EUROPEAN OUTLOOK
I went short of both the DAX and FTSE yesterday, making a 61-point profit on the former and getting stopped out at breakeven on the latter. I believe the current down-move in the indices has further to go, despite the recovery later on yesterday. A retest of the May trough, followed by new lows is my base-case here.
Graham Cox writes in to point out that if the FTSE drops towards some of the targets that I have been suggesting, it would break a rising trendline from the March 2009 lows. Surely that would be mega-bearish? From the chart below, I can see where he’s coming from. But while I do see that line probably giving way, I don’t necessarily think it would be a disaster. I’ll aim to do a little video later on today to explain why.
Today, I am open to establishing new shorts in FTSE, DAX, and EURGBP.
Click here for analysis of some leading European markets.
COMMODITIES
Although I am not completely sold on the idea that the Chinese economy is heading for an imminent “hard landing,” copper makes an obvious way to play such a scenario. I looked yesterday at its downside targets from the perspective of Fibonacci retracements. Today, I am highlighting its outlook on the point-and-figure chart. The P&F chart picks out two likely-looking objectives, first at 330.64c and subsequently at 317.74c. What is nice about these levels is that they correspond to those detected by other technical methods.
I would like to short copper on a failed rebound. Its downtrend looks much more tradable than gold’s or silver’s.
Click here for analysis of some leading commodities and EURUSD.
WALL STREET OUTLOOK
Payrolls day in the US has long been a trading black-spot for me. I just never seem to call Wall Street right on the first Friday of the month, so I’ve basically given up trying to make money in advance of the release of the figures.
I read a great piece this morning by Nick Beecroft at Saxo Bank suggesting that if equities, commodities and bond yields rally in response to a good number, an opportunity will arise to short into the end of the move. His argument is that the European crisis is the story that really matters right now and that the negativity coming out of Greece and Spain will overwhelm any feel-good factor over the US economy. I may well follow this strategy if the situation arises.
Click here for analysis of the S&P, Dow and Nasdaq.
**Dominic will be presenting at the London Investor Seminar on 18 June - book your place today.**
MORE FROM DOMINIC PICARDA...
Dominic Picarda is a Chartered Market Technician and has co-ordinated the IC's trading coverage since 2006. He is a regular speaker at trading and investment events and also holds the Chartered Financial Analyst qualification.
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