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Market Outlook: Bad day in Iberia

Violence in Spain, fire in Portugal
August 18, 2017

Yesterday the Portuguese government called a state of emergency in order to access EU funds to fight forest wildfires that have been dogging the countryside for weeks.  Barcelona started with tourists being pelted with eggs as locals continue to protest against the hordes visiting the city year-round.  Then a van zigzags down the main boulevard, Las Ramblas, killing and wounding many.  The driver is still on the run.  Later in the evening a vehicle crashed a checkpoint at the resort town of Canbrills to mow down pedestrians on the seafront avenue.  All five terrorist suspects were shot dead.

Another lawsuit filed against banks yesterday, this time in Manhattan by three US pension funds, Reuters reports.  They accuse six of the world’s largest banks of stifling competition in the $1 trillion market involving the lending of stocks.  The banks are leading players in this area: Bank of America, Credit Suisse, Goldman Sachs, JP Morgan, Morgan Stanley and UBS.

DAX 30

Back down to where we were at the beginning of this month as the market consolidates neatly below horizontal resistance at 12345. 

 

SHORT TERM TRADER:  Small short at 12225; stop above 12355.  Target 11550.

 

POSITION TAKER:  Short at 12175; stop above 12355.  Target 11500.

FTSE 100

Yesterday’s fairly large bearish engulfing candle sees bearish momentum almost match this year’s strongest reading (in April when the index was down at 7100). 

 

SHORT TERM TRADER:   Small short at 7410; stop above 7460.  First target at 7310 so will run the position into next week if we settle below 7300 today.

 

POSITION TAKER:  Short at 7300; stop above 7460.  Target roughly 7000.

S&P 500

Crashing through badly drawn trend line support taking the MACD to almost as bearish as this year’s most extreme reading in March.  If the drop from the record high is an A, B, C type correction then the measured target is 2415 – still above pivotal support at the psychological 2400. 

 

SHORT TERM TRADER:  Short at 2468; stop above 2475.  Next target is pivotal support at 2400.

 

POSITION TAKER:  Square.

BRITISH POUND/US DOLLAR

Suddenly stopped dead in its tracks at the Fibonacci 61 per cent retracement support with tiny daily ranges.  The commodity channel index continues to try to turn bullish.

 

SHORT TERM TRADER:  Small long at 1.2885; stop below 1.2800.  Target 1.3100, maybe 1.3270/1.3300.

 

POSITION TAKER:  Square.

EURO/US DOLLAR

Interesting to see that yesterday’s brief dip to this month’s lowest level has in fact reversed the strange reaction in the momentum measure.  Minutes from the ECB yesterday noted: ‘the appreciation of the euro to date could be seen in part reflecting changes in the relative fundamentals in the euro area vis-à-vis the rest of the world, concerns were expressed about the exchange rate overshooting in the future’.

SHORT TERM TRADER:  New small long at 1.1745; stop below 1.1600.  First target 1.1890 but in truth looking for a burst to a new high for this year.

 

POSITION TAKER:  Square.

GOLD

Pushing up rather too strongly for our liking towards June’s high.

                            

SHORT TERM TRADER:  Small short at 1269; stop above 1296.  Target 1210.

 

POSITION TAKER:   Square.

Nicole Elliott is a long standing Member of the Society of Technical Analysts and has taken over the IC’s trading coverage. She is regularly interviewed and quoted by the financial media, is a conference speaker, and author of several books on charting.