Pre-Market Analysis And Chartbook: Stocks Finally Find Footing as Pound Pushes Higher

Tuesday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,768 0.80%
DAX 30 11,710 0.83%
WTI Crude Oil 71.33 -0.54%
GOLD 1,234 0.30%
Bitcoin 6,441 0.04%
EUR/USD 1.1600 0.18%

Although most of the key global stock benchmarks are still very close to last week’s lows, with some markets even hitting new lows this week, today equities might be in for something more than a dead-cat-bounce. The oversold short-term indicators have been screaming for a relief rally and those conditions still persist, even as the trend in most risk assets is clearly negative.

The US-Saudi tensions look to be slightly easing, with the local stock market staging a strong rebound following yesterday’s plunge, and as Treasury yields are still stable, there is no immediate negative catalyst to drive prices lower.

Shanghai Composite Index CFD, 4-Hour Chart Analysis

The Chinese stock market continues to be in very bad technical shape from a long-term perspective, as trade tensions and the slowdown in the economy are taking their toll. The Shanghai Composite resumed its bear market after the Golden Week, and it continues to hit new 4-year lows, still underperforming its global peers.

FTSE 100 Index CFD, 4-Hour Chart Analysis

European markets are also higher, but the bounce hasn’t even retested the breakdown levels, let alone questioning the downtrend. The FTSE 100 has been relatively weak lately, due to the Pound’s strength, and today it’s among the weaker benchmarks as well, after the releases of the British Employment Report which showed higher than expected wage growth.

Dow 30 Futures, 4-Hour Chart Analysis

The ongoing choppy correction in the US markets still hasn’t retraced more than the initial bounce, and given the still gloomy sentiment, there is plenty of room for correcting without violating the newly established short-term downtrend.

Earnings have been beating the consensus estimates so far across the board, and although expectations have been revised much in recent weeks, the results can still provide some momentum for stocks. Small caps outperformed yesterday, but that relative strength was short-lived, and today, the sector which has been leading the market lower is lagging again, which also confirms the deeper risk-off shift of the recent weeks.

Forex Markets Volatile as Brexit Talks, Dollar in Focus

EUR/GBP, 4-Hour Chart Analysis

The Great British Pound is having a huge day thanks to the wage growth beat and the hopes regarding a breakthrough with regards to the Irish border issues on the Brexit talks. The currency erased much of its recent pullback against the Euro and the Dollar.

The Pound hit multi-month highs compared to its largest peer earlier this month, and it could be starting another leg higher, at least against the weaker Euro, depending on the progress in the negotiations. The Dollar, on the other hand, lost ground once again today, at least in early trading, with only the overbought Yen dipping lower thanks to the improving global sentiment.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Nasdaq 100 Futures, 4-Hour Chart Analysis

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

DAX 30 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 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

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

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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.