Stock Markets Recovery is happening on a Macro Level

I failed to update my blog this week because i was on my 3rd paternity leave, well anyway that is altogether a different story. This week's cross markets update will be short as I still have to catch up with my sleep.


Global Stock Markets Behavior


The week belong to the stock markets and the story was bullish break-outs or potential break-outs from key resistance levels; this is happening on a macro-level led by Wall Street which broke-out of 12,700 key resistance level last Friday followed by FTSE100, Hangseng, Kospi Composite, Strait Times Index and Taiwan; other indices are lagging behind there peers like Nikkei and Shanghai but eventually they will follow.



Cross Markets Behavior


All markets are inter-related, markets don’t move in isolation, historically stock market moves are the end result of the ripple effect that flows through the other three sectors (Bonds, Currency and Commodity): US Dollar and Bond Markets had led the way for stock market recovery in recent weeks while the commodity market remains the missing link but it is developing a bearish divergence and a potential bearish top pattern.







CRB INDEX


The commodity index re-tested recent high but failed to clear the peak thus validated recent peak as strong resistance and technically formed a double top bearish reversal pattern. The bearish divergence in its’ RSI Oscillator confirms this bearish reversal pattern.



BOND MARKETS & US DOLLAR


After last week’s spectacular performance from the bond market, 10yrs USD Treasury Note (TNX) formed a holding pattern this week to gather momentum for a stronger rebound for the coming week and the 2yrs USD Treasury Note which closely track FED Funds moves strongly suggest a potential bottom in the FED Rate Cutting Cycle (this will sustain the anticipated US Dollar rally); and speaking of the US Dollar, it just broke out from its' 3 weeks consolidation last Thursday.

The US Dollar strength or stability will serves as the underlying foundation for stock markets sustained recovery, still, for stock markets to clutch into higher level there must be a significant drop in the commodity market.

STOCK MARKETS


The star performer indices for the week belongs to Shanghai and Hangseng (refer to Greater China Market Category for these indices report); Dow Jones Index broke above key 12,700 resistance level last Monday and is forming a base above 12,700 support level (reversal of role) before the market develops enough momentum for a stronger rise with its target at 13,300 level; notably was its’ volume gradually expanded as the index consolidated between 12,700 and 12,800 for the past 4-5days (note that quoted levels need not be precise, it's only a range).