Tuesday Technicals - 15 November 2016
Here's the regular 5 macro technical charts (going as far as individual commodities, currencies, bonds, and sectors, as well as the rest of the major indexes and benchmarks). No comments on anything except the technical/price developments (albeit we will typically cover the broader case in the Weekly Macro Themes where the technical and fundamental set up produce a compelling investment idea). Even if you're not technical analysis minded it's a useful way to keep on top of trends in some of the main financial markets and as a prompt for further investigation...
1. DXY - Resistance
-US dollar index faces significant overhead resistance in the form of the 100 mark.
-It failed to break that level 4 times previously while it's been trading the 2016-16 range, so if it ends up breaking out this time it will be of tremendous significance.
-The move does look slightly overextended short term, and with the RSI above 70 it could take a breather before making a clear breakout.
Overall technical view: Bullish bias, but 100 will be a key test, and short-term looks overbought.
2. Emerging Markets - Breakdown
-Down-trending RSI (bearish divergence) has resolved with a breakdown for emerging market equities.
-Price has broken down through he 200 day moving average, a flag of a possible trend change.
-Relative performance vs the S&P 500 has come down towards the lows of earlier this year, and is currently sitting on the nascent relative uptrend line, the RSI is also towards oversold levels, so a bounce is likely.
Overall technical view: Bearish bias, but a short term bounce could come soon.
3. Emerging Market Bonds - Breakdown
-Similar to emerging market equities, emerging market bonds are breaking down after a solid run through most of 2016 with both the 50 and 200 day moving averages breached.
-The main hard dollar EM bonds ETF, EMB, is currently at support of 108, and a break down through that level will open up a move toward previous support of 102.
-Relative to treasuries (the second chart), it's clearly rolled over after hitting the top of the range.
Overall technical view: Bearish, particularly if support of 108 is breached.
4. Gold - Sitting at Support
-Gold is on borrowed time, currently sitting above support of 1200.
-The 50 day moving average is now below the 200 (a "death cross") and gold could be setting up for a head and shoulders formation.
-Notably, the recent rally failed at the downtrend line, so a downside bias is warranted, but at the same time, that downtrend line will be useful to track as a key line in the sand.
Overall technical view: Bearish, particularly on a downside break of 1200
5. Shanghai Composite - Upside Breakout
-The Shanghai Composite has made an upside breakout from an ascending triangle formation.
-The SHCOMP has also breached the psychologically important 3200 level.
-Simple measure rule would suggest around a 4-500 point move, which would open up a run toward previous resistance of 3600.
Overall technical view: Bullish
Thanks to Investing.com and StockCharts.com for charts.
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