Matt Simpson
October 26, 2021 10:36 PM
US regulators voted to vaccinate children ages 5-11 with the Pfizer / BioNTech COVID-19 risks because the benefits outweigh the risks.
Wall Street profits continued to deliver the goods, with Alphabet beating sales estimates and Microsoft beating quarterly sales estimates. The S&P 500 and Dow Jones hit new record highs despite the previous day’s setback in Facebook profits.
On the S&P 500 daily chart, however, a declining pinbar with (slightly) above-average volume formed. It’s not what bulls want to see at a record high, but in the context of the big uptrend, it’s just a candle flies towards it. However, should we see a break from yesterday’s lows, it could trigger a technical sell-off as it confirms the reversal candle.
The STOXX 50 and DAX rose in line with our bullish tendency yesterday and are now hoping that prices will stay above their most recent consolidation areas (essentially yesterday’s lows).
The ASX 200 is interesting as it created a bearish pinbar below the resistance of 7487.6 and matched Monday’s high to double high on the daily chart. So these technical signs, along with a stronger CPI report, could plunge the ASX from its highs.
Australia’s 11:30 AEST CPI report is the main economic event in Asia today. That is, when the CPI is actually inflating at a reasonable rate. The trimmed mean is the preferred value of the RBA and is currently 1.6% and has remained below the target range of 2-3% since the fourth quarter of 2015. However, Westpac expects that value to climb to 1.9% today, which, if applicable, could ignite a game below the Australian dollar.
AUD / USD has risen slightly along with trend support and has formed a tight bullish channel for the past 3 days of trading despite a stronger US dollar. With the RBA remaining as cautious as ever, weak CPI pressures may not be enough to bring them down significantly. Also, we would like to see a break of the 0.7487 support to confirm a near-term turnaround. This means that if Westpac’s higher CPI forecast is correct, the more volatile upward response could be as it puts further pressure on the RBA to « get away with the program » and acknowledge that they are behind the curve. The initial target would be around 0.7520 / 25, then the 0.7540 / 46 zone.
New Zealand also has the NBNZ Business Outlook Report which is closely monitored by its central bank. Sentiment has been pessimistic (below zero) for four months in a row but may have bottomed in August. This means that any reading above the September -7.2 reading is net positive, especially if it returns to optimism. This could reinforce the view that the RBNZ will hike rates by 50 basis points when it meets in November.
The US dollar index (DXY) hit a 6-day high after breaking Monday’s bullish outer candle. Then it starts, although the momentum has yet to tear us off our feet. For that, we may have to see a persistently low-key ECB meeting on Thursday even though inflation is at 13-year highs. And we suspect that’s exactly what we’re going to get.
Gold did not stay very long over 1800 or its 200 days, but instead retreated towards its lower trend channel. A small pinbar on the four-hour chart indicates that an attempt could be made to offset losses, but 1800 remains key to the future.
Silver hit 3-day lows although we were prepared for that potential given its bearish hammer near its 200-day eMA and the $ 25 resistance zone. Like gold, it printed a little bullish gavel on the 4-hour chart and closed again above USD 24
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