Pre-Market Analysis And Chartbook: Markets Choppy Before ECB

Thursday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,685 0.41%
DAX 30 11,222 0.27%
WTI Crude Oil 67.20 1.22%
GOLD 1,235 -0.10%
Bitcoin 6,396 -0.24%
EUR/USD 1.1416 0.22%

It has been a mixed day, so far, for global equities as after yesterday’s rout on Wall Street, Asian stocks fared relatively well and European markets also avoided another wave of selling. That said, the charts remain deeply wounded across the globe, and although in particular Europe is deeply oversold before the European Central Bank’s meeting, even after a major bounce, the bearish trends would remain intact.

Shanghai Composite Index CFD, 4-Hour Chart Analysis

Chinese stocks showed relative strength today, with the Shanghai Composite closing in the green after a hectic session. The fact that yesterday’s panic didn’t spread to the weakest market from a broader perspective could be the sign of short-term selling exhaustion, so a stronger bounce is possible in risk assets in the coming days.

DAX 30 Index CFD, 4-Hour Chart Analysis

The ECB is currently holding its monetary meeting, and in the light of the recent troubles concerning the Italian budget, the slowing global growth, and the lackluster performance of the European financial sector, some analysts are hoping for a dovish shift in the rhetoric of the central bank.

There were already hints on a Twist-like operation by the ECB, which would mean the reinvestment of the current holdings, while a direct extension of the asset purchase program seems unlikely. The Euro has been weakening in recent weeks, and at this pint even an unchanged guidance could cause a rally in the common currency.

The uncertainty surrounding the meeting is higher than usual, given the mixed economic catalysts and the European Union’s strong arming with Italy, which could lead to a hawkish bias.

US Earnings Continue to Impress but Sentiment Remains Gloomy

S&P 500 Futures, 4-Hour Chart Analysis

US stocks futures rebounded off their late-day lows, with the help of the better-than-expected earnings releases by Microsoft (MSFT), Visa (V), Tesla (TSLA), and Twitter (TWTR), but the major indices only recovered a small part of yesterday’s steep losses. Today’s busy session, with regards to earnings and economic releases could cause a tumultuous Wall Street session again, especially following the ECB’s meeting.

Treasury yields are up in early trading after two days of declines across the curve and we expect volatile trading to continue in bonds following the ECB announcements, and the, so far, choppy currencies will likely also see a surge in activity. Day traders should be aware of the possible spikes and temporarily illiquid market conditions even in the major pairs.

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

On a negative note, emerging market equities continue to struggle, even as the most vulnerable currencies are still stable. The EEM ETF fell to another bear market low, and despite today’s strength in China, the segment failed to show strength in pre-market trading.

All in all, there is little for bulls to cheer about, and even as violent counter-trend rallies are expected, most of the global markets are rolling over or are already in bearish trends, so we continue to be defensive towards equities from a broader perspective.

ChartBook

Major Stock Indices

Nasdaq 100 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Forex

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Gold Futures, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Featured image from Shutterstock

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.

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