JUNE NIKKEI 225 FUTURES 22,120

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1 Friday, June 1, 2018 The Nikkei Is Expected to Surrender Overnight Gains JUNE NIKKEI 225 FUTURES 22, (-0.23%) Day High: 22,270.0 Day Low: 22,010.0 Japanese equities bounced yesterday, lifted by buybacks amid receding risk-off sentiment that was sparked by political turmoil in Italy. The Nikkei 22 Average rose points, or 0.83 percent, to end at 22, after plunging points Wednesday. The Tokyo market got off to a firmer start after U.S. and European equities rebounded on Thursday thanks to easing concerns over the political crisis in Italy. But the market failed to stage a powerful rally after being weighed down by the Japanese Yen s continued strength (-0.09%) Day High: Day Low: Market participants moved to repurchase stocks as they took heart from the latest political developments suggesting slimmer re-election possibilities and smooth sales of government debt in Italy. But worries about the situation did not completely dissipate. A media report that the administration of U.S. President Donald Trump plans to go ahead with fresh tariffs on steel and aluminium from the European Union on Friday also limited the Tokyo market s topside. In index futures trading on the Osaka Exchange, the key June contract on the Nikkei average gained 160 points to end at 22,190. However, in after-exchange electronic trading, the Nikkei was dragged down by overnight losses on Wall Street. Overnight, the Dow Jones Industrial Average fell points, or 1 percent, to end at 24,415.84, while the S&P 500 declined points, or 0.7 percent, to finish at 2, The NASDAQ Composite shed points, or 0.3 percent, to close at 7,

2 TECHNICAL OUTLOOK NIKKEI 225 FUTURES ACTIVE FRONT MONTH CONTINIOUS 4-HOURLY Because Wall Street s overnight losses, the Nikkei is expected to give up most of yesterday s gains today. In after-exchange trading, the index has already seen the pullback but the cash market may open with a gap down. Regardless, we could see a modest rally attempt perhaps in the latter half of today s trading session only to see these anticipated gains eroded by a sharp selloff next week. As mentioned in previous updates, this anticipated decline, sharp as it may be, is seen as a technical pullback and is seen as a buying opportunity. This anticipated decline may target the lower level; ideally into the demand zone at From within this price band, a massive recovery, signaling the resumption of the longer-term uptrend may be staged.

3 JUNE HANG SENG INDEX FUTURES 30, (+0.76%) Asis Is Expected to Follow Wall Street s Lead Lower Day High: 30, Day Low: 30, Asian equities notched largely solid gains yesterday, with Japan and South Korea recovering some of Wednesday s near-2 percent declines in their benchmarks. The gains also follow roughly 1% advances in the U.S. on Wednesday, as risk assets recovered from start-of-week slides fuelled by Italy-related uncertainty. Japanese stocks opened with solid gains. But the Yen rose anew, with USD/JPY back below after changing hands at in late Wednesday New York action. The Nikkei 225 Average has fallen five of the past seven days, notching a six-week closing low Wednesday (+1.78%) Day High: 3, Day Low: 3, Chinese stock indexes started with among the biggest gains in the region, rising some 1 percent after posting among the largest declines Wednesday at 2.5 percent. That came as manufacturing PMI showed unexpected strength for May. Just the same, Chinese equities have gotten oversold with six straight days of declines; the Shanghai Composite Index on Wednesday set a 19-month closing low while notching its first six-day losing streak in 4½ years. The index, however, logged a nearly 1.8 percent gain yesterday. Hong Kong equities traded solidly though the Hang Seng only to log its third monthly drop in the past four. However, Wall Street fell overnight after the Dow Jones Industrial Average fell points, or 1 percent, to end at 24,415.84, while the S&P 500 declined points, or 0.7 percent, to finish at 2, The NASDAQ Composite shed points, or 0.3 percent, to close at 7, Last night s performance left the Dow with a 1 percent monthly rise, while the S&P 500 advanced 2.2 percent and the NASDAQ booked a 5.3 percent increase.

4 TECHNICAL OUTLOOK HANG SENG INDEX FUTURES ACTIVE FRONT MONTH CONTINIOUS 4-HOURLY By and large, the Hang Seng is still not doing very much as it gyrates within the trading band of about 3,000 points set by the February low of and the March high of Following Wall Street overnight losses, the Hang Seng is expected to pull back the bulk of yesterday s gains. This could be followed by a rally attempt early next week only to decline sharply towards the mid s, especially into the demand zone at Based on wave count, this decline is seen as a buying opportunity as a rather robust rally is expected to result from within this price range.

5 ABOUT THE AUTHOR Daniel Ang, an active trader and have held senior positions in some of the most prominent multi-exchanges futures brokers based in Singapore and the region such as Standard Chartered Futures (which was later merged with the public listed Man Financial Group of the UK) and FIMAT Asia, the brokerage arm of the French Societe Generale Group. He has also help to set up a FX brokerage in Dubai and then back to Asia with a Chicago FCM based in Hong Kong as an IB. It was in this role that he first became a speaker when he was part of the entourage with the Chicago Mercantile Exchange s Asia Marketing team touring the Greater China region. Over the last thirty years, he has witnessed every major financial crisis from Black Monday in 1987 to the invasion of Kuwait by Saddam Hussein in 1990 to the collapse of Barings Banks in 1995 to the Asia Financial Crisis in 1997 and the Global Financial Crisis (GFC) in 2008, he has seen them all. Over the years, his speaking assignments, coaching clinics and workshops have taken him all over Asia but for the most part, he is still an active trader till now. His belief is Fear not as each financial crisis brings along with it unique money-making opportunities provided we understand what is happening and how to position ourselves to take advantage of the numerous opportunities presented by events beyond our control.