at the 4900 point level quite firm with resistance again 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 has rolled over here:
Wall Street remains in profit taking mode across the board with the tech heavy NASDAQ and S&P500 both closing around 0.3% lower, the latter finishing at 6034 points.
Price action was looking extremely positive but perhaps the Orange Santa rally is running out of steam as the 6000 point level might turn into support going forward. Watch for a potential stable finish this evening if the CPI print comes in on schedule:
Currency markets remain quite volatile due to political and macro tensions everywhere, not helped with the fallout from Friday’s US NFP print and the usual weekend gap. USD however is recovering as Euro failed to breakout above the 1.06 level and reversed course back down to the 1.05 handle overnight.
This fits in with my contention that we are still likely on our way back to parity as traders start to price in the now very unclear future for the continent so watch out for this to turn into a dead cat bounce if the 1.06 handle is not attacked again this week:
The USDJPY pair was able to push further out of retracement mode overnight with a modest rebound after before pushed aside all last week as Yen returned to strength, almost getting above the 152 level.
Short term momentum has switched to positive settings as price action makes new short term highs so this could be setting up for a further advancement here above the 152 level, but I remain cautious:
The Australian dollar was flummoxed by RBA inaction again yesterday following the hold decision as it flopped through the 64 handle after being depressed all last week making a new monthly low.
The Pacific Peso remains under pressure however on reweighting risks and the lack of action from the RBA as it wants to hold through to Feb/March next year given that a rate cut from the Fed is imminent, so watch for any rally to be rejected at the 65 handle and a possible further breakdown going into the end of year:
Oil markets are still not anticipating much support from OPEC or the fallout from the Syrian conflict as Brent crude remains depressed around the $72USD per barrel level overnight, still stuuck at a new monthly low.
The daily chart pattern continues to tighten like a spring with short term momentum definitively 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 shot straight out of the gate after the weekend gap due to Chinese bank buying, seeing it spike right up to the $2670 level before extending through to the $2690USD level overnight.
Price action had been accelerating in confidence as new levels of support were being created for the shiny metal regardless of USD strength but this pullback and rebound both are fighting too much under the $2700 zone so I’m skeptical of a new breakout here:
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!