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PATRIS - Weekly Technical Outlook - 15 October 2018

15 Oct 2018

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S&P500

Sharp decline over the last week. As we type, S&P500 is close to its 200-day moving average (2768). Daily momentum indicators show a strong oversold, which have already allowed S&P500 to try to stabilise around its 200-day moving average. We define targets for a rebound at 2799 and 2826. This is the fourth time this year that S&P500 has moved towards its 200-day moving average. Weaker medium-term momentum indicators suggest that risks are now higher that the index will not be able to hold above its 200-day moving average. New targets on the downside defined at 2685 and 2625.

Euro Stoxx 50

Euro Stoxx 50 weakened further over last week and moved below 3262 - 3274, a risk suggested by our previous commentary. The next target on the downside is defined at 3154. The index fell more than 7% since 27 September. Euro Stoxx 50 is likely to stabilise in the near-term. Targets for a rebound are defined at 3295, 3325 and 3355. The technical backdrop remains weak. However, the index has already retraced almost 50% of the June 2016 - November 2017 upward move. We will watch the technical signs showed by the index during the next recovery.

PSI20

PSI20 reached the downside targets defined last week. With short-term momentum indicators oversold, the index could show a recovery in the near-term. We define targets at 5134 - 5140 and 5239 - 5249. The technical backdrop remains weak. We still see risks that the downtrend may not be finished. Next target defined at 4796 (61.8% retracement of the June 2016 - May 2018 upward move). The downward move remains impulsive. We do not see, for now, sufficient signals to expect a reversal of the downtrend. 

Bovespa

Bovespa moved closer to the 2018 high (88318). Recent sessions have showed a pull-back, reflecting the overbought condition reached by daily momentum indicators. The index may find support at 82345. Below that level, our attention would be at 80804 and then 79263. The technical backdrop seems to support further attempts to extend the upward move towards the 2018 high. RSI shows an uptrend…

WTI

WTI continued to pull-back over last week. WTI is not far from its 50-day moving average ($69.92). Below this level, support could be seen at $69.18. A move towards the 200-day moving average ($67.09) would likely be a negative signal, as WTI would retrace almost all the rally posted since mid-August. We continue to watch carefully medium-term momentum indicators, in order to see if WTI is close to a relevant high. For now, we do not see sufficient signs suggesting a change in the direction of the trend. RSI has corrected from its overbought condition…

Gold

Gold was able to reach targets defined at $1214 and $1222. We still see the current technical backdrop as supporting a move to $1235-$1239. Daily momentum indicators are still not overbought, which could allow new attempts to extend the upward move. We remain cautious in the medium-term. RSI shows an uptrend and is still not overbought.

EUR/USD

EUR/USD delivered the expected short-term recovery and moved towards its 50-day moving average (1.1583$/€). Daily and weekly momentum indicators continue to move upwards. This suggests that EUR/USD may continue to push higher. We define new targets at 1.1623$/€ and 1.1669$/€. A move closer to the September high (1.1815$/€) could be even possible, but we prefer to see how EUR/USD will react to current technical backdrop over the coming week...With long-term momentum indicators still weakening, we continue to see risks that, in the medium-term the EUR/USD could be pushed again to its August’s low (1.1301$/€). A cross could allow EUR/USD to continue to push higher in the near-term…

10-Year UST Yields

Following the sharp rise since 24 September, daily momentum indicators seem to be weakening. This may push yields lower in the near-term…However, medium-term momentum indicators remain favourable, suggesting that higher yields are still possible over coming weeks.

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Disclaimer

The information and opinion contained in this report was prepared by PATRIS - SOCIEDADE CORRETORA, SA ("Patris"), which is part of the group of companies whose holding is PATRIS INVESTIMENTOS, SGPS, SA (Patris Group), listed in Alternext, which holds 100% of the share capital and voting rights of REAL VIDA SEGUROS SA which, in turn, holds 100% of the share capital and voting rights of Patris.

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