Chinese Stocks Plunge, Oil Lower

Good Tuesday Morning, MPTraders! October 8, 2024-- Pre-Market Update: Connecting the overnight dots...  Last night's price action was about China's weakness and important technical setups in Crude Oil (resistance thwarting an upside breakout) and in the Equity Index futures (support holding in ES)...

China's NDRC (National Development and Reform Commission-- a macroeconomic management agency under the CCP) held a "disappointing press conference" during our overnight session. The NDRC commissioner failed to put meat on the bones of the supposedly forthcoming massive China stimulus plan, which provided a nifty excuse for a nasty decline of 8%-9% in China stocks

On my attached 4-hour BABA chart, we can see the 10% plunge in the aftermath of a multi-session 32% vertical assault in response to China's announcement of a substantial economic stimulus and liquidity injection plan.  Let's also notice that my recent technical setup work argued in favor of a correction into the 98 to 103 target window ahead of my pattern expectation of another powerful upleg that projects to an intermediate-term target zone of 157-162. My analysis remains unchanged, and as our own FJB mentioned earlier this AM, patience, patience, patience in these China names... Last in BABA is 109.99... (continued below the BABA chart)...

The plunge in Chinese stocks, technical though it may be for the time being, triggered a domino knock-on sell-off in the commodity sector. November Crude Oil (see my attached 4-hour chart) reversed from a false upside breakout above its 6-month resistance line (77.70) to an overnight low at 75.15 (-4.2%). It is NO COINCIDENCE that Oil reversed from its dominant resistance line concurrent with the fallout in Chinese stocks, HOWEVER, my pattern and momentum work consider this weakness in Oil a "pause that will refresh the geopolitically-charged-- and still unresolved-- September-October uptrend." As long as any forthcoming weakness is contained above support lodged between 72.50 and 73.60, my pattern work expects the emergence of another powerful advance that makes a run at 80-82 next... Last is 75.62... 

ES setup next...



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Veteran Wall Street analyst and financial author, Mike provides detailed and timely analysis and trade set-ups on a range of markets. Read more...

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