Technicals | 10:30 AM
Earlier today, Tony Sycamore, Market Analyst, IG updated his views and thoughts on financial markets, including the technical analysis updates.
First Up, Nasdaq100
From its late-March low of 22,841, the Nasdaq100 launched a powerful 35% rally in just over nine weeks to reach a record high of 30,762 in early June.
The correction that followed into the late-July low of 27,176 played out largely as expected.
In early August, we declared the correction complete and shifted to a bullish bias after the index sharp rebound in late July and its closed above 28,500.
The overnight rejection from trend channel resistance 30,200 is a setback to this view.
Nonetheless, as long as the Nasdaq100 holds above short term support at 28,800ish we will stay with it — aware that a sustained break below 28,800ish would open the way for a retest of trend channel support now near 27,600.
ASX200
The ASX200 spent the better part of 17 weeks confined within an 8500–9000 range before releasing that pent-up energy at the start of August and hitting a fresh record high of 9296.7.
Since then, we have been expecting a pullback towards 9000 and that view has played out reasonably well with the index yesterday hitting a low of 9054.50.
Looking ahead, provided the ASX200 holds above the 9000/8900 support region (former range resistance), we expect to see a retest and break of the 9296.7 record high in the months ahead.
Crude Oil
WTI Crude Oil finished marginally lower overnight at US$84.42 (-0.62%), after earlier touching a fresh three-week high of US$84.07.
The fade from that high came as traders largely looked through the latest round of headlines, including one from President Trump, who said no talks were under way or scheduled and maintained that the waterway was open and operating.
With the President’s approval rating sitting at just 33% ahead of the mid-term elections in November, the political pressure to find an off ramp is rising.
Meanwhile, reports have emerged that Saudi Aramco has begun sending some VLCCs back through the Strait of Hormuz after a three-week pause, with three vessels having loaded roughly 2 million barrels each last week and more potentially lined up.
At the same time the company is still relying heavily on ship-to-ship transfers off Fujairah.
Workarounds continue to operate and develop, yet even if one takes the US Energy Secretary’s claim of around 9 million barrels a day transiting at face value, the volume moving remains well short of normal pre-conflict levels and the security risk has not gone away.
Overall, the market remains numb to the daily rhetoric. Prices remain supported by the ongoing disruption and the absence of any clear path to a lasting ceasefire, yet unable to sustain a sharper rally while alternative routes and dark shipments continue to cushion the worst of the supply fears.
Gold
Gold finished lower overnight at US$4334 (-1.86%) unable to withstand the inflationary pressure of elevated oil prices and higher bond yields.
Looking ahead, a sustained break above the downtrend resistance at US$4430 (from the record US$5602 high of late January) and last week’s US$4449 high is needed to open the way for a push towards the 200-day moving average at US$4507.
A sustained break above that level would confirm that gold bottomed at the late June US$3942 low and open the way for the recovery to extend back towards US$5000.
All material has been re-published with permission and does not by association represent FNArena’s views.
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