Pre Market: China Shocks With Trade Deficit as Stocks Still Stuck in Range

Choppy trading continued on Wall Street yesterday as trade war fears took a back seat, with traders focusing on the likely retaliation against Syrian government forces. The planned attack which escalated tensions between the US and Russia didn’t happen, and although US stocks are still not out of the woods, the major indices finished in the green, and they are modestly higher today before the bell.

Nasdaq 100 Futures, 1-Hour Chart Analysis

European stocks are outperforming once again, while Asian markets are performing in line with their US peers, adding to the mixed picture. China reported a surprising trade deficit overnight, and that weighed on local stocks and the Yuan, although global markets mostly ignored the release. With no more major economic releases scheduled for today, the market will be left alone with technicals (and the occasional trump tweet), and these days are often great to gauge the underlying trend.

DOW Futures, 1-Hour Chart Analysis

The recent Friday’s ended with short squeezes, albeit starting from much more stretched setups, but the cash session could very well end the volatility compression that developed amid the consolidation. The pattern is clearly visible on the hourly chart of the Dow, and although we are leaning a tad on the bullish side here, we still advise traders to sit this one out until a clear move out of the range.

Also, as the quarterly earnings season is heating up, with J.P. Morgan, Wells Fargo, and Citigroup all reporting today pre-market, we might be in for even more day-to-day volatility with regular gaps in the indices.

Risk Assets Trading Higher Again

AUD/USD, 4-Hour Chart Analysis

Fiat currencies and commodities are also showing bullish signs, with the Australian Dollar the Canadian Dollar and crude oil all continuing higher, while the Japanese Yen and gold are edging lower in quiet trading.

The Aussie and the Loonie have been leading equities in recent weeks, and their gains could point to a pop in stocks before the weekend. That said, Middle-East tensions definitely play a part in the oil rally, as the WTI crude hit another almost 4-year high in early trading, breaching the $67 per barrel level.

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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.

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