OPEX Rush – Inter Market Analysis

Risk On

  • US equity market broke higher in late trading hours – negative news all baked in and sentiment is clearly improving with the VIX index sold hard
  • Talks among central banks and ECB officials have made a resounding view to do more in terms of monetary stimulus
  • HSBC boss said Chinese economic fears are overdone – inevitable bumps on reform road

Risk Off

  • Hugo Boss next in the industry to suffer poor sales data as shares slide with China slump
  • Schlumberger sees “challenging” global oil market to continue – Chinese deflationary pressure and oversupply with the lack of production
  • Nestle reduce sales outlook amid weakness in Chinese market
  • Lower revenue or missing revenue estimates should hurt US firms in the long run despite buyback programmes
  • Crash fears in property bubble – has put Swedish investment funds at risk
All eyes on Chinese GDP numbers that are due on Monday as well as Chinese Industrial production data. This is a risk event that may well have been priced in but any better than expected numbers could give equity market extra lift (and vice versa).

Extra Stimulus has yet to kick in but wary of the build up to Santa rally

Multi Time Frame Analysis

USD index

Daily

4 hour

We made a mistake on yesterday report and should have written that the 50% Fibonacci retracement from May 2015 low to September 2015 high should offer as support (instead of failed). This could well be the last line of defence for the bulls and a break lower could instigate more selling. A short term rebound should be healthy here since inflation data came in as rather rate hike supportive.

German Bund

Daily

4 hour

Bunds maintain an uptrend potential here and a small pullback has seen buyers returning to the market. Price action broke above the key resistance levels and also broke above the psychological level of 157.00. There is more room for higher prices although we are starting to feel that a pullback is due.

Eur/Usd

Daily

4 hour

1.15 proves too much for the bull to take out but a corrective pullback is underway here. If we get an impulsive sell off, then it will put the latest bullish run into question. Ideally, the daily 100 and 200 ma should be the target of this pullback where we find strong support.

German Dax

Daily

4 hour

Dax 4 hour chart seems to suggest a potential double top pattern but we need a break below 9860 to confirm that the top is in and for a pullback to retest previous low. Dax daily put in a bullish engulfing candle but it will need to break above previous high of 10188 to make its way higher.

The 100 ma on the 4 hour chart gave good support and price has since risen higher – in fact the 4 hour chart shows a break out of the bull flag formation despite a strong Euro and Bunds. A daily close with that green candlestick will certainly put the bears in question.”

Gold

Daily

4 hour

We have a daily doji candle from yesterday close but we need a confirmation from today’s close with follow up selling to confirm a shift in sentiment. A break below 1170 may give the bears more rooms lower as the risk reward shifted. Only a break of previous high could assure more upside.

Current price action has reached an important juncture here and big resistance. Any false break here could easily send the yellow metal lower again.”

Silver

Daily

4 hour

No change in our commentary here. Daily chart has a diverging RSI that could well give early signal of a pullback. The steep buying and short covering process has certainly sparked many to forecast astronomical prices as they argued that silver is biding its time here. Price action will tell us the next move from here on.

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