Daily Analysis: Stocks Bounce Back Hard as Markets Digest North Korea Threat

Tuesday Market Recap

Asset Current Value Daily Change
S&P 500 2446 0.11%
DAX 11,945 -1.45%
WTI Crude Oil 46.49 -0.17%
GOLD 1312.00 -0.18%
Bitcoin 4558 4.89%
EUR/USD 1.1995 0.13%

Yesterday’s North Korean missile launch sparked a steep but short-lived decline in risk assets, and a spike in safe-haven markets, such as gold adn the Japanese Yen. The US Dollar got volatile following the event, as first the break to new lows intensified before a strong boince today that could have marked a durable bottom in the battered currency. The Euro slipped back below 1.20 after hitting 1.2175 for a new high. US stocks also surged higher in the second half of the day and finished in the green despite the overnight weakness.

DXY, 4-Hour Chart Analysis

European equities continued to underperform their US peers, as the DAX dipped below 12,000 again, despite the late weakness in the common currency. Gold was the big winner of the overnight session as it added to its break-out gains and reached $1330 for a new 12-month high before retreating to the $1315 support. The metal is still looking bullish long-term but yesterday’s panic buying could have formed a short-term top. Hurricane Harvey continues to cause huge problems in the in the Gulf area, but crude oil remains under selling pressure, and the short-term downtrend remains intact.

Gold, 4-Hour Chart Analysis

Cryptocurrencies

It has been a mixed day for the crypto segment as Ethereum and Bitcoin led the way higher, but some of the majors suffered steep losses. BTC hit a new all-time high above $4500, breaking the $75 billion barrier in capitalization, while Ethereum surged above $350 to reach $370 in late trading, and get close to the next important target near the $380 level. NEO and Monero were the notble losers of the day, while Ripple remained volatile and Litecoin’s break-out halted near $65 and the coin corrected back towards the $60 level. Dash and Ethereum Classic closed the day virtually unchanged after a low-volatility low-volume session.

BTC/USD, 4-Hour Chart Analysis

Technical Picture

The NASDAQ still trades in a consolidation pattern around the 5850 level, as the sell-offs of the previous weeks all got reversed quickly in the last part of the summer trading period. As volumes are expected to spike in the the next weeks, volatility might increase substantially. September and October are the worst months for equities, and with the broad weakness in stocks the next period could be bearish, but a push to new highs is in the cards, given the short-term strength of the indices. The benchmark faces resistance at 5900 and 6000,with strong confluence support 5725.

NASDAQ, 4-Hour Chart Analysis

Key Economic Releases on Tuesday

Time, CET Country Release Actual Expected Previous
14:30 CANADA M3 Money Supply 4.5% -0.2% -3.7%
16:00 US CB Consumer Confidence Index -0.6% 120.3 121.1

Key Economic Releases on Wednesday

Time, CET Country Release Expected Previous
3:30 AUSTRALIA Building Approvals -5.1% 10.9%
10:00 GERMANY Prelim CPI 0.1% 0.4%
14:15 US ADP Non-Farm Payrolls 186,000 178,000
14:30 US Prelim GDP 2.7% 2.6%
14:30 CANADA Current Account -17.3 bill -14.1 bill

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Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.