Non-Stop Hunting Programme – Inter Market Analysis

Risk On

  • Talks of additional QE from tomorrow ECB meeting has given the bulls some firepower
  • Profit warnings and missing revenue seems to instigate shares buy back that has kept the equity market buoyant – but how sustainable is this?
  • European stocks managed to cut loss and unwind higher
  • Ferrari IPO gets top dollar
  • Greek capital control  could be lifted in Q1
  • With the VIX index struggling to make a base, risk on sentiment could remain high

Risk Off

  • Shanghai, Hang Seng and Taiwan stocks opened higher but suffer heavy selling late into the trading hours – Indian stocks edged lower
  • Nikkei higher despite talk of additional stimulus remain in check  but all eyes on BOJ meeting next week
  • Pearson drops after cutting profit forecast
  • UK has smallest budget deficit since 2007 – could curtail investment and seriously dampen recovery
  • Tesla loses consumer reports recommendation – shares tumbled
It seems that this post is rather futile but market volatility has created an ideal scenario for day traders to take advantage of both long and short positions. In addition, traders have to be patient for key levels to breach and target hit as overnight highs and lows are subject to various noises. With the ECB meeting tomorrow, talk of QE will heat up and play as the background noise but price action will be king.

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

Dollar index continue to consolidate as we head to several key risk events such as the ECB, FOMC and BOJ. Sentiment remains on the dovish side that the global economy would prefer more easing and no rate hike. If we see another delay in rate hike or the Fed fail to provide any clear view then we expect more sell off.

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.”

German Bund

Daily

4 hour

Daily chart is showing bull exhaustion here as we mentioned in our last few posts that a sell off will ensue but it is a matter of time. The daily 200 ma continue to act as a strong support but for how much longer? Mind you the ascending channel continue to look like a steep bear flag but the 4 hour 200 ma will get tested for support.

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.”

Eur/Usd

Daily

4 hour

Sell interest in the Euro remain strong and the overall bearish sentiment has not change since the ECB has drum up its bazooka for another round. Squeezing shorts could remain in the agenda as long as tomorrow ECB meeting does not transpire into actionable policy.

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

With the bears unable to drive prices lower and the dax 10000 psychological level defended, there is only one way which is up. The QE induced trade has also benefit from talk from ECB officials about expanding QE programmes. Despite the late sell off in Chinese equity market, dax has succumbed to more buyers. Pullback could happen but that will need a break below the 4 hour 20 ma and 200 ma

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

Momentum is bullish and mainstream is bullish on gold – price continue to consolidate and open interest is elevated – signs of more bullishness in the yellow metal. We remain open to the idea that smart money is playing the metal higher and it is a matter of time that it revert back to its original trend.

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.”

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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