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Market Outlook: Catalan chaos

As Civil Guard disrupts the poll
October 2, 2017

The eagerly anticipated poll on whether Catalans want independence from Spain turned ugly yesterday with about 800 people injured.  Chaotic scenes as ballot boxes were forcibly removed and voters prevented from going into polling stations.  Spanish PM Mariano Rajoy continued insisting the operation was not legitimate and that ‘today there was no referendum on self-determination in Catalonia’.  Of the 5.4 million eligible to vote it is claimed 2.26 million did and of these 90 per cent wanted out.  The EU has not commented on the issue.

Yet another airline is declared insolvent, this time Britain’s Monarch airlines.  KPMG, acting as liquidator, grounded all its planes at 03:00 am today leaving 110,000 passengers stranded abroad.  We remind: the airline industry, in its history, has never made money.

DAX 30

Ending the month and the third quarter on a strong note with the strongest ever monthly close.  This is not the case for most other bourses all over the globe.  Note that on Thursday Fitch downgraded Germany’s top lender, Deutsche Bank, saying its business model was broken and revenues difficult to recover.

 

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Square.

FTSE 100

Closing on the monthly chart in the middle of this year’s range with a hanging man candle – a bearish chart formation.  The quarterly chart formed a larger dragonfly doji candle, denoting indecision and instability.  Probably the best that can be said is that we’re still holding between 7100 and 7550.

 

SHORT TERM TRADER:   Square.

 

POSITION TAKER:  Stopped out of my short on Friday’s close for a small loss.

S&P 500

One of a few US indices ending the month and Q3 at a new record high.  For the S&P 500 this marks the 11th consecutive month of bullish candles, suggesting the move is mature and due a correction.

 

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Square.

BRITISH POUND/US DOLLAR

The strongest monthly close since the Brexit referendum retracing about a quarter of the losses since 2014’s high.  Small mercies and slow work.

 

SHORT TERM TRADER:  Square and looking to re-buy.

 

POSITION TAKER:  Long at 1.3195; stop below 1.3215.  Target about 1.4000.

EURO/US DOLLAR

A second monthly close above 1.1600 is about all one can say on this wretchedly slow chart price action.  Twenty months’ worth of basing activity against the 1.0500 area and now a small incremental step higher.  Another unexpected consequence of super-easy monetary policy.   

 

SHORT TERM TRADER:  Short at 1.1750; stop above 1.1875; target 1.1600.

 

POSITION TAKER:  Square.

GOLD

Not nearly as clear a picture as we would like but the break above secular trend line resistance may well turn out to be false, continuing the theme of marginally lower highs since 2013.

                            

SHORT TERM TRADER:  Short at 1291; stop above 1300; target 1240.

 

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.