China growth data was out today, and as if on cue, it comes in to 8.9% annually, which beat economist forecasts of 8.7% while still being speculated as lower than what the CCP is comfortable with. This has thus caused a flurry of trading activity throughout the day, and I’ll try to bring you up to speed on most of it, although I will need to back this up with separate posts later (too much is currently happening at the moment to truly crunch down on all of this in a more rigorous and organized manner). These will be split on the possible technical effects on Hong Kong-listed equities, and the implications for China’s future together with what exactly I think the market is fundamentally reading out of this data.
- The HSI broke the 19 200 level, with force and with amazing volume. Perfect bullish empty marubozu candlestick on top of it, there was sustained buying pressure all throughout the day, gapping higher. This means that the next important level to look out for is the 20 000 level. There will be momentum trading coming in, but seriously, expecting this to happen when volume should be thinning out right before the Chinese New Years close (January 23, 24 and 25 in Hong Kong) is somewhat naive. However, the index triangle is broken, and I refer back to my individual stock triangle analysis to get more out of this. I promise I’ll update this later with more new analysis. Futures closed just a bit higher and world non-US$ assets are sparking higher at the moment. Day trade available for all of tomorrow! Daily Magic-D + Bollinger is still having a favorable kink with it, but this is not currently tradeable. Updates will be given in due time as the 20 200 level is being chipped into with candle wicks.
- Gold is running insanely well. Hit the monthly 4h candle upper Bollinger again to reinforce the surf, currently trading at 1663 and turning just shy of the 1670 level. Look out for the trend lines pointed out earlier, but the big moves will very very likely come around the 1675 level, which happens to be the 50% CME margin hike fib, which got reinvigorated after the 100% was touched again, and has allowed beautiful longer period (1h+ candles) trading.
- The Land of the Rising
YenSun saw its currency steadily appreciate in Dollar terms, meaning it’s a pretty fair one-trick pony at the moment. Just wondering when the choir that screamed bloody murder at these levels went, because it surely seems like the BOJ is biting less hard at the moment, and shared intervention seems to be a thing of the past. Cliff’s notes? Yen strength! To the data: new post-Halloween-intervention low at 76.56 (vs 18th of November 76.58) and nothing that I can track shows even a hint of USD strength here. Thankfully this seems to be a rather USD-isolated event, as the euro took a turn for the better.
- …which utterly makes no sense. Data is bad or worse, and Greece is fumbling for straws, and we still see the euro rallying off better growth prospects? How are you going to trade with China on favourable terms if there is no bank credit to help companies secure operating cash is beyond me. Then again the entire banking world seems to have run aground in an even more prescient manner than that boat off Italy, as companies are now lending cash to banks instead of the other way around. It’s a man-bites-dog world indeed… Numbers: EURUSD is currently sniffing the 1.28 level. It’ll be interesting to see any further action if this is cracked. Immediate resistance then is the 1.2879 level which was Friday’s high (and also the week high last week) and perilously close to the 20D EMA (1.2881) and falling. My bet? it hasn’t traded above this particular technical indicator substantially since October, and given the news I would not hold my breath. QE hopes you say? Well… not today, give it another 2 weeks and we’ll talk. Back above 98 yen though, strong running!
- Equities are higher across the board in Europe. By a lot. Futures on the S&P 500 are back above 1300, (1305 atm – blast from last July!) and mostly everything is up on the order of 1 or 2%. The S&P is so far sustaining the autumn/winter bull run shown as the last leg here. This rally got additional legs after the report avalanche today that eurozone and UK inflation is in control (you don’t say!) and even below forecasts. It’ feels kinda like seeing a friend going up against a heavyweight boxer, being beaten to a pulp with severe bruising, but being happy that the sound of bones being cracked isn’t filling your ears. Read: fundamentals out the window, feed the rally monkey while it’s out, the flea problems can be dealt with later.
Some good buffet to bite in at! Snacks coming up, as well as tea!