The Yen index continued to rise overnight as the markets absorbed news from the two day meeting of the Bank of Japan, with the general tone being one of disappointment, and the yen (FXY, quote) strengthening as a result.
As US equity markets continue to defy gravity and move inexorably higher, so the VIX slides ever lower as market complacency takes hold with risk on appetite continuing to remain firmly on the menu.
Like nervous students awaiting their end of year exams, so the major US indices are all approaching new high ground with equal trepitation, with the ES emini (SPY, quote) a classic example of the tension that is now building on the daily chart.
Bullish momentum for US equities remained firmly in the ascendency last week as bullish sentiment for the US dollar continues to weaken, and further extending the rally of the turbulent start to the year which saw major buying by the insiders as a result.
As each new year comes around, and we celebrate the new and say goodbye to the old, as traders we are never sure what it is precisely we are welcoming in, or indeed saying goodbye too.
As a trader and investor, I always find volatile markets the most interesting and rewarding.
AUDUSD is currently bouncing off the bottom of its long-term range visible on the daily time frame, partly supported by the pickup in risk sentiment and stronger than expected data in China.
For the YM emini futures (DIA, quote) contract there is only one game in town at present from a technical perspective, and that’s the resistance level just below the 17,800 region which like a tropical storm, continues to build in strength and develop as the days pass to weeks, and the weeks to months.
For US equity markets, and the YM emini in particular, it is the daily chart which has focused the mind over the last few weeks, and the prospect of whether or not the sustained resistance level that has developed in the 17,850 region would be breached, or whether this would ultimately cap the Santa Claus rally and bring it to a shuddering halt.
With the Nikkei having fallen over 2% at the start of a new trading week and month, European and London traders could be forgiven for thinking their respective markets and Globex would simply follow suit.
