October Issue

Top Market Events

As we head into Q3 earnings season, the technical makeup regarding the major US indices is mixed. The US2000 smaller companies index is below its 200-day EMA with the EMA pointing down. This is concerning because the US2000 is sensitive to macroeconomic data.

The SPX500 and the NAS100 are both above their respective 200-day EMAs but momentum has stalled.

The higher yields continue to act against the stock market and the Israel-Hamas conflict is an added headwind, with a risk of regional escalation. In this environment, the USDOLLAR continues to act as a safe haven. Gold has improved markedly following the eruption of the Middle East conflict and has moved above its 200-day EMA, as its haven status comes into focus. However, the GER30 is showing weakness as it trades below its 200-day EMA.

Finally, oil is very much top-of-mind due to supply constraints and geopolitics and is trading above its 200-day EMA and its shorter 20-day EMA.

In the Spotlight

USOil

USOil has charted a higher trough followed by a higher peak on its daily chart. OPEC+ has extended its supply cuts and there is a fear that this may be compounded if the Israel-Hamas conflicts escalates and spreads in the region.

XAU/USD

Given the headwinds that the markets are facing, the precious metal has caught a bid. Capital may rotate towards safety including gold if uncertainty continues to escalate.

EUR/USD

EURUSD is trading below its 200-day EMA. Any rallies into resistance may be compelling especially given the higher US yields, which may stay higher for longer, and the pressure arising from the Mid-East conflict, with dollar safety being potentially sought.

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