Risk markets continued to lift higher overnight with the USD losing further ground against the currency majors as European shares led the way with a big boost. Wall Street finished solidly higher as well despite more dovish Fed talk with the Australian dollar holding firm above the 64 cent level.
US bond markets remain at near historic highs with the 10 year Treasury yield hovering around the mid 4.7% level while oil prices pulled back slightly after their big weekend gap with Brent crude back at the $87USD per barrel level. Gold paused its own breakout with a consolidation around the $1860USD per ounce level in a very quiet session.
Looking at share markets in Asia from yesterday’s session with Chinese share markets falling into the close with Shanghai Composite down 0.6% to 3078 points while in Hong Kong the Hang Seng Index reopened to lift some 0.8% to finish at 17664 points.
The daily chart is still showing a significant downtrend that has gone below the May/June lows with the 19000 point support level a distant memory as medium term price action stays well below the dominant downtrend (sloping higher black line) following the previous month long consolidation. Daily momentum readings are now out of oversold mode and while this bounce is turning into a breakout, I remain cautious here:
Japanese stock markets also returned from their holiday with the Nikkei 225 closing some 2.4% higher, putting in a big bounce to close at 31746 points.
Trailing ATR daily support had been paused for sometime now as the market went sideways after a big lift recently, with a welcome consolidation above that level but that turned into a proper dip that got well oversold. Daily momentum has retraced back from oversold settings but like Chinese markets I’m wary of a dead cat bounce pattern forming here with ATR resistance at the 32000 area to watch out for:
Australian stocks were also quite positive on merger news with the ASX200 closing some 1% higher at 7040 points.
SPI futures are again looking up, currently 0.4% higher as markets continue to follow Wall Street’s optimism the 7000 point level could still form as strong short term resistance. Medium term price action continue to move sideways at best but there could be further short term upside to the 7200 point level:
European markets soared higher with more than 2% rises across the continent, with the Eurostoxx 50 Index ending the session some 2.2% higher at 4205 points.
The daily chart still shows an overall decline with weekly support at 4100 points barely defended, as weekly resistance firms at the 4300 point resistance level. There are signs of stability returning here as daily momentum now gets out of oversold mode but I remain cautious as this looks like another short term ill fated dead cat bounce:
Wall Street was less optimistic but still put in broad gains across the three main bourses with the NASDAQ closing 0.6% higher while the S&P500 lifted 0.5% to finish at a new weekly high at 4358 points.
The daily chart was showing price action bunching up around the recent lows at the 4260 point area with the previous session suggesting a bullish engulfing candle giving a big lift to risk sentiment. After a slight gap down, futures re-engaged to the upside with the cash session matching the previous weekly high – this is the most optimistic market to watch and hence others could follow in correlation:
Currency markets are continuing their fight back against USD following the latest NFP print with major currency pairs extending their gains overnight. European economic weakness is not yet overshadowing Euro which pushed through the 1.06 level following a slight consolidation overnight to the mid 1.05 area in the previous sesion.
In the medium term its apparent on the four hourly chart that the union currency still really needs to have a strong return above trailing ATR resistance, now at the 1.06 handle. Short term momentum is well overbought but price action is starting to firm properly:
The USDJPY pair was unable to stabilise after its recent decline and big whipsaw last week with another drawdown back to the 149 level overnight with a test of last week’s low at the mid 148 level the next area to stumble.
Four hourly momentum shows a return to negative settings so watch out below as price action looks tenuous here in the short term:
The Australian dollar had been under the pump against King Dollar for sometime with a big decline to the 62 handle in recent weeks but after finding some new life on Friday night it followed through again to hold firm above the 64 cent level.
The Pacific Peso will remain under pressure but short term momentum looks solid here at slightly overbought readings and no price action near the low moving average:
Oil markets consolidated again overnight after a big weekend gap jump higher due to conflict in the Middle East but it remains to be seen if demand concerns and supply cuts will keep Brent crude elevated as it finished slightly below the $88USD per barrel level level.
After almost reaching $100 in mid September, price is looking to return to the August levels where a point of control was established before the breakout at the $87USD per barrel area. Daily momentum has nearly returned to oversold readings, so beware of a dead cat bounce here:
Gold gapped considerably higher on Monday morning after halting its impressive decline on Friday night from the NFP print, jumping above the $1840USD per ounce level and then firming again at the $1860 area overnight as momentum holds in the short term.
The daily chart was showing a potential bottoming action before Friday’s NFP print with this breakout possibly continuing as short term momentum remains heavily overbought but not in extreme condition as yet:
