Pre-Market: Stocks Bounce Again Overnight but Trend Remains Bearish
US equity futures were modestly higher again after a bearish Wednesday session, but they drifted back to unchanged as the opening bell drew closer. The Federal Reserve’s manufacturing surveys and the Swiss National Bank’s interest rate decision were in the center of attention pre-market, and selling continued just after the open.
The SNB didn’t cause much of a surprise, leaving the benchmark rate unchanged at -0.75%. The Philly Fed index was a tad lower than expected but the Empire State index showed strong momentum, coming in well above the consensus estimate, helping the recently lagging Dow in outperforming the other major benchmarks before the cash open.
Dow Futures, 4-Hour Chart Analysis
Despite the current bounce, the Dow remains in a clear short-term downtrend, similarly to the majority of the main global indices, with the 25,000 level still being in focus, as it has been the case ever since the initial post-crash rally. Short-term support to watch today is at 24,650, while the 24,150 swing low is also in sight.
The Nasdaq lost some of its mojo in the current pull-back, but the globally leading index is still above the January lows, far from bearish from a technical standpoint. That said, we wouldn’t bet on a rally that is only led by a handful of stocks, and shorting the laggards has been working out well this week, so we would stick to that approach, despite the occasional bounces.
Yen and Dollar Shine as Forex Markets Still in Risk-Off Mode
EUR/USD, 4-Hour Chart Analysis
The Dollar continued to gain ground on the Euro and the main risk-on currencies, while the Yen is still the strongest among the majors, with the USD/JPY pair dipping below the 106 level as expect, eying the February lows.
USD/CAD 4-Hour Chart Analysis
The Australian Dollar rolled over after yesterday Chinese data induced rally, as we speculated, and with the USD/CAD pair flirting with the 1.30 level, the highest since early July, we can conclude that our canaries in the coal mine not looking good.
These pairs have been leading other risk assets since the crash, and we wouldn’t jump on the buy-the-dip train until we see some strength in this segment of the market.
As for the main commodities, crude oil is slightly higher thanks to the manufacturing data, while gold and industrials are lower amid the Dollar rally, but should stocks remain bearish, the precious metal could see some safe-haven buying together with the Yen.
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