Pre-Market Analysis and Chartbook: Risk Assets Lower Again amid US-Saudi Tensions

Monday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,767 -0.19%
DAX 30 11,582 0.51%
WTI Crude Oil 71.95 0.62%
GOLD 1,233 0.96%
Bitcoin 6,413 3.72%
EUR/USD 1.1581 0.21%

The deep correction that took hold of US equity markets last week is set to continue today, as the Asian and European sessions have been controlled by sellers. Asian markets were clearly underperforming, with the main driver of the selloff being the diplomatic standoff between the US and Saudi Arabia on the alleged assassination of Saudi journalist Khosseghi in Turkey. The Nikkei took out an important short-term support level today, and since it was among the strongest indices globally in recent months, today’s move is another warning sign for equity bulls.

Nikkei 225 Futures, 4-Hour Chart Analysis

While the surprisingly tough approach of the US diplomacy is, at least in part likely due to the midterm elections, the Kingdom already threatened with retaliatory measures, sending the price of oil higher in early trading. Treasury yields, which triggered the widespread plunge are stable in pre-market trading, as traders are waiting for the US Retail Sales report which will be released before the market open.

DAX 30 Index CFD, 4-Hour Chart Analysis

While Europe is little changed compared to Friday’s closing prices, the technical picture is far from pretty, and the key benchmarks are trading very close to their recent lows. The DAX is among the weakest indices, being stuck far below the key12,000, confirming the key long-term breakdown that we have been tracking last week.

Nasdaq 100 Futures, 4-Hour Chart Analysis

According to futures markets, the major US indices are well below the bounce highs form Friday, and the Nasdaq continues to lag the broader market. The tech benchmark ran into short-term resistance on Friday and despite the bounce, the steep short-term is also intact.

Small-caps , which have been leading the market during the plunge are also in the red in pre-market trading, being very close to their recent lows, as measured by the Russell 2000, and for now, the environment still looks hostile for bulls, even as violent counter-trend moves are still expected.

Gold Extends Gains as Dollar Pulls Back in Active Trading

Commodity and forex markets are also experiencing heavy trading, with several currencies already covering a lot of ground in early trading. The Dollar’s slight dip is the most important trend so far today, but the Pound also has been volatile amid the uncertainty regarding the Brexit deal. The Yen continued to appreciate in the nervous environment, with safe-haven flows helping the currency together with gold again.

Gold Futures, 4-Hour Chart Analysis

Gold broke out above a declining trendline last week and also recaptured the key $1220 resistance that has been capping its price for several weeks. Today the precious metal hit a new swing high, confirming the break-out and establishing a short-term uptrend amid the broad risk-off shift.

Crude oil is also higher today due to the Saudi threats with regards to the “oil weapon”, but for now, the WTI contract is stuck below the key resistance zone near the $72.50 per barrel price level. Copper is virtually unchanged in the meantime, holding up near the $2.80 level, still trading in a short-term consolidation pattern.

ChartBook

Major Stock Indices

S&P 500 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

Shanghai Composite Index CFD, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 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

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.