We appear to have a market again here with prices rising and falling in a normal manner as opposed to the prior drift ever upward of recent months.
Whilst the main US equity markets continue to see low volatility moves, price continues to be close to all time record highs, volatility is increasing and price is becoming contested. Within its sectors the key transports have fallen by 7% or so. The only major sub index that has scored a recent breakout has been the defensive sector index which is often used as a mild risk off home for excess institutional cash.
European indexes have been the beta (in this case negative beta) again to the US, even US$ adjusted. There is mounting evidence that the top of their wave five is in across broad indexes like the eurostoxx50 to individuals like the dax30. A decent bounce from these supports here looks likely but appears a high probability of failure to achieve a higher high. From failed moves come fast moves so on the attempt failure that would be trigger a short sell candidate by my practice. (Note the conviction 2 short sell from GS below). The ftse100 has lead the weakness and is one of the first indexes to have already scored a move below her 200 dma. No death cross quite yet (50 through the 200) but its on the radar.
Asia is weakening also with the Nik225 has scoring an impulsive wave downward from her near vertical wave five. Again, as above a bounce appears likely first and then another GS conviction 2 short sell target. The hang seng price holding up and correlating well with US major indexes, for now.
Commodities have seen a continued price drift downward. As issues like copper scored a recent price breakout momentum is likely to rejoin rather than continue to drift lower in one wave. (GS conviction 2 short). Precious metals await some direction in inflation expectations as well as the US$ basket. The chart has the potential for either direction at present.
Fundamental wise for a moment, note most recent china pmi for Oct17 at 51.6 ie only just in positive expansion, month on month GDP scored negative 0.1% for Canada in August and Industrial production has turned negative in Japan. Escape velocity has seldom looked like this?
Noteworthy that the 10yr minus 2yr spread narrowed again to 0.69% as of yesterday. Not yet in a bear market trigger territory but 0.3% would be setting off plenty of cyclical risk alarms among institutional managers.
FX wise the majors continue to look for direction here. (CFTC report via scotia below showing the neutral stance across the majors, jpy aside). When will the US$ bull resume? -8.5% for the year. When will the eurgbp trend resume. The euro can finish the week strongly to push a little higher she will attract large inflows as price and momentum indicators will have been triggered but if she softens here yet more price chop beckons.
The Swiss team are traveling and also taking a holiday so the next update from them wont be until the 28th of nov.
Here GS with their charts that matter weekly tech report:
And here their release from last week:
And here Fitzpatrick still banging the table on Oil:
And here Scotia on the cftc:
Note the JPY shorts (that i was a part of targeting a potential Eur breakout) have likely mostly been knocked out vs the USD at least. The Euro breakout still in play but has lowered conviction and therefore size due to the risk off moves as above.
Here finally a note on rates. The 2,10 spread the traditional indicator.
For my book a small draw down the last week or so especially as Euro measured, given some euro strength here again. We also have had a bit chop on fx as we look for direction. I hold some Sp500 shorts and eurostoxx50 shorts in the money at present. They are partial hedges for longs only at present. I remain short biased GBP as the major carry target. The gbp vs major pairs charts promise much, for the patient.
Depending on the price action more next week. The first report from the guys 28th or 29th Nov.
All the best guys
Rich
p.s. Bitcoin. I’m wondering, in spite of the thin order books, gaping price action, large spreads and unregulated mkts, (allowing front running of the multitude of pi funds out there, btw), to start a technical analysis of the instrument. For technical traders inc chartists and candle price traders etc the instrument is dream to trade, across timescales. Accepting all of the above and many more outstanding issues.