23rd October 2018 - The risk aversion could be extended to the Asian session

Walid Salah Eldin

Active member
214 1
The risk-off sentiment could be prolonged to the Asian session, sending the Japanese yen higher across the broad, while the US indexes future rates are still diving down.

As the safe haven demand could contain the market sentiment, before the release of key quarterly earnings reports from the Tech sector which looked more volatile than the other sector in the recent few weeks.
The investors preferred taking the defensive side, despite the upbeating US economic expansion and the solid demand for hiring in US which have raised UST yields to their highest levels since the credit crisis.

It's not the normal conditions we used to see in the recent quarter, when the stocks were rising, before such reports which usually meets later limited profit taken on buying on rumor selling on fact.
But what made the current condition different is the current the geopolitical concerns rising following the killing of Jamal Khashoggi and the growing worries about the continued trade tension between US and China and its impacts on the global growth.
After IMF World Economic Outlook report has expected global expansion by 3.7% this year to be as the same as 2017, after it had expected last April that growth to be by 3.9%. IMF said that lower revision was mainly because Trump’s trade policies.

While the investors looked more worried about the political stance of Saudi Arabia, before The Turkish president Ardogan to fulfill his promise today revealing more facts about the death of Jamal Khashoggi.
No one knows what he can say and this was a considerable source of concern in the markets which watched Trump sending his foreign secretary Pompeo and then his treasuries secretary Mnuchin to meet with The Saudi Prince, In the same time he sent the director of the C.I.A Gina Haspel to Istanbul.

Mnuchin's visit itself at this time could open the door to more worrying questions such as;
Is there threat from the Saudi side to sell its hold of treasuries?
Has there been actually unknown taken action from the Saudi Arabia to sell US Equities or Treasuries?
Can There be freezing of Saudi assets in US?
Can the escalating against Saudi Arabia spur selling from other allied countries to it such as Emirate of their holding of US assets?
Can Saudi Arabia use the oil weapon?
and more and more questions ...

But this visit is mostly looking to restore confidence between US and Saudi Arabia for calming its leaders down and capping them from selling the Saudi holding of Treasuries.
As the diversifying of The Saudi's reserve out of US Assets is one of the most worrying threats currently in the case of escalating against Saudi Arabia Regime which became well-exposed to blackmails from different sides currently and that could weigh down on the oil prices driving WTI to be traded well below $70 per barrel.

S&P 500 Future rate could extend its falling to 2730 during the Asian session after diving below its daily SMA50 and its daily SMA100 following inability to surpass its daily SMA100 ended to forming a lower high at 2821.50 on Oct. 17.
While the index has been already undermined by the massive falling on Oct. 10 below its daily SMA200 which could not be contained sending a dovish message.
The Index has failed previously to overcome last Sep. 21 high at 2942 to be satisfied by reaching on the third of this month 2940.40, whereas it started forming series of lower highs ended to breaking out of last Sep. 7 bottom at 2862.50 to gather stronger downside momentum.
This index is now trading in its fourteenth consecutive day of being below its daily Parabolic SAR (step 0.02, maximum 0.2) which is reading today 2800.
S&P 500 Future daily RSI-14 is now in a lower place hardly inside its neutral region at 31.207 just above its oversold region below 30.
S&P 500 Future daily Stochastic Oscillator (5, 3, 3) which is more sensitive to the volatility is having now its main line inside its oversold area at 15.647 leading to the downside its signal line which is still higher in the neutral area reading 36.148, showing aggressiveness of this selling wave in the recent hours.

Important levels: Daily SMA50 @ 2867, Daily SMA100 @ 2827 and Daily SMA200 @ 2767

Experienced S&R:
S1: 2708.20
S2: 2690.20
S3: 2674.40
R1: 2821.50
R2: 2942.00
R3: 3000.00

Have a good day

Kind Regards
Global Market Strategist of FX-Recommends
Walid Salah El Din


  • SP500-Daily-23-10-2018 06-00-31 ص - Copy.jpg
    SP500-Daily-23-10-2018 06-00-31 ص - Copy.jpg
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