Have stocks made a high? Aussie and gold find some support | Vantage FX Market Wrap

Ring the bells – the top might be in for stocks.

It is a reasonable question to ask after the bulls were able to square the circle overnight and hit the Nasdaq 4000, S&P 500 1,800 and Dow 16,000 milestone.

With 15 minutes to go the Nasdaq is but back at 3,994 now +0.06%, while the Dow sits at 16,079 (+0.09%) and the S&P is at 1,803 for a fall of just 0.1%. Data in the US was on the weaker side with the Dallas Fed Index falling to 1.9 from 3.6 and pending home sales down again falling 0.6% in October – 5 months in a row now I think.

Over in Europe there was a little bit of faux ebullience stemming probably from the fact that Christian Noyer said that rates in Europe are low, will stay low and may even go lower. Such a plan and the possibility of QE surely increases the Chance the Fed will taper sooner rather than later I reckon because the last thing global financial stability needs is the big three central banks dropping money from helicopters at the same time.

So in the end the FTSE rose 0.33%, the DAX a stellar 0.88% while the CAC in Paris somehow rose 0.55% even though French business climate data remains subdued.

The Sydney Futures Exchange was up earlier but has turned down near the US close and is now off 8 points on the December contract of the SPI 200 at 5,365 bid.

I’m still short the SPI based on my weekly charts.

When you trade in longer time frames the swings by definition are bigger usually. The risk doesn’t have to be because your position sizing should take that into account via your average true range volatility measure.

The above is by way of explanation as to why I didn’t take the 100 points on offer last week from my sell at 5397. I am treating this position like an option on the market I have a big stop, a long time frame and a big expectation of the SPI 200 dropping a couple of hundred points at least.

A break of 5290 is needed to propel the SPI 200 another 130+ points lower and then we’ll see how it looks.

On currency markets the Aussie dollars recent fall stabilised somewhat with a low of 0.9117 overnight but it is back around the 0.9160 region this morning.

The question for me today is, “Has Aussie made a short term low?”

So I’m long Aussie for a bit of a short term run today on the back of the 4 hour charts mainly and am expecting a run toward 0.9190 initially and then 0.9210/20 over the next 24 hours.

I’m using the same system I always use just in a different time frame here for this trade and it is clearly speculative but with the recovery in gold we saw overnight off it’s low and the bounce in Nymex Crude of it’s low I’m all for a little Aussie rally.

At risk, small percentage and stop below last night’s low

Yesterday in our timezone the Euro tried so hard to break out yesterday but failed at 1.3560 and sits at 1.3512 while GBP is off nearly a full big figure from the high of 1.6240 resting at 1.6147 this morning. USDJPY continues to rally however which is driving some big moves in Yen crosses and it sits at 101.71.

On Commodity markets it was a nice bounce in gold from a low in the US session of $1227 to sit back at $1248 oz this morning.

Gold had a nice old bounce last night but the yellow metal remains strangely out of favour and the target is still below $1200.

Is it simply that Bitcoin is taking some of the non-fiat currency interest these days? Although isn’t bitcoin more fiat than fiat money?

What is its true value? Certainly there is no intrinsic value as we have in gold – although Bitcoins can be mined and have a finite supply.

Whatever the reason Gold is under pressure and, like the Aussie dollar, looks a bit head and shouldery as you can see below.

My target – $1177 an ounce, at least!

Elsewhere Crude is down 0.8% to $94.08 but it is actually an up day, in terms of price action from the open and the low. Of course the Iran deal is the key driver here with question about whether and how additional supply can be absorbed into the market at the current price. Of course it probably can’t and a break of $91.30/50 is key the Technicians are saying. Coppers rally continued up another cent per pound to $3.24 and the ags were all higher with corn up 0.65%, wheat up 0.46% while soybeans rose to 0.68%. Bitcoin was positively boring moving through only an $81 range and it sits at $811.87 this morning.

On the data front today RBA Deputy Governor Phil Lowe is speaking at 9.15 while Buba President Weidmann is also speaking today. Tonight in the US there is more housing data with the release of housing starts, building permits and the Case Shiller house price index. Also out in the States is the Redbook Index, consumer confidence and Richmond Fed manufacturing.

Have a great day and good hunting


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NB: Please note all references to rates above are approximate and should not be used for trade reference