While keeping its key interest rate unchanged – and negative – at yesterday’s rate-setting meeting the European Central Bank decided to halve to €30 billion the assets it will buy monthly. However, this exercise will continue through to September 2018, longer than originally planned and possibly even longer if judged necessary, something that might be described as downsizing rather than ending Quantative Easing. Mario Draghi also said that the key rate will remain at current levels after QE has ended and that he had ‘growing confidence in the gradual convergence of inflation rates towards our inflation aim’.
Yesterday the boss of Deutsche Boerse said he would step down at the end of this year. This follows a decision by a German court not to allow him to settle via a cash payment allegations of insider trading. He is said to have bought, for his personal account, €4.5 million worth of shares in the exchange he runs two months ahead of announcing its merger with the London Stock Exchange. In the end the European Commission blocked this move.
DAX 30
QE forever! What could possibly go wrong? Super overbought on the RSI again; readings this high have rarely been seen since 2009.
SHORT TERM TRADER: Stopped out of my short at a small loss.
POSITION TAKER: Square.
FTSE 100
Bouncing a tad higher than expected yet keeping momentum bearish.
SHORT TERM TRADER: Short at 7554; stop above 7570. Target 7320.
POSITION TAKER: Square.
S&P 500
Very solid results yesterday from Alphabet, Amazon, Microsoft and Twitter yet both the Dow Industrials and the S&P 500 did not post a new record high. Note that bullish momentum has eased considerably since the 10th of the month.
SHORT TERM TRADER: Small short at 2567; stop above 2580. Target 2500, maybe 2450.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
Reversing all and more of Wednesday’s gains, possibly on news that a CBI survey shows UK retail sales and orders to suppliers both fell at the fastest rate since March 2009.
SHORT TERM TRADER: Long at 1.3115; stop below 1.3100. Target 1.3400.
POSITION TAKER: Square.
EURO/US DOLLAR
Both the euro and the yen weakening (Tokyo October CPI -0.2% Y/Y). Technically it is important that we do not close below 1.1600 on a weekly basis as this would imply that the break above here is not part of a trend but a false break.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
GOLD
The price of gold dipping in line with US dollar strength.
SHORT TERM TRADER: Small short at 1275; stop above 1300. Target 1220.
POSITION TAKER: Square.
