Stocks have started to turn back upward again amid signs that the recent correction may have run its course for now. Traders cheered the news that US retail sales and industrial production came in below expectations, essentially slamming the door on a September rate hike. Better than expected jobless claims and Philadelphia Fed reports, however, indicated that December remains possible. Today’s data suggests a Goldilocks economy not growing fast enough to force the Fed to tighten but not growing too slow which would undermine corporate earnings growth.
That being said, now is not the time for traders to get complacent, September is historically the worst month of the year for US index performance and also one of the more volatile months which can create trading opportunities but also punish those not paying attention. Friday brings US inflation figures which could change rate speculation again. The twists and turns of a much closer than many expected Presidential election race may also impact trading over the next two months.
Crude oil also remains active, bouncing back and erasing part of a two day selloff. Between changing demand expectations, the potential for more supply from Nigeria and Libya and the side meeting between OPEC producers and Russia at a conference in Algeria later this month, the pot may continue to boil in energy markets for some time.
Asia Pacific markets may continue to be impacted by global trends, particularly speculation surrounding if the Bank of Japan will cut interest rates deeper into negative territory next week. Singapore markets may be active around trade data.
Oracle $0.55 vs street $0.58
Significant announcements released overnight include:
Bank of England meeting no changes to 0.25% interest rate or £435B asset purchase target as expected, 9-0 vote but two members having second thoughts about QE
Swiss National Bank meeting no changes to deposit or lending rates as expected
US retail sales (0.3%) vs street (0.1%)
US retail ex auto (0.1%) vs street 0.2%, previous revised down to (0.4%) from (0.3%)
US industrial production (0.4%) vs street (0.2%)
US manufacturing production (0.4%) street (0.3%)
US jobless claims 260K vs street 265K
US Empire manufacturing (1.9) vs street (1.0) vs previous (4.0)
US Philadelphia Fed 12.8 vs street 1.0
US producer prices 0.0% vs street 0.1%
US core PPI 1.0% as expected vs previous 0.7%
US natural gas storage 62 BCF vs street 55 BCF
UK retail sales 6.2% vs street 5.4% vs previous 5.9%
UK retail ex auto 5.9% vs street 4.8% vs previous 5.4%
Eurozone trade balance €20.0B vs street €22.0B
Eurozone consumer prices 0.2% as expected
Eurozone core CPI 0.8% as expected
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
10:30 am AEST Singapore non-oil exports street (3.3%)
10:30 am AEST Singapore electronic exports previous (12.9%)
11:00 am AEST NZ ANZ consumer confidence previous 117.7
8:30 am EDT Canada manufacturing sales street 1.0%
8:30 am EDT US consumer prices street 1.0% vs previous 0.8%
8:30 am EDT US core CPI street 2.2%
8:30 am EDT US real avg weekly earnings previous 1.4%
10:00 am EDT US consumer sentiment street 90.6
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Chart Signals: Indices and oil rebound from recent weakness
It remains a choppy month for trading with major indices and crude oil bouncing back from recent declines. AUD, NZD, and SGD also have been on the rebound while JPY has been making inroads on a soft USD.
Asia Pacific Indices
Australia 200 is turning upward today with the index rallying up from near 5,200 toward 5,300 with next potential resistance near 5,330 a Fibonacci level. RSI back above 30 from oversold territory signals a trading bounce underway as downward pressure eases.
Japan 225 appears to be bottoming out with a hammer candle forming after the index fall from near 16,500 down toward 16,350 then climbed all the way back up toward 16,540. Next resistance near 16,580 the 50-day average then 16.675 a Fibonacci test. RSI suggests downward pressure levelling off.
Hong Kong 50 is bouncing around 23,400 a Fibonacci level trading between 23,100 and 23,630 recently advancing from 23,360 toward 23,.560. RSI bouncing back above 50 indicates momentum turning upward again following a correction.
North American and European Indices
has bounced up off the 18,000 round number toward 18,250. It remains in a downtrend of lower highs below its 50-day average near 18,435 but RSI stabilizing near 40 suggests downward pressure fading for now.
US NDAQ 100 rallied up off its 50-day average near 4,740 driving back up above, while RSI hovering near 50 suggests a sideways trend emerging. Additional support possible near 4,700 then 4,667 with initial resistance near 4,775 then 4,800.
US SPX 500 is holding steady in the 2,120 to 2,150 area above 2,105 Fibonacci support. More importantly a higher low in the RSI suggests downward pressure starting to ease. Initial resistance on a bounce possible near 2,140 then the 50-day average near 2,167
UK 100 has bounced up from 6,635 support back up through 6,700 and on toward 6,740. It still needs to retake its 50-day average near 6,770 to call off a recent breakdown.
Germany 30 is bouncing around its 50-day average between 10,330 and 10,470 while RSI stabilizing near 40 suggests the recent correction may have run its course. Next upside resistance near 10,500 with next downside support possible near 10.310 then 10,200.
Gold has levelled off near $1,320 confirmed by RSI levelling off near 50. Support has moved up from near $1.300 toward $1,313 with resistance possible near $1,322 then the 50-day average near $1,335.
Crude Oil WTI has bounced up off $42.20 setting higher lows in both the price and the RSI indicating that we remain in a volatile but still sideways trend between $40 and $50. Recently trading near $43.80, initial resistance on a rebound appears near $44.35 the 50-day average then $45.00 where the channel midpoint, round number and a Fibonacci level cluster.
US Dollar Index continues to trade in the upper half of a 94.40 to 95.75 trading range with support rising toward 95.30. Initial resistance possible at its 50-day average near 95.75 with more support near 95.00.
continues to consolidate between $1.1200 and $1.1300 recently trading near $1.1250. RSI sitting on 50 indicates current trading as a pause within an uptrend.
GBPUSD continues to bounce around between its 50-day average near $1.3110 and $1.3310 a 23% Fibonacci retracement of its Brexit plunge, while consolidating an initial rebound near $1.3240. RSI sitting on 50 confirms a pause underway.
NZDUSD remains in an uptrend of higher lows with upward momentum confirmed by RSI holding 50. The pair has bounced back up toward $0.7320 from $0.7290 following a correction with initial resistance near $0.7360 then $0.7420.
AUDUSD is turning back upward regaining $0.7500 with support rising toward $0.7460 and next resistance possible at the 50-day average near $0.7575. RSI at levels similar to previous lows suggests potential for a trading bounce.
USDSGD has dropped back toward $1.3630 after running into resistance near $1.3700 short of the 50 day average. A lower high in the RSI suggests upward momentum fading. Next support in a retrenchment possible near $1.3620 then $1.3555.
USDJPY remains in a long-term downtrend as it continues to struggle with falling channel resistance near 103.40 and its 50-day average near 103.00. It has dropped back toward 102.20 with next potential support near 101.40 and 101.00.
GBPJPY is hanging around 135.00 and its 50-day average digesting an Aug rally and Sept correction. RSI on 50 confirms a pause.
EURJPY is bouncing around between 114.00 and 116.40 above its 50-day average while RSI near 50 indicates trendless trading.
CADJPY has stabilized above 77.00 support bouncing into the 77.60 to 78.00 area. RSI stabilizing near 40 suggests the recent downdraft may be ending.
USDCAD ran into resistance near $1.3250 where its 200-day average and a previous high converge. RSI suggests upward momentum starting to level off. Initial support possible near $1.3190 then $1.3110.