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Market Outlook: Chinese data slips

Weakest in a while
September 14, 2017

Yesterday Jean-Claude Junker confirmed plans to screen foreign takeovers of EU companies saying, ‘Europe must always defend its strategic interests’.  Perhaps the risk of Chinese takeovers has already receded as August data from that country this morning was weaker than expected.  Fixed-asset investment grew by only 7.8 per cent year to date, its slowest since 1999.  Factory output was just 6.0 per cent Y/Y, its lowest in nine months.  And retail sales dipped to 10.1 per cent from 10.4 per cent previously.

In a new report by management consultants at Oliver Wyman spending on research my investment managers is likely to drop by between $1.5 and $3.0 billion after Mifid II; buy side firms currently spend just under $5.0 billion.  Some firms have already said they will not be charging for some, if not all, of their research.

DAX 30

A perfect little dragonfly doji yesterday on Fibonacci 61 per cent retracement resistance underlines some fragility at current levels.  A market looking for direction and possibly a third interim lower low since the record high 

 

SHORT TERM TRADER:  Small short at 12490; stop above 12600.  Target 12150.

 

POSITION TAKER:  Square.

FTSE 100

The Bank of England meets today and is not expected to tinker with interest rates.  This despite inflation that is well above target, unemployment at its lowest in 40 or so years, and a record participation rate.  They will do nothing because many are questioning economic modelling as wages remain subdued, asset prices many multiples of earnings, and of course, Brexit.

 

SHORT TERM TRADER:   Square.

 

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

S&P 500

Stopped at the record high and the market is almost overbought.

 

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Square.

BRITISH POUND/US DOLLAR

A sharp rejection from yesterday’s high at 1.3330 but an inside day and momentum is still clearly bullish.  It looks as though we are in for a bit of a fight over the US dollar which is trading at its weakest in many months against a raft of major currencies.

 

SHORT TERM TRADER:  New long at 1.3200; stop below 1.3050.  Target 1.3400.

 

POSITION TAKER:  Long at 1.3195; stop below 1.3150.  First target 1.3450, maybe 1.4000.

EURO/US DOLLAR

Bullish momentum has suddenly been wiped out.  Let’s see if trend line support holds.   

 

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Stopped out of my long position.

GOLD

Here too bullish momentum has been completely wiped out and let’s see if trend line support holds until the end of this week.

                            

SHORT TERM TRADER:  Square.

 

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.