The latest US initial jobless claims number spiked overnight and combined with more senseless tariff threats from Trump including doubling down on China saw volatility hit Wall Street hard as all the post election gains were wiped out, taking European stocks lower as well. The USD is pushing back against the undollars with new daily lows in Euro and Yen overnight in the wake of tariff threats while the Australian dollar has flopped below the 63 cent level back to the early February lows.
10 year Treasury yields lifted slightly after falling all week to remain slightly above the 4.2% level while oil prices rebounded on hopes that OPEC+ might consider further production cuts with Brent crude lifting above the $72USD per barrel level. Gold is failing to get back above the $2900USD per ounce level after its recent setback, making a new low at the $2870 level this morning.
Looking at stock markets from Asia in yesterday’s session, where mainland Chinese share markets barely moved higher in afternoon trade with the Shanghai Composite up 0.2% to the 3380 point level while the Hang Seng Index has finally slowed down with a mild retracement to stay above the 23000 point level.
The Hang Seng Index daily chart shows how this recent move looks very unsustainable to the upside after recently setting up for another potential breakdown around the 20000 point level. Momentum is extremely overbought after beating the previous monthly highs at the 21500 level so I’d be very cautious here:
Japanese stock markets were able to lift higher after successive failing sessions with Nikkei 225 gaining some 0.3% to be over 38240 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 the support level unlikely:
Australian stocks are finally putting on some runs with the ASX200 closing 0.3% higher at 8268 points.
SPI futures however are down 0.7% due to the continued pullbacks on Wall Street overnight. The daily chart pattern and short price action suggests resistance overhead at the 8500 point level is far too heavy for the market to overcome with short term momentum oversold and ready to go lower:
European markets sold off across the continent, this time unable to shrug off the impact of the tariff threats as the Eurostoxx 50 Index closed more than 1% lower at 5472 points.
This has the hallmarks of a rally that is running out of steam although daily momentum was overbought it never got to extreme readings. Daily candlestick analysis showed some buying exhaustion setting in as I continue to watch for any inversion this week with the harbinger a close below the low moving average (red line):
Wall Street is getting hit hard by the White House nonsense with the NASDAQ down over 1.5% while the S&P500 closed nearly 0.8% lower at 5910 points wiping out all the post election gains.
This should have set up a rally into the 6200 point area but the good old Trump pump and dump scheme is working a treat here as overhead resistance rejected further calls to launch higher above that level. As I said last Friday, watching ATR support at the 6100 point level proper for an inversion as the selloff was beckoning with momentum ready to take this lower:
Currency markets are swinging back to King Dollar on the latest initial jobless numbers plus the full scattergun approach to tariffs from the White House with the once resurging Euro forced back well below the 1.05 handle overnight after recently matching its weekly highs.
The union currency was looking weak at the start of last week but surged as the bluffs were called on Trump’s tariffs, with short and medium term support building after being under threat. Momentum was overextended with support clear at the 1.04 level before this move higher:
The USDJPY pair is still failing to get out of its funk after a very brief deceleration phase into the early February lows around the 151 level although short term momentum is fighting back with a slightly push above the 149 level proper overnight.
Short term momentum was extremely oversold before the start of week bounce but required price action to at least get over the 156 level to call this a proper trend higher. As USD weakens structurally overall and domestic policies continue to strengthen Yen I’ve been warning for sometime about a strong break below the 151 level:
The Australian dollar has completely given up its recent gains with the false breakout above the 64 cent level proving very short lived with this retracement now extending into the low 62 cent level overnight against USD.
The recent follow through to the high 62’s and low 63’s was always high risk going into the live February RBA rate meeting and after the Trumpian tariff crusade although this bounceback could of shot over the 200 day MA (moving black line) with a clear inverted head and shoulders pattern – but did not come to pass. This has hall the hallmarks of rebalancing so I expect some further downside here:
Oil markets are failing to get back on track but we did see some strong bids on speculation OPEC+ might do something about production overnight with Brent crude pushed back above the $73USD per barrel level although it still looks weak internally on the short run.
The daily chart pattern shows the post New Year rally that got a little out of hand and now reverting back to the sideways action for the latter half of 2024. The potential for a return to the 2024 lows is building here:
Gold is failing to continue its surge above the $2900USD per ounce level with a sharp retracement in the previous session now back on track overnight as it retraced to the $2860USD per ounce level this morning.
Price action is finding a lot of resistance just under the $2960 zone and this continued overnight with a swing down to ATR support on the four hourly chart that then turned into a selloff. Watch for the $2900 level to now become resistance going into the end of the trading week:
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!