Bank of America’s monthly Fund Managers Survey published yesterday shows that of the 181 who took part in this extensive questionnaire 26 per cent believed that being long Bitcoin was the most crowded trade. Long NASDAQ came second (down from top spot in August) and in third place being short the US dollar. Note that from December 2016 to April 2017 the most crowded trade was consistently being long the greenback. Later in the day JP Morgan CEO Jamie Dimon said the crypto currency, which is up over 300 per cent year to date, is ‘worse than tulip bulbs. It won’t end well’.
In a report commissioned by the Adam Smith Institute and penned by Durham University professor Kevin Dowd they conclude that British banking today is an ‘accident waiting to happen’ and that ‘the biggest risk facing the UK banking system now is the Bank of England’s own complacency’. It continues: ‘the stress tests are about as useful as a cancer test that cannot detect cancer’ and that ‘they seek to demonstrate a financial resilience on the part of UK banks that simply isn’t there’.
DAX 30
Capped yesterday around the Fibonacci 61 per cent retracement level taken from the decline from the record high as many believe that Angela Merkel’s re-election on the 24th is a given.
SHORT TERM TRADER: New small short at 12490; stop above 12600. Target 12150.
POSITION TAKER: Square.
FTSE 100
One of the few indices which did not inch higher yesterday as it grapples with a stronger pound – where a euro is now just £0.9000 instead of the nearly £0.9300 late August.
SHORT TERM TRADER: Square.
POSITION TAKER: Short at 7300; stop above 7460. Target roughly 7000.
S&P 500
Though Apple’s latest iPhone launched yesterday underwhelmed, this index managed to close at a new record high.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
Shocking inflation numbers yesterday (CPI up 2.9 per cent Y/Y – highest since 2012 - and RPI 3.9) mean that traders yesterday re-assessed the Bank of England’s potential next interest rate move, as well as writing a grovelling letter explaining their failure to meet their inflation target. Cable at its highest in a year.
SHORT TERM TRADER: Wondering where to go long again.
POSITION TAKER: Long at 1.3195; stop below 1.3150. First target 1.3450, maybe 1.4000.
EURO/US DOLLAR
With the MACD barely bullish and so many fund managers now saying they are shorting the US dollar one worries where the next wind is the sails wil be coming from.
SHORT TERM TRADER: Square.
POSITION TAKER: Long at 1.2035; stop below 1.1900. Target 1.2600.
GOLD
Hesitating, but holding.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
