Pre-Market Analysis And Chartbook: Commodities and Stocks Plunge After Fed Meeting

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Friday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,779 -0.93%
DAX 30 11,518 -0.08%
WTI Crude Oil 60.20 -0.91%
GOLD 1,211 -1.06%
Bitcoin 6,345 -0.94%
EUR/USD 1.1345 -0.16%

The aftermath of the Fed’s monetary meeting has been bearish for risk assets so far, even though Treasury yields haven’t risen too much following the central bank’s slightly hawkish statement. The Fed didn’t mention the recent turmoil in financial markets yesterday, and that could mean that the “Fed put” under the stock market is much deeper than bulls hoped, and until the economy remains on track, Jerome Powell will keep on tightening.

 WTI Crude Oil, 4-Hour Chart Analysis

Stocks markets are lower today globally, although the losses are muted, and the recent lows are not in any kind of danger for now. Commodities are in more trouble, with oil continuing its decline, gold hitting a new one month low, and copper also falling below key support.

WTI crude oil plunged below the $60 level, as we expected, and now the crucial commodity is testing the long-term support zone just below that price level. Traders playing the short side now face a heightened correction risk, and a stronger short-covering rally could be ahead next week, with the $65 level being the obvious target for that.

EUR/USD, 4-Hour Chart Analysis

The Dollar is once again in the center of attention in forex markets, and the Greenback is drifting towards its recent high as measured by the Dollar index and the EUR/USD pair. The latter is now only slightly above its August lows, and the common currency is looking ready to hit new 16-month lows after the recent failed rally attempt.

While the USD pulled back just after the midterms, the broader uptrend in the reserve currency is intact and the Fed’s adamant stance interrupted the correction. Some of the risk-on currencies are in much better shape compared to the Dollar, but especially if the stock decline resumes, we expect new highs in the USD across the board.

Stock Rally Pauses in the US but Risk-Off Flows Remain Muted

S&P 500 Futures, 4-Hour Chart Analysis

As far as the technicals are concerned, Wall Street is still in a risk-on mode, with the Volatility Index (VIX) being just above yesterday’s lows, and the major indices holding on to most of their gains. The S&P 500 ran into resistance yesterday after the strong bounce, but for now, the post-Fed dip is controlled, and until a dip below the key support/resistance zone near 2750, bulls remain in control, at least short-term.

On a negative note, small caps are once again lagging the broader market, and that could point to the end of the bounce in the coming week. The Nasdaq is also underperforming the other benchmarks, while the defensive utilities and healthcare stocks are among the best performing issues yet again.

Gold Futures, 4-Hour Chart Analysis

As we mentioned above, gold hit a one-month low today amid the broad commodity selloff, with the front futures contract clearly plunging below the $1220 support. While a recovery back to the recent consolidation range is still possible, a durable break would warn of a test of the $1180 support. Bulls would need a quick recovery above $1215 to maintain the early-October break-out.

ChartBook

Major Stock Indices

Nasdaq 100 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

Copper Futures, 4-Hour Chart Analysis

Featured image from Shutterstock

2018-11-09 10:15:00

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