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Dax Update
Submitted by Nic Lenoir of ICAP
A quick note to start the trading session: the Dax is quite overbought here and shows relatively strong divergence of MACD and RSI on the 3-hour chart. In Elliott we have either completed a 5 leg impulse or wave 3). Either way the minimum common case retracement is 5,951/5,917 which is a reasonably big move from here. Given that there is absolutely no divergence on the daily RSI it is very possible we only completed wave 3, but we will monitor how the market trade if/when we reach 5,917.
In parallel, we note that the 30Y Treasury future in the US has so far held support at 114-25 as indicated last week. A pull back in equities of 2.5% or more in equities would probably imply the market will not bypass this support on the downside in the very near term and keep on consolidating.
Good luck trading,
Nic
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so, the consensus for upcoming employment data in the US is for employment growth of 200K. Predictably this have caused speculation that it will be "the" sign of economic growth, and thus possibility of another leg higher for the market. However what are the chances that this will stoke fear of imminent rate hike and thus leg down in the market? What interest rate sensitive sectors look most vulnerable at this time? Commodities?
Earlier today, headline...Fed's Evan's said needs jobless drop before accomodative stance ends
So a big temp rise on the back of census to come?
They will then have to play it down then eh!
In today's insanity, overbought just means it can become even more overbought. I've been watching charts for 25 years and the past few years have blown my mind. What I had previously thought impossible is now not only possible but an everyday occurrence.
You could say it really is different this time... until it isn't!
Funny thing is I keep hearing how people "look at this market and fear it." Right now the number of people who want to talk about the market - outside of y'all and the token rarity - is zilch.
So this idea that the herd will be late to the game? I don't hear it or see it and can't even beg for someone to talk about it except for the ones that were stung of course. And who likes to play damage control?
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