Overnight saw the still quite hesitant risk complex jump for joy as the Mango Mussolini decided to perhaps, maybe pull back his upcoming April 2nd tariff threats a smidge which gave Wall Street the excuse to bid everything higher as the Trump Dump and Pump scheme continued. European stocks were caught flatflooted however while the USD rebounded on higher than expected PMI readings, sending Yen to a monthly low while Euro broke below the 1.08 handle. The Australian dollar was able to hold just below the 63 cent level but pressure continues to build on the Pacific Peso.
10 year Treasury yields soared higher on the “news with a 8 point leap back above the 4.3% level while oil prices continued their follow through on their recent bounceback with Brent crude pushing higher above the $72USD per barrel level. Gold suffered a minor setback following its move above the magical $3000USD per ounce level but managed to barely recover above that critical psychological level.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets fell in afternoon trade before recovering right on the close with the Shanghai Composite actually closing 0.1% higher while the Hang Seng Index also slipped at first before zooming 0.9% higher to close at 23905 points.
The Hang Seng Index daily chart shows how this recent move looked unsustainable to the upside after recently setting up for another potential breakdown around the 20000 point level. Momentum has retraced from being well overbought after beating the previous monthly highs at the 21500 level:
Japanese stock markets also saw little action with the Nikkei 225 steady at 37686 points.
Price action had been indicating a rounding top on the daily chart for sometime now with daily momentum retracing away from overbought readings with the breakout last month above the 40000 point level now in full remission. Yen volatility remains a problem here, with a sustained return above the 38000 point level still unlikely although futures are indicating a small lift higher on the open:
Australian stocks were barely able to make headway in the first session of the trading week with the ASX200 closing just a few points higher at 7936 points.
SPI futures are up nearly 0.6% on the much better showing on Wall Street on Friday night. The daily chart pattern suggests entrenched resistance overhead at the 8500 point level is far too heavy for the market to overcome with short term momentum somewhat oversold but price action is indicating a bounce here:
European markets were unable to move much higher despite the supposed tariff relief with muted moves across the continent with the Eurostoxx 50 Index finishing 0.1% lower at 5415 points.
This was setting up for a breakdown with short term support taken out and the ATR support from the recent uptrend now under threat as momentum went into oversold mode but I still contend looks like another launching pad to buy more European defense stocks as they decouple from Wall Street:
Wall Street however surged on the “news” with the NASDAQ up more than 2% while the S&P500 gained 1.7% to close at 5767 points.
The Trump pump and dump scheme is now in the repump phase now as short sellers scramble, particularly on Tesla (up 12% overnight) with a return for the broader index to the early March highs:
Currency markets are wavering in their anti King Dollar mood amid the growing trade wars with the release of the latest flash PMI’s overnight helping most undollars push back again against USD. Euro is particular gave up a lot of ground and fell back below the 1.08 level, breaking weekly support in the process.
The union currency is barely holding on despite the tariff trade war with short and medium term support building at higher levels. Momentum was overextended earlier in the week and has now flipped to oversold setting so watch for the 1.08 handle to remain under pressure here:
The USDJPY pair broke down substantially on the BOJ aftermath last week with a fall back below the 149 but it has managed to not just clawback most of those losses but also return above the 150 handle to exceed its previous intraweek high.
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. USD is not weakening as expected here so we could see a more sustained run higher as Yen takes a back seat:
The Australian dollar is failing to get back into the swing of things and while we saw some life above the previous weekly high point its now remaining well below the 63 cent level amid the rate cut/dovish mood around most central banks last week, sliding back to the weekly low on Friday night and staying there overnight.
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 price action has now breached the 200 day MA (moving black line) which could turn into resistance:
Oil markets are finally getting back on track as Brent crude broke out of its funk in the previous session to make headway above the $72USD per barrel level albeit in very early stages of a breakout.
The daily chart pattern shows the post New Year rally that got a little out of hand and now reverting back to the sideways lower action for the latter half of 2024. The potential for a return to the 2024 lows is building here, although there is some more buying support slowly building:
Gold had a small hiccup on Friday night but is holding above the $3000USD per ounce level with the run up to the $3050 level stalling due to being very over stretched.
Price action has always found a lot of resistance just under the $2960 zone so that was the likely target in any upside potential but that has been deftly pushed aside without any substantial pullback thereafter, finding a very solid bid up here at new historic highs. Watch for support to hold at the $3000 level:
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!