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By J.C. Parets & All Star Charts
Wednesday, 19th October, 2022
1/ Netflix Fills the Gap
2/ Global Equities Test Key Lows
3/ Silver Finds Supply
4/ Dollar Eyes Parity with the Franc
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1/ Netflix Fills the Gap
Netflix (NFLX) shares rallied 13% today on the heels of a big earnings beat, with price closing at its highest level in over six months. Interestingly, today’s breakaway gap took place at the same area as the last major gap earlier this year. Back in April, the stock fell over 35% on the heels of a first-quarter earnings miss.
Due to the massive gap earlier in the year, NFLX hasn’t traded at this level since 2019. We refer to this absence of price action as a volume pocket, or memory gap. Due to a lack of overhead supply, it’s not uncommon for price to move through these zones with little-to-no resistance.
With price running into a downward-sloping 200-day moving average (MA) and touching the AVWAP from all-time highs, we could see some profit-taking and consolidation here.
2/ Global Equities Test Key Lows
The damage in international equity markets continues to worsen, as our global trend indicator shows the weakest market internals outside of the U.S. since 2008.
While all areas are under pressure, emerging markets are actually outperforming developed markets at the moment. However, the massive weighting of China has been dragging down the MSCI Emerging Markets Index. The chart below removes China from the equation:
Even when we look at the Emerging Markets Ex-China Index (EMXC), the outlook is bleak. The index is currently trying to hold above its September lows, which coincide with key lows from 2018 and 2019. If international indexes don’t find a bottom at this polarity zone, the next support level coincides with the March 2020 pandemic lows.
3/ Silver Finds Supply
Like the majority of the commodity space, precious metals have to contend with overhead supply. Yet when it comes to silver, we continue to revise critical resistance levels lower.
Silver futures broke down from a multi-year consolidation during the summer, undercutting a shelf of former lows. Supply overwhelmed demand at this level, and the bulls were unable to support a bid.
Earlier this month, bulls ran price back to the former lows, but the principle of polarity kicked in. Demand was unable to absorb supply at the former lows near $21.50.
What was once a range-bound price environment has turned into another metal contract with heightened downside risk.
4/ Dollar Eyes Parity with the Franc
The dollar looks poised to take down yet another major European currency. The USD/CHF pair has been carving out a base since May. It broke to fresh highs last week, reaching parity for only the second time in three years.
With a relentless uptrend taking place in the U.S. Dollar Index (DXY) as the euro, pound, and yen collapse, it makes sense for the Swiss franc to follow suit. If and when USD/CHF breaks to fresh highs, we could see the rally in DXY accelerate into the latter stages of a parabolic advance.
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Originally posted 19th October, 2022
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