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 5/12/22
US Indexes fought back from a very weak open after Employment data showed strength. The data release was a surprise to bulls who took a beating but it seems that the algos and intraday traders took control from the ‘gap down’ open to rally prices up off the lows. I expect that the data release will support the Feds stance to ‘stay the course’ with rate rises which is bearish for stock markets but the thinly traded markets are an intraday traders paradise and it seems easy to be ‘bullied’ up or down. The price action suggests bulls are committed to a year end rally or potentially know something that I don’t??…but either way, it was a good fight back from the weak open. I expect that the reaction up was overdone and the stronger than expected ‘Average Hourly Earnings’ means spending remains strong and therefore inflation resilient so we could see a delayed reaction down this week. US Bond yields initially rallied but then turned on a dime to fall into the close. The USD was much the same initially rallying had and then falling just as hard into the close. Tech stocks lagged the broader market as continued concerns of higher debt costs pressure prices. (All times AEDT) AUD ANZ Job Adverts and Company Operating Profits at 11:30am, CNY Caixin Services PMI at 12:45pm, EUR ECB President Lagarde Speaks at 12:45pm, USD ISM Services PMI and Factory Orders at 2am.
Asian markets may have a mixed open with the Hang Seng looking strong, Nikkei weak and SPI200 flat. Expecting that higher inflation will weigh on markets so expecting general weakness.
The ASX200 is expected to open UP 20 points after the SPI200 recovered nicely after the spike lower.
Prices below as at 9am AEDT
SPI200 (Dec) overnight futures up 19 pts to 7334
SP500 down 4.87 pts to 4071.70
NASDAQ Composite down 20.95 pts to 11461.50
Dow Jones up 34.87 pts to 34429.88
FTSE100 down 2.26 pts to 7556.23
DAX40 up 39.09 pts to 14529.39
GOLD (Spot) down $5.04 to $1797.91 an ounce
COPPER futures US session (Comex Mar) up $0.0375 to $3.8550 a pound
OIL futures US Session (Nymex Jan) down $1.24 to $79.98
CRB Index down 2.78 pts to 276.69
AUDUSD trading at 0.6790
EURUSD trading at 1.0535
GBPUSD trading at 1.2280
USDJPY trading at 134.3100
USD Index US Session (ICE Dec) down 0.249 to 104.440
The SPI200/ASX200 sold off after the US employment release and then bounced back hard along with the US. Price held a minor lower high and double top into the close, at 7346, that may bring in some sellers on the open. I feel that the inflation concerns in the US remain and will continue to pressure markets so looking for weakness today. (Refer to the Trade The Structure members area for weekly updated ASX200 charts) The DOW made back all the data release losses plus some into the close but I feel that the reaction back up was overdone. The inflation concerns will remain after average hourly earnings came out stronger than expected. I expect a delayed reaction lower today is the 34460 levels holds. The US Tech 100 ended back up around 12010 resistance after the bounce back from the open. I expect that resilient inflation will remain and continue to pressure the Tech sector so watching for a move down off a lower high today. The Hang Seng had a big rally after the data release which well outweighed the moves in the other indexes. Price ended up around 19163 resistance which means the underlying index is set to open up 400 pts (into previous sessions highs)…so it may not be much to ask for a fade off the open from a lower high. The Nikkei was the opposite to the Hang Seng as price was range bound after the data release and failed to bounce. Price was kept below 27800 which may lead to more weakness on the open today. Watching for a stop hunt below 27668 and then a lower high to hold. The DAX bounced after the employment data to end up around resistance at 14572. Price action has struggled into this level so watching for weakness off a lower high into the European session. The UK100 looks more buoyant than other indexes after holding above 7542 into the US close. If price action remains below 7570, then watching for a move lower off a lower high.
Cryptos were well contained Friday and in weekend trade. Bitcoin is hovering around 17100 resistance that could hold to see a move up through recent highs around 17250. Price action looks relatively buoyant and I feel that longer term bargain hunters will provide some short term support. Ethereum is struggling around 1289 and does not have the same bullish price action as BTC so watching for a move lower. In saying that…where one goes so to does that other so it will be interesting to see what unfolds…could just be a choppy start to the new week.
Spot Gold moved inversely to the USD as buyers supported 1787 but could not break up through 1807 resistance. If we are to see higher prices, then ideally gold flushes lower to trap some sellers before a higher low holds above 1787. If not, then I will watch for the reverse…flush higher and failure. Crude Oil fell away from 82.20 and into 79.78 into the US close. I expect that recent buyers may be looking at the current environment as inflationary and looking to take some risk off the table. Looking for a pop higher followed by a lower high and move down. USD Index spiked above 105.035 to clear out some sellers before moving back down again below 105.000. If price can hold up off Fridays lows today, then I am watching for a run up back through 105.035. If not, then a bigger corrective move down is on the cards.
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US Tech 100 Index
Hang Seng Index
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