Nasdaq Dips After Amazon’s Milestone as Emerging Market Crisis Deepens

The record-breaking divergences that developed between the main financial markets continued to widen today, as the main US indices returned very strongly after the Labor Day break. While the pressure on the most vulnerable emerging markets hasn’t eased much, with the Argentinean Peso, the Brazilian Real, and the Turkish Lira all hovering near their recent lows, US stocks managed to finish with only meager losses yesterday.


Nasdaq 100 Index Futures, 4-Hour Chart Analysis

Also, until now the leadership of the bull market continues to ignore the whole periphery issue even as today, stocks opened broadly lower. The Nasdaq got hit hard as the top execs of Facebook, Google parent Alphabet, and Twitter. Senate members hinted at tighter regulation of social media, causing a sharp dip in the overbought sector.

DAX Index, 4-Hour Chart Analysis

The selloff in Europe continued in earnest too, with the German DAX index hitting the lowest level since April and threatening to violate the 12,000 level again, and the EuroStoxx 50 followed the same path, as emerging market woes continued to strengthen.

Amazon (AMZN), the second largest public company currently became the third stock in history to reach the $1 trillion mark almost exactly one month after Apple (AAPL), as it hit a new all-time high yet again yesterday, in the face of the broad weakness in global markets.

With that, CEO and founder Jeff Bezos extended its lead as the richest person on earth, with an estimated wealth of around $170 billion. With money pouring into the leaders of the market while fleeing the vulnerable segments, the current valuations in the tech segment seem more then aggressive, and conditions are increasingly hostile from a long-term investment standpoint.

Dollar Rally Stalls but Risk Assets Remain Weak

USD/TRY, 4-Hour Chart Analysis

While emerging market currencies continue to suffer, with the Turkish Lira still consolidating just above its all-time low, the major peers of the US Dollar gained some ground today, thanks to the positive news regarding the Brexit process. Especially the Pound popped higher briefly, but the technical setup in the EUR/USD pair is more interesting from a global perspective.

EUR/USD, 4-Hour Chart Analysis

The common currency bounced back above 1.16 today after yesterday’s steep selloff, and should it resume the rally that started in mid-August, risk assets might be in for a bounce. That said, the other risk-on currencies, such as the Aussie, the New Zealand Dollar and the Pound are still in clearly declining longer-term trends, and that makes us suspicious about the Euro’s rally especially given the weakness in other European assets and emerging markets.

Copper, 4-Hour Chart Analysis

Chinese stocks, for example, continue to hover just above their bear market lows, and copper is in a very similar position as global trade and growth concerns are still very strong. “Dr. Copper” is just north of its August lows, while elsewhere in the commodity segment, gold is still trading near $1200, and crude oil is back below the key $70 per dollar level with regards to the WTI contract.

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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.