Commodities rallied and Asian stocks found support after a three-month sell-off.
From Reuters (September 19):
Copper jumped to its highest in three weeks on Wednesday, boosted by a weaker dollar after a new round of U.S.-China trade tariffs were not as high as previously expected.
China will levy tariffs on about $60 billion worth of U.S. goods in retaliation for U.S. tariffs on $200 billion worth of Chinese goods. Washington’s new duties, however, were set at 10 percent for now, rising to 25 percent by the end of the year, rather than starting immediately at 25 percent…….
“In some ways the bad news had been priced into the markets and, if anything, the news on trade had been slightly less severe than we had thought it would be,” said Capital Economic analyst Caroline Bain.
“It’s still too early to talk about this as sustainable … it just seems to be a bit of a relief rally after all of the bad news.”
The Shanghai Composite Index rallied off primary support at 2650, a slight bullish divergence on the Trend Index signaling short-term buying pressure. Penetration of the descending trendline would suggest that a bottom is forming.
Japan’s Nikkei 225 is testing its January high at 24,000.
India’s Nifty is testing support at 11,000. Long tails indicate buying pressure. Respect of support would signal another advance.
Europe
Dow Jones Euro Stoxx 50 rallied off primary support at 3300 but is yet to break the down-trend.
The Footsie also rallied, finding support at 7250, but a declining Trend Index warns of continued selling pressure.
North America
The S&P 500 rallied off the new support level at 2875 and is likely to test its long-term target of 3000.
The Nasdaq 100, however, continues to test support at 7700. Breach would warn of a correction to test 7000.
Canada’s TSX 60 found support at 950 but declining peaks on the Trend Index continue to warn of selling pressure.
Markets are dominated by one concern, a US-China trade war, and volatility is likely to remain high until a resolution is found.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.