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 7pm and DOW and USTech100 at 1:30am .
OVERNIGHT MARKET SNAPSHOT FOR MONDAY 6/02/23
US Indexes initially brushed aside the strong employment data to rally off of a weak open. It was only later when the sellers took hold to press prices back down into negative territory. The USD had a big rally off daily support which sent Gold falling off a cliff and Oil lower along with other key commodities. Bond yields also spiked which helped support the Dollar rally. This to me means that we may see a delayed reaction from the stock market this week as recent longs take profit in a risk off market. The strong employment reading supports the view for inflation remaining elevated and therefore the US Fed remaining in a ‘rate rising’ mode for longer. Companies are already feeling the pinch as we have seen with many big tech ‘layoffs’ to support the bottom line. What seemed cheap a week or two ago may this week seem expensive as traders will now be assessing the possibility off another 50 basis point rate hike from the Fed which will further squeeze company margins. All in all, it remains a hard market to navigate so risk management must be a priority.
(All times AEDT) AUD MI Inflation Gauge at 11am, AUD Retail Sales at 11:30am, EUR German Factory Orders at 6pm and EUR Retail Sales at 9pm.
Asian Markets I expect may come under pressure as traders re-assess global inflation concerns. I will not be surprised to see a major trap on open to suck in some buyers prior to a late selloff. Opening price action will be key for the day ahead.
The ASX200 is expected to open UP 15 points thanks to a late spike higher on the SPI200.
Prices below as at 9am AEDT
SPI200 (Mar) overnight futures up 25 pts to 7472
SP500 up 60.55 pts to 4179.76
NASDAQ Composite up 384.50 pts to 12200.82
Dow Jones down 39.02 pts to 34053.94
FTSE100 up 59.05 pts to 7820.16
DAX40 up 328.45 pts to 15509.19
GOLD (Spot) down $46.99 to $1865.69 an ounce
COPPER futures US session (Comex Mar) down $0.0598 to $4.0312 a pound
OIL futures US Session (Nymex Mar) down $2.49 to $73.39
CRB Index down 5.44 pts to 266.19
AUDUSD trading at 0.6923
EURUSD trading at 1.0795
GBPUSD trading at 1.2056
USDJPY trading at 131.1900
USD Index US Session (ICE Mar) up 1.248 to 102.823
The SPI200/ASX200 held 7498 into the US close but I expect that this level will be broken on the open as many re-assess stubborn inflation. I expect that we may see a trap on buyers on the open and then a selloff lower through 7498. I feel that we are going to see a risk off move today on concerns for the US and European markets later. (Refer to the Trade The Structure members area for weekly updated ASX200 charts) The DOW held between 34135 and 33800 but looks set for a move lower and unwind of recent long positions. Many will now be looking to a more aggressive Fed on interest rates so may look to lock in some gains. I am looking for price action to hold a lower high for a move below 33800. If we see a weak open, then looking for a retest and failure of this level from below. The US Tech 100 also looks set for a move down after failing around the 12800 zone in the US session Friday. With the cost of debt set to go higher and a Fed Pivot off the cards in the near term, I can not see how this is a positive for big tech so looking for a lower high and move down through 12448. The Hang Seng moved back down into the day sessions lows and support around 21470. Ideally, if we are to see further weakness, I would like to see a squeeze higher on open to clear out some shorts and trap some longs and then a lower high hold for a move below 21470 later in the session. The Nikkei was much like the SPI with some minor buying into the close off 27575. I expect that the 27727 level will hold and we see a move lower wo watching for a lower high to hold potentially into the Hang Seng open. The DAX held the 15353 level twice which is generally a show of strength. Price has made its way lower off 15530 and I do expect that the selling will continue. Ideally, looking for a pop and then sellers to step in to hold price action down. We will have to be careful as the Index looks supported and could easily ramp again, I just expect that US data to weigh on stock markets this week. The UK100 was well supported right from the European open as price action spiked above 7830 and into 7913 as it seems that new all time highs were the target. I expect that price will initially spike into new highs but then be met with selling pressure. Hard to see a decent rally considering US markets may rollover.
Key Cryptos Bitcoin and Ethereum found further weakness over the weekend which sets them up for a weak open on the CFD. I expect to see some unwind of buyers into BTC for a lower high off the 23150 zone. ETH may be much the same around 1630 if buyers can not lift price back above the level. Much will depend on the Asian Indexes open to gauge whether we will see a share market selloff in the European and US sessions which I expect will pressure Bitcoin and Ethereum lower.
USD Index rallied hard as Bonds fell which means that the Dollar has flushed a key Daily support area and is now bouncing. This is in anticipation that many traders have it wrong with regards to a Fed pivot and need to add to longs bets on the continued inflationary pressure and a more aggressive Fed. Spot Gold took a hammering as would be expected after the recent strength into the precious metal. The extended move down may show expectations for the start of a rally back into the USD. Gold has pushed down into support around 1864 but it is too early to see if this will hold or break. Sellers will need to see either a lower high after a bounce or a retest from underneath and lower high hold. I expect we will see a squeeze on sellers early prior to a potential move down. Crude Oil also took a hit lower to continue with the recent selling pressure. Price extended into 72.88 but, like gold, it is unclear whether we will see a bounce or move straight through. Many will be awaiting the coming price action into the USD…more USD buying could trigger another flush lower into Oil.
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US Tech 100 Index
Hang Seng Index
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