Charts Marked with anticipated entry setups in YELLOW and ideal setup in GREEN on market opens. There will be many possible scenarios shown so it is key to work off major levels and higher lows/lower highs once the price action unfolds.
PROCESS IS KEY….DEFINE LEVELS – MARK EXPECTED PRICE ACTION – TRADE THE SETUPS
All prices refer to the CFD pricing from the charts below off TD365.com. Opening times (AEDT) for underlying indexes are SPI200 at 10am, N225 at 11am, HSI at 12:30am, DAX and UK100 at 6pm and DOW and USTech100 at 12:30am .
OVERNIGHT MARKET SNAPSHOT FOR FRIDAY 14/10/22
US Indexes ripped higher to brush aside bears in a strong move up after stronger than expected CPI suggesting more inflationary pain. Major Indexes moved against major expectations and in unison to all rally from the start of the US session in what was a big trap and then short squeeze….’sell the rumour and buy the fact’….someone was tired of the bear market it seems! Markets are very extended to the upside intraday, but price action could easily continue higher with little pullback as there are many shorts still offside which could fuel a further squeeze up. Bond prices continued to press lower as yields rallied which is not good for debt financing and in turn companies bottom line. News now suggests that the bounce is due to traders being ‘happy’ that the Fed is locked into to a big rate hike…where as a day ago that was the reason prices are moving lower. Either way inflation is far from under control and I expect to again weigh on markets…remembering that some of the biggest rallies happen in a bear market and daily trends remain down on Indexes and up on USD. CNY CPI and PPI at 12:30pm AEDT, EUR Trade Balance at 8pm AEDT, USD Retail Sales Data at 11:30pm AEDT and USD Consumer Sentiment and Inflation Expectations at 1am AEDT.
Asian markets will gap up strong making longs very difficult without any flush of buyers first. Shorts will also be off the cards unless we see a clear top and lower high suggesting buyers running out of steam.
The ASX200 is expected to open UP 105 points after a major flush lower then spike higher…SPI200 rallying over 200 points off lows.
Prices below as at 8am AEDT
SPI200 (Dec) overnight futures up 110 pts to 6745
SP500 up 92.88 pts to 3669.91
NASDAQ Composite up 232.05 pts to 10649.15
Dow Jones up 827.87 pts to 30038.72
FTSE100 up 24.12 pts to 6850.27
DAX40 up 183.32 pts to 12355.58
GOLD (Spot) down $7.07 to $1666.13 an ounce
COPPER futures US session (Comex Dec) up $0.0007 to $3.4610 a pound
OIL futures US Session (Nymex Nov) up $1.84 to $89.11
CRB Index up 3.24 pts to 282.49
AUDUSD trading at 0.6298
EURUSD trading at 0.9773
GBPUSD trading at 1.1329
USDJPY trading at 147.1900
USD Index US Session (ICE Dec) down 0.867 to 112.357
The SPI200/ASX200 saw a major reversal off lows which was the same across the board. It seems that investors are now happy with higher interest rates 🤔. The SPI is very extended but could easily continue higher considering there will be bottom pickers chasing price higher and more sellers to be squeezed out. Happy to watch the action unfold on the open for either a clear lower high or higher low. (Refer to the Trade The Structure members area for weekly updated ASX200 charts) The DOW algos kicked into high gear to push sellers out of the market with a massive 1500 point rally off lows into the open. Longs may have gotten over excited but I will need to see clear failed highs and a lower higher prior to any short. For a long, I would need to see some sellers get trapped on a pullback…otherwise I could be buying the top. The US Tech 100 spiked up into resistance around 11055 and could setup for another squeeze up through the level. Watching for a minor pullback to trap some ‘top pickers’ and then another squeeze up. Hang Seng also had a big rally off the lows to end near the day sessions open just below 16710. The 16710 level seems like a clear target for the open to flush so will be watching for either continuation up off the level or failure back down. The Nikkei ramped 930 points off lows so price is a little extended. Like the DOW, I will only look to buy off a clear flush lower and hold otherwise looking for a clear lower high to sell into. The DAX ended the session into resistance at 12510 which I would expect to be flushed at some stage if price wants to move lower. If we see a minor pullback to 12402 and then the level hold, looking for another leg up. The UK100 was a little less enthusiastic then other major indexes although did follow the same flush and spike move. Will be looking for a minor pullback and then rally although any rally could be capped with pressure from local economic (read government incompetence) issues.
Cryptos were initially hit hard before the short squeeze was triggered and prices on Bitcoin and Ethereum rallied. BTC moved up into 19525 which may see some profit taking while ETH held resistance at 1319. Watching ETH for a squeeze up into 1314 and then for some profit taking and the longer term trend lower to potentially take hold again.
Spot Gold did not know which way to go…first a big spike lower and then a ramp higher. Bulls will want to see 1661 hold today and provide some support for a move up through 1682 tonight. If 1682 does not come under fire then we could see a push below 1661…but this will depend on a recovery into the USD. Crude Oil was also choppy with a rally off 86.05 support. The 89.50 level will be key to see if we get continuation or not. I expect that there may be some overflow buying today/tonight to see a kick up into 90.50. USD Index saw a squeeze on buyers and a move down although bond yields continued higher. I expect that many feel that we have seen peak in inflation although CPI remains strong and analysts have been wrong the previous few months…shown below.
We need to see an aggressive Fed before bulls may give up bets of higher levels for the USD and lower CPI readings.
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US Tech 100 Index
Hang Seng Index
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