Equities Futures Trading Lower; Turning Point in Risk Sentiment? – Charts

US10Y T-Note Daily

Is “Risk” coming off? Equities appear to be trading across all regions, and much more worryingly, the benchmark “Risk-Free” US10Y bearish breakout appears to have been invalidated (see chart below). Is fear creeping back in or are we simply in a temporary pullback?

Nikkei Futures 15 Minutes

N225 has pulled back significantly from the highs of 11,000s. Prices seemed to have recovered temporarily around 10,800 yesterday, with a rally that break away from the downward channel. However the recovery is short-lived as price fail to hold unto the 10,900 level, resulting in a strong sell-off that followed today bringing us to the topside of the channel. We could still see support from the Channel Top, but a break below may result in continuation of bearish momentum heading lower.

It is easy to attribute N225′s decline due to JPY's recovery in strength. If that is the case, we should see N225′s decline as the exception rather than the norm that is observed across all region. A better description in this case would actually be JPY is strengthening back due to risk-off sentiments despite BOJ actions.

DAX Futures 15 Minutes

DAX finally broke the 7,700 level, with current prices trading just below the support and the downward trendline. As market is currently closed, watch out for market opening levels – Opening below 7,700 may see acceleration of bearish momentum but interim resistance can still be found between 7,670.

S&P 500 Futures 15 Minutes

S&P 500 is also trading marginally lower after breaking confluence of upward trendline and the support/resistance level just above 1,470, which is a significant ceiling for prices post QE3 back in 2012 (see chart below). Failure to maintain this level may cause panic in the markets as S&P 500 is hugely followed and is the de facto benchmark for global equities sentiment. Falling below current levels will open up 1,400 as a support from a technical point of view. From a sentiment point of view, that would mean losing all the hard-earned gains we've gathered post “Cliff” resolution, meaning that if we do see sell-off below current levels, we could see selling coming in hard. 1,460 could still act as interim support against the more feared drop back to 1,400.

S&P 500 Futures Daily Chart

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