Trader Insights – chasing the money flows

After last week's solid rally in US equity, it probably doesn’t shock too intently that we’ve seen broad US equity indices take a breather – a lack of major data also failing to offer any new signal to traders. Tight high-low session ranges have offered little for the day traders, with S&P500 futures tracking the second tightest high-low range of the year, with poor breadth across the cash equities (37% of S&P500 stocks closed higher).

For those who gravitate to movement, there have been pockets of life, with Reddit firing up 30% and closing a touch below the session high of $62. Micron continues its fine run of form and hits new cycle highs, while Super Micro Computer fires yet again (+7.2% on the day) taking the YTD gains to 266% - it’s hard to bet against this name and after the rally from $855 the probability of new highs through $1229 seems highly elevated. One also assumes that the prospect of a stock split is rising.

Bitcoin gets a good run from clients with price breaking the 68,500-supply zone and becoming reunited with a 70-big figure. The whole crypto scene has worked on the day, so momentum has come alive in the high beta scene. Like many others, we're now experts in the halving - but while some have said this move is prepositioning ahead of the halving, I’d argue that is a hard one to justify. Personally, I’d like to see a move back into 68,500 to see if the bulls have the drive to defend and cement this as support – that would get the bulls pumping for new highs into the halving in late April.

Cocoa continues to head ever higher – price is grossly overbought so it’s tough to chase, but many have tried to pick this high and its cost. A simple look at the daily and we can see why the trend-followers typically overweight in softs and ag’s… when these markets go they can really kick hard and we get these incredible outlier moves.

Outside of these higher movers, we’ve seen modest USD sellers, courtesy of the PBoC who sent a message to the world that they are not ready for a sustained depreciation on the CNY. We continue to watch the 12:15 AEDT CNY ‘fixing’ and the prospect of a firmer-than-expected CNY ‘fix’ seems elevated, which for the momentum trader is a touch disappointing as a trending USDCNY and USDCNH typically leads to a trending USD in G10 FX and also higher volatility.

The AUD has benefited most from the CNY and CNH move, and we see price holding the rising trend drawn from the Feb lows – I suspect AUDUSD will remain a slave to the tape USDCNH near-term. The NOK has also worked well on the day with the further rise in the crude price – NOKSEK upside still favoured and would look to add on a break of the 50-day MA.

We turn to the Asia equity cash open with our calls eyeing a flat open – with little in the way of data to drive the prospect of chop looks elevated.

ASX200 -28 (or -0.4%)

HK50 +3 (unchanged)

NKY225 -2 (unchanged)