First of all, my apologies for the late appearance of this report. The FT building and surrounding area have been stricken by power outages this morning.
Of course, it is not only this part of London that is suffering from a lack of spark right now. The FTSE has continued to sell off, in line with my recent call. But while I am short-term bearish, I remain optimistic about the bigger-picture outlook for UK and other European equities. Above all, I’d keep a sense of perspective about the current decline. The FTSE has dropped a grand total of 4.35% since its highs of 14 September. So, it has taken 44 trading sessions to decline fewer than 300 points. This is almost certainly a correction within an uptrend, as I see it.
Nevertheless, I am not fighting the tendency for now. I am still looking for shorts today.
Click here for analysis of some leading European equity indices.
I have wondered aloud more than once lately about how gold and silver could continue to withstand the weakness affecting other commodities and risky assets more generally. Now the answer seems to be that they cannot. I switched to neutral on gold yesterday, based partly on these concerns. And I am currently looking to go short of the yellow metal unless it can stage a quick and decisive recovery. Copper and EURUSD continue to head south too, and they too offer shorting potential.
Click here for analysis of some leading commodities and EURUSD.
WALL STREET OUTLOOK
I called for further losses on Wall Street yesterday and they duly came. I did not get the chance to join in, though, as I was expecting an intraday bounce first, given how bashed up the indices were looking. That is still the case, as I see it. I do not like shorting markets when they are very oversold on both daily and intraday timeframes. The chances of getting short-squeezed are high, in my view.
As such, my stance remains the same: I’d like to short the end of an intraday rally in the S&P, Dow or Nasdaq.
Click here for analysis of the US indices.
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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