Yesterday a court in Brooklyn, USA, found a British FX trader guilty of front-running at least one customer order. Mark Johnson, who used to be global head of cash foreign exchange at HSBC, had defrauded a client by ramping up the value of sterling ahead of Cairn Energy’s $3.5 billion order to buy pounds. He faces up to 20 years in prison while the bank was fined $175 million.
On the same day in London the FCA slapped a £34.5 million pound fine on Merrill Lynch for reporting failures. Over a two-year period starting in February 2014 it had not reported 68.5 million derivative trades. I’m only guessing, but these are very likely to involve money market futures where each contract is worth a million euros, dollars or quid. The FCA, pushed into it by MPs, also published a 16-page summary of the nearly 4-year investigation into RBS’s Global Restructuring Group. In Dublin this week the heads of Ireland’s main banks have been summoned to a meeting with finance minister Paschal Donohoe to explain their ‘scandalous’ behaviour overcharging for at least 13,000 tracker mortgages.
DAX 30
The series of horrid little daily candles continues with a shooting star yesterday. Note that the MACD has been bearish since before nudging to a new record high this month.
SHORT TERM TRADER: Small short at 13045; stop above 13125. Target 12400.
POSITION TAKER: Square.
FTSE 100
The slow potential rounded top formation against established resistance around 7555 continues. A daily close below 7480 might turn momentum clearly bearish.
SHORT TERM TRADER: Short at 7554; stop above 7600. Target 7320.
POSITION TAKER: Square.
S&P 500
Yesterday the RSI on the Dow Industrials hit 88.09 which Tom Keene of Bloomberg pointed out was its highest in 62 years. The S&P 500’s RSI is back down at an overbought 70 reading having touched 80+ Friday and Monday where price action nearly reversed itself from a new record high.
SHORT TERM TRADER: New small short at 2567; stop above 2600. Target 2500, maybe 2450.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
Trying to break above the descending trend line but there is precious little bullish momentum. Note that whoever is chosen to head up the US Fed, bond traders are selling short-dated paper and buying the long end of the yield curve which is now as flat as it was in 2007.
SHORT TERM TRADER: Long at 1.3115; stop below 1.3100. Target 1.3400.
POSITION TAKER: Square.
EURO/US DOLLAR
Lacklustre to say the least as we wait to see what Mr Draghi has to say on Thursday. Note that an ECB report yesterday notes that Eurozone banking consolidation continues, credit institutions falling to 2290 from 2379 and almost 7000 branches closed. They also noted that ‘Non-Performing Loans remain persistently high in a number of countries and have increased further in some cases’.
SHORT TERM TRADER: Stopped out of my little long position yesterday and think that’s for the best.
POSITION TAKER: Square.
GOLD
Precious metals rather side-lined at the moment.
SHORT TERM TRADER: Small short at 1275; stop well above 1300. Target 1220.
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.
