Week Ahead 42

Equities
SP500:
- biggest dip bellow the 200d SMA since January 2015

- on Friday formed a s/t swing higher low probably due to some short covering 
- price closed just above the 200d SMA on Friday

It might retest the resistance around 2800 early next week, but a lower low is well in the cards. It could even go to 2550. Earnings season could be the main catalyst. Technically the new high is not a very likely scenario unless earnings would be very positive. The previous record was just above the January high and could not even hold for two weeks. Tax cut seemed to be the last fuel for the rally and headwinds as trade war, interest rates, emerging markets and Italy started weight on the sentiment and also on fundamentals. 

NAS100:
- Formed a double top
- Dipped bellow the 200d SMA
- June low provided support

- Closed at a s/t resistance on Friday
- 6800 is the key level to watch. Should that fail decisively things could turn very ugly.

DAX:
- double top in June well bellow the record high 
- the 200d SMA was broken in June and retested only once in July
- followed by three lower highs
- March low was broken without any bounce on Wednesday
- October 2015 high provided support on Friday. Actually it is a very strong level.

It is interesting to look at some sectors relative performance. It looks that defensive sectors are gathering some relative strength. This kind of asset rotation is not a good sign for the market as a whole.
- Staples: could be bottoming that is a sign of overall weakness. It is important to note that it has started in June. So market started to be more defensive well before new highs.

- Discretionary: topping, the same applies.

Technology: stalled.

Utilities: Gathering some strength.

Health Care: massive out-performance since April.

Materials: under-performance accelerated. 

 Financials: under-performance since January.

Real Estate: I think this is where interest rates bite the most, though did not under-perform since January. 

Finally Growth/Value:

Bonds
Yields retreated but bounced back on Friday.

Commodities
First of all Mr. Copper: surprisingly it was a little bit up despite the equity selloff.

WTI after the false breakout week before now retested the September high as risk-off mood prevailed. 

Brent is retesting the breakout, the bull bias is clearly stronger here.

Gold
As equity selloff accelerated gold rallied nicely on Thursday that stalled on Friday. Price broke out from 11180- 1212 range and did not retest yet the breakout.

FX
USD was not the save heaven of choice as DX is back bellow the 95.25 level.

EUR/USD broke the 1.1525 resistance and back to a range. Nice chart symmetry here as it broke out from this range in the opposite directions.

USD/JPY moved in line with equities.

Week Ahead 34

Next week will be busy with news and important data releases. FOMC meeting minutes, resumption of US China trade talks, Jackson Hole just to mention a few. 

USD Index finished the week with a strong bearish bar closing at a S/T resistance at 96.00. Should that level fail MAs offer support otherwise the market could retest the strong support around 95.20.

Equities
SP500 closed the gap on Friday finishing the week on a bullish note. Moving averages offer now support and the early Augusts high is the resistance before the all time high. 

Nasdaq Index respected the longer term trendline and bounced back from 7300. The lower highs on short timeframe are a bit of concern now.

DAX bounced back from strong support and needs much more to change the bearish picture.

Bonds
Declining US yields and flattening yield curve might not be a good sing for equities. The 2y could not bounce back as the US indices did on Friday.

Commodities

US Oil broke down from the 67-00-70.50 channel. The 200d SMA and the early June lows offer a strong support now.

Copper is off the L/T support at 2.50. Positive trade talks news could lift it even further.

Gold
Gold is fully driven by USD rather the prevailing risk on/off mood. It broke the 1200 level on Monday and reversed sharply on Thursday. 

FX
EUR broke the 14.30 S/T resistance but needs follow through. GBP is at the 1.2750 S/T resistance. Both AUD and NZD had a nice follow through after breaking S/T resistance. CAD moved sharply after the strong CPI reading and now is at a S/T support. CNH also broke support on the resumption of trade talks. 

USD consolidates

US-China trade talks should be behind.

Minor USD correction in the morning

There is minor USD bounce back after the nice run again during the Asian session. I look for price action at S/R or even before given the strength of the trend.

JPY is weakening further

It is reported that a lot of Japanese retail investors were hurt in the Turkish crisis. They must have brought most of their money back by now.

Corrections in some FX pairs are bumping into S/T resistance

Week Ahead 33

Equities
US Equities didn't move too much last week as the TRY collapse wiped out all the gain on Friday. Though, they were trading in a very tight range from Tuesday that was a sign of weakness. I would want to see at least another leg of this correction before considering buying the dip.

Things look much worse in Europe as DAX dropped more than 2% on Friday. It broke key resistances an completed a H&S pattern. The H&S target coincides with the previous low of 12100. It looks definitely bearish. I would look to sell more at the bounce back if any or it goes further down. The old rule applies: buy US Equities in rallies and sell DAX in the risk off mood. 

Bonds
It is important to point out how the US2y behaved this moth. We saw dips before the Friday dive so it might be a decent flow to bonds that is not so good for equities.

Commodities
Trade War victims the agri complex looks to see new lows. It is good for shorts and bad for US farmers who shouldn't blame the traders.

Oil is back to the 67.00-70.50 channel after the false breakdown on Wednesday.

Gold
Gold is still in a tight channel bouncing back from the major long term support level multiple times. It looks sellers time to time pop up as the USD interests are appealing. It is important to point out that Friday was clearly risk off day and the 2y fell sharply and gold could not break out from this range. 

FX
It seems that nothing can stop the dollar run.

JPY and CHF can hold despite the run. It looks that any USD correction or more risk off mood could bring the JPY to the 109 area or even further down.

USD is the winner of the Trade War so far

Majors are falling off the cliff this morning. EUR/USD cleared a massive stop area.

Only JPY can maintain some strength as this is viewed as a risk off sentiment.

This could spread to equities. ES and NQ futures are in the read now.