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 MONDAY 31/10/22
US Indexes were all one way action up from the open as positive earnings and buoyant economic data supported the bargain hunting sentiment. With the FOMC meeting this week and the unknown fed outlook for interest rates, we may be seeing another ramp up in shares ahead of the release. Major Indexes are pulling back from the recent downtrend on hopes that the Fed will ease off on future rate rises and we may be seeing peak inflation. The broader US market remains down 10% from Aug 16th highs and has now rallied 11% off lows on Oct 13th. Bond yields moved back up along with the USD so maybe share markets are getting ahead of themselves again as inflation remains high and companies will still have to battle with higher costs of debt. To me, this means that companies have to show profits generally by raising prices (or increasing sales which would be tough in this environment) which would mean that higher prices are here to stay or potentially going up…meaning lingering inflation….and there is only so much prices can be raised at the expense of the consumer. This is potentially why there is a bond market problem with the lack of buyers which point to higher yields. (All times AEDT) AUD Private Sector Credit and Retail Sales at 11:30am, CNY Manufacturing PMI at 12:30pm, EUR German Retail Sales at 6pm and EUR CPI Flash Estimate at 9pm.
Asian markets will gap up after a strong US session. SPI and Nikkei will see a push into resistance and I feel it will be one of those days where longs are extended and shorts will be scalps.
The ASX200 is expected to open UP 95 points after the SPI200 ran up into resistance to reverse the previous sessions losses.
Prices below as at 8am AEDT
SPI200 (Dec) overnight futures up 92 pts to 6868
SP500 up 93.76 pts to 3901.06
NASDAQ Composite up 309.78 pts to 11102.45
Dow Jones up 828.52 pts to 32861.0
FTSE100 down 26.02 pts to 7047.67
DAX40 up 32.10 pts to 13243.33
GOLD (Spot) down $18.94 to $1644.51 an ounce
COPPER futures US session (Comex Dec) down $0.0875 to $3.4320 a pound
OIL futures US Session (Nymex Dec) down $1.18 to $87.90
CRB Index down 4.18 pts to 272.62
AUDUSD trading at 0.6411
EURUSD trading at 0.9965
GBPUSD trading at 1.1615
USDJPY trading at 147.6000
USD Index US Session (ICE Dec) up 0.092 to 110.545
The SPI200/ASX200 had a big rally to end the week with a spike into resistance into the close. The closing spike means that longs have not been squeezed out of the action. For any new long, I would need to see a pullback and another higher low hold. For shorts, I expect a flush higher on open and then will watch for a lower high. (Refer to the Trade The Structure members area for weekly updated ASX200 charts) The DOW saw a strong rally with little selling pressure so price is in no mans land at the moment. At the minimum, I want to see a pullback hold before a long entry. For a short, I want to see a exhaustive spike and then a lower high. The US Tech 100 was also just one way action higher into the close. Like the DOW, any new long needs to be off a pullback otherwise I will be looking for a short on an extension into 11700. The Hang Seng extended hard into 14825 before finding some buyers to support price. The Hang Seng could still move lower (as the move up was not convincing considering the US rally) so looking for a flush up into 15065 on the open and then a lower high to hold. If not, then I expect a grind higher to squeeze out more shorts. The Nikkei rallied hard up off 27119 and looks set to extend up into 27595 on the opening drive. With and expected gap up on the underlying index of 470 pts, longs will be extended so looking for a short off a lower high around 27595. The DAX pushed up through 13230 and is in no mans land below resistance at 13465. I will need to see a flush lower to trap some sellers and then a higher low hold for a long or sit back and wait for a move into 13465 to see how sellers react. The UK100 had a choppy session and lagged the bullishness of the major Indexes. Price held below 7080 resistance so watching to see if a lower high holds off the level or whether bulls push up and through and hold a retest.
Cryptos were again in sync with the risk on move in the share markets although the strength into the USD pressured prices. Bitcoin will need to hold above 20530 or hold a higher low to convince new buyers to jump into the action for a new leg higher. Ethereum has kicked up above 1576 on the open today so watching to see if buyers can hold another minor higher low for a move up into 1650.
Spot Gold came under pressure along with other commodities on the USD rally. Price flushed down into 1641 so watch to see if buyers can hold above the level and squeeze out some sellers on a move up. Crude Oil was generally caught between 88.50 and 87.38 in a tight range. The flush lower and then hold at 87.38 now confirms a double bottom so watching to see if bulls can ramp price higher through 88.50 and hold a higher low. USD Index moved up into 111.055 before finding sellers to cap the advance. Price has opened slightly higher today so watching to see if buyers try to push up through 111.055 or hold a lower high for a squeeze down. If feel that we may see some choppy action in coming days ahead of FOMC.
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US Tech 100 Index
Hang Seng Index
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