Thoughts Ahead Of The Open
Submitted by Nic Lenoir of ICAP
Equities are slightly lower than they were last night after GS beat expectations by less than expected, if that makes any sense. There are two key charts to focus on. The Nasdaq yesterday left an indecision candle on what people could see as a doublt top in formation. Obviously it all depends on how we trade today. If we trade down or even gap down and follow through into the close then maybe we have something, but it's not worth trying to front run it too much at this point.
The Shanghai composite also left an indecision candle on recent highs just as the 50 and 100 daily moving averages are about to post a bearish cross, so a sell off there in the next couple days would be relatively bearish.
Note on the flip side that the Nikkei did not confirm indecision shown the previous couple days and actually filled its gap overnight at 10,230. The market tested and failed to break the 50 daily moving average so far, but should proceed to break through on the upside in the next few days then technicals would be bullish. Price action will likely be driven by what happens in the US and China.
It's options week, so indecision is to be expected. Let's see if we get any resolution in the next few days. We remain bearish on 10Y treasury futures from 119-23 for the medium term, but in the immediate future we need to get a close below 117-29 to accelerate otherwise the risk is to retest 119 before trading lower.
Good luck trading,