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Opening Bell: Global Omicron Relief Rally Slows; Oil Recovers, Bitcoin Slides

By Investing.com (Pinchas Cohen/Investing.com)Market OverviewDec 08, 2021 08:53AM ET
www.investing.com/analysis/opening-bell-global-omicron-relief-rally-slows-oil-recovers-bitcoin-slides-200610868
Opening Bell: Global Omicron Relief Rally Slows; Oil Recovers, Bitcoin Slides
By Investing.com (Pinchas Cohen/Investing.com)   |  Dec 08, 2021 08:53AM ET
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  • Market leadership shifts again flipping between US tech and small caps
  • Treasury yield curve narrows
  • Bitcoin slides below $50,000

Key Events

After the biggest rally on Wall Street in nine months yesterday, on Wednesday contracts on the Dow Jones, S&P 500, NASDAQ and Russell 2000 moved slightly higher as investors took the chance to slow down and breathe. The current narrative says traders have been repositioning portfolios according to the latest headlines on the Omicron variant of COVID-19, thereby adding volatility and whipsawing markets.

Yields on US Treasuries fell and the dollar was also weaker.

Global Financial Affairs

Investors were encouraged by the latest reports showing that COVID-19 vaccines provide partial protection against the new Omicron variant. However, after the initial relief that additional lockdowns no longer appear likely, we expect volatility to increase as investors refocus on tightening US monetary policy.

US futures rose for the third day on Wednesday. However, the paradigm shifted from yesterday's leadership by mega-cap technology stocks on the NASDAQ 100 to small caps on the Russell 2000 index, perhaps indicating that investors are re-focusing on the economic recovery story.

In Europe, a rally in healthcare stocks overshadowed a slump in the energy sector, leading the STOXX 600 Index higher after its strongest two-day gain in over a year.

Earlier Wednesday morning, Asia was green across the board. The MSCI AC Asia Pacific ex-Japan Index surged over 1%. Technically, however, downside risk remains.

MSCI Asia Pacific Ex-Japan Monthly
MSCI Asia Pacific Ex-Japan Monthly

The index may be developing a weekly H&S top after falling below its uptrend line since mid-March. The price has to contend with the downtrend line since the July peak, reinforced by the 50 WMA. On the monthly chart, the price found resistance by a falling trendline since 2011 and is finding resistance by the 200 MMA for the third month in a row. Below, the 50 MMA supports the top.

US shares on Tuesday saw their most significant jump in nine months, with the NASDAQ 100 notching 3% gains, followed by the S&P 500 and the Russell 2000, each adding about 2%. The Dow Jones lagged, climbing just 1.4%. The major averages all wiped out Omicron-related losses, as each eyes new record highs.

The 10-year Treasury yield pared a back-to-back advance, as the spread between short- and long-term notes tightens ahead of expected rate increases, creating a challenge for the Federal Reserve.

10-Year Treasuries Daily
10-Year Treasuries Daily

Rates fell below the 200 DMA, a natural neckline for a Double Top.

The dollar opened lower, ending a two-day rally.

Dollar Index Daily
Dollar Index Daily

The trading range since Nov. 24 is in the shape of a pennant which we suspected was bullish after the preceding sharp rally fizzled out, meandering aimlessly through its apex.

Gold advanced for the second day as bulls forced the yellow metal back above its uptrend line, preventing an H&S top.

Gold Daily
Gold Daily

We urge traders to disregard moving averages in trendless markets. If the 50 DMA crossed above the 200 DMA, it is meaningless when the price has been moving sideways for six months. As its name implies, this indicator requires movement, or more aptly put, a trend.

Bitcoin fell, dropping below $50K at time of publishing.

Bitcoin Daily
Bitcoin Daily

The digital token retreated from the dual resistance of the broken uptrend line and neckline of a downsloping H&S top, one so weak bulls couldn't provide sufficient demand to develop a right shoulder proportionate to the left one.

Oil edged higher, extending an advance to the third day.

Oil Daily
Oil Daily

The price is resisting the underside of its broken uptrend line for a second day, reinforced by the 100 DMA. However, the price did scale above the 200 DMA.

Up Ahead

Market Moves

Stocks

  • The STOXX 600 rose 0.5%
  • Futures on the S&P 500 rose 0.3%
  • Futures on the NASDAQ 100 rose 0.5%
  • Futures on the Dow Jones Industrial Average rose 0.2%
  • The MSCI Asia Pacific Index rose 1.9%
  • The MSCI Emerging Markets Index rose 1.8%

Currencies

  • The Dollar Index was little changed
  • The euro rose 0.2% to $1.1285
  • The Japanese yen was little changed at 113.57 per dollar
  • The offshore yuan rose 0.2% to 6.3507 per dollar
  • The British pound was little changed at $1.3241

Bonds

  • The yield on 10-year Treasuries was little changed at 1.46%
  • Germany's 10-year yield was little changed at -0.37%
  • Britain's 10-year yield advanced two basis points to 0.75%

Commodities

  • WTI advanced 0.42% to $72.35 a barrel
  • Brent crude rose 0.4% to $75.78 a barrel
  • Spot gold rose 0.2% to $1,787.60 an ounce
Opening Bell: Global Omicron Relief Rally Slows; Oil Recovers, Bitcoin Slides
 

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Opening Bell: Global Omicron Relief Rally Slows; Oil Recovers, Bitcoin Slides

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Comments (4)
Mohd Izhar Muslim
Mohd Izhar Muslim Dec 12, 2021 3:20AM ET
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That Great once, Thanks for the article 💯
Zaw Zaw
Zaw Zaw Dec 08, 2021 9:09PM ET
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So thank Sir.
candan esin
candan esin Dec 08, 2021 8:31AM ET
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I can not place the production versus coin price contrast. When economy surges, production does so. Product and trade increases thus one expects a comodity object coins should price more. Either stock market decides odd or there are huge budgeted players in coin market thinking odd.
Gershom Zvi
Gershom Zvi Dec 08, 2021 7:55AM ET
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Thanks
 
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