SGT Chart Book
The main theme of the week has been higher US interest rates, with yields on the US 10-Year settling on Friday at 4.572%, and we have witnessed the implications for other markets with softness in stocks and the US Dollar index bid.
SP500 pulls back to trendline support. Seasonality continues with a weak September. The worst month for the SP500 since December 2022. The SP500 fell 4.9% in September but is still up 12% for the year.
Dow Jones 30
In contrast, the Dow has broken through similar T/L support.
10-Year US Rates
After a breakout of the longer term up channel with US 10-year rates peaking above 4.6%, before a pullback after US inflation data (PCE index: Personal consumption expenditure); the Fed’s favored measure of inflation.
US Dollar Index
The US dollar index made new yearly highs, helped by US interest rates. Trendline support is seen around 105.40.
Comparison between US10-Year rates and the US Dollar index shows an interesting correlation.
Unlike the dollar index, the EURO did not manage to make a new yearly low on $ strength and has bounced off the Jan 2023 lows. The downtrend is still intact and would expect initial rallies to be sold into at this point.
The Loonie, as it is commonly referred to, shows a consolidation pattern - watch for the break.
A prominent theme of selling the rallies has been seen with pullback approaching the 50% retracement of the entire leg up. We had mentioned the Elliot Wave count a few weeks back, and the potential target around $1800, this would coincide with the 61.8% retracement. We have added the wave count chart below.
Chart published Aug 20th, 2023.
Break of trendline support around 22.50 levels was seen on Friday.
WTI US Oil
Market seems very bullish with Goldman now targeting $100 per barrel. Looks like a crowded trade and may see some weakness 84.50 area the obvious candidate, look left at previous tops.
Much of the same, lack of movement.
Until next week, happy trading…
SGT Trade Desk
Disclaimer: Trading Desk Observations are not trade recommendations. The purpose of these charts is to bring to your attention potential chart patterns you may wish to monitor.
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