Equity Looks Heavy – Inter Market Analysis

Risk On

  • The Asian market opened with positive territory and risk sentiment remains unabated despite poor earnings results
  • Chinese small cap gain traction and interest which help stocks rose higher
  • VIX index remain sold and rather subdued but we are conscious that this could change with a switch
  • Dollar have a small rebound but remains weak and vulnerable though we have seen money rotating out of Euro and Yen
  • Oprah invests and shares double / Costa boosts Whitbread’s profits / UK sales help Asos
  • Big oil firms are cutting back and looking more efficient (bullish outlook) as it continue to ride out low oil prices

Risk Off

  • Fed Williams says near future interest rate hike is appropriate Hugo Boss next in the industry to suffer poor sales data as shares slide with China slump
  • IBM revenue falls more than expected / cuts profit forecast
  • Swiss watch exports slump worst since 2009 / Luxury brand continue to suffer
  • Fear of VW scandal spreading – could increase cost
BOE Carney speaks and Miss Yellen will speak too – Thursday ECB Draghi on the line – market looks to digest all the information before the long awaited “Live FOMC meeting” as the debate continues about a rate hike.

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 did have a bounce while price action look set to consolidate within a potential broadening channel. Support remains the rising black coloured trend line and this is all lining up nicely for October FOMC meeting next week. A break higher is warranted if we get a hawkish Fed otherwise the dollar bull could continue to lose confidence.

A short term rebound should be healthy here since inflation data came in as rather rate hike supportive.”

German Bund

Daily

4 hour

The uptrend continues but price action looks heavy here and we cannot help to suggest that a bigger sell off could transpire for a retest on the daily rising trend line. Swing traders may already have build positions here but only time will tell.

There is more room for higher prices although we are starting to feel that a pullback is due.”

Eur/Usd

Daily

4 hour

Dollar into consolidation mode and we have the Euro taking charge on a Tuesday morning – ahead of the ECB meeting. Price action is fast converging within the triangle pattern and potential play could see ab ABC correction.

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

Price action continue to ping pong as it remain in a cross road. Sellers arrived at 10200 levels and continue to pressure – building a strong layer of resistance. Only a break above will see a clear breakout for higher prices. The risk of going lower is there as many are seeing a potential double top with the 4 hour chart RSI diverging.

Dax 4 hour chart seems to suggest a potential double top pattern but we need a break below 10000 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.”

Gold

Daily

4 hour

Price did break below 1170 but buyers are flocking in again here, providing short term support as it confluence with the 4 hourly 50 ma. Since the pullback is corrective, there is a possibility that a wave 5 could play out. Support for gold comes in at 1158 and 1148 if the pullback comes in deeper.

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.”

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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