Despite the severe bearish action around the globe yesterday following Kim’s missile flying over Japan and a sharp, not-unexpected u-turn during US trading hours, stock indices really did not make any significant move. Major indices are still trapped between last week’s (Jackson Hole) range except for DAX. It is a loss leader that could react badly to another blow.
It’s easy to get carried away this week – either very bearishly because of Kim’s missiles or very bullishly because of the super ‘back to unchanged’ rebound during the US segment last night. But hey the way I see it, stock indices didn’t really get anywhere apart for the ‘great volatility’ being missile launch at what? 6.06am until the US opened.
Let me justify.
Last week was a pretty boring week because markets were really moving sideways in anticipation for Yellen and Draghi’s speech at Jackson Hole on Friday. The moment I inspect this week’s price action based on last week’s trading high and low, I realised that many stock indices are still range bound and has not done any meaningful breakout or started any new trend so far. Let’s see.
Note: I am using charts with CFD data but anyone can easily check against cash indices.
Singapore Index Futures
This is daily chart of Singapore index futures or SiMSCI. Yesterday’s price action did not move out of existing range in any meaningful way.
SiMSCI (SG30SGD) daily chart
Next chart is Nasdaq100. To be fair, the US cash market isn’t open yet so we won’t know what will happen on Day 2 but so far also nothing broken.
NAS100 daily chart
This chart of DJ30 speaks for itself. Maybe there will be an attempt to break higher, maybe it already failed who knows? But at this moment nothing.
DJ30 daily chart
This is UK100 or FTSE. Nothing.
UK100 (FTSE) daily chart
This is N225 or Nikkei 225. That price action yesterday looks like an enormous save. I read somewhere that based on ETF purchases, BOJ is already major shareholder for what? 300+ Japanese companies? Wonder how much action yesterday involved investors and how much involved the central bank.
N225 (Nikkei) daily chart
Now so far we have 5 boring charts showing ‘nothing’ action. I don’t want this post to end this way. Presenting DE30 or Dax30.
DE30 (DAX30) daily chart
If there is a German version of the US Plunge Protection Team or the Chinese ‘National Team’, the German team is not working hard enough. If today price action remains below last week low with a rejection-type of candlestick, we might have a genuine loser. Recall my 15 August post that found DAX and FTSE to be loss leaders in terms of YTD performance.
I think that DAX is presenting a consistent picture and worth to keep an eye on over the next few days. Would DAX be able to withstand another blow?
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Soh Tiong Hum is Director of TerraSeeds Market Technician Pte Ltd. TerraSeeds is a trading educator in Singapore since 2005.
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"I do not have a financial advisor's license. I am not qualified by any regulator to give financial advice. I do not know you the reader. Your investment means and motive may be different from me. My posts here are based on observations and meant for education. I am not responsible for for any consequence from your actions."