The Financial Times reported earlier that in the fourth quarter of 2017 South Korean GDP shrank by 0.2 per cent, giving the lie to the current mantra of ‘synchronised global economic growth’; a rare event that has only occurred 4 times since 1999 following the Asian crisis. This follows strong growth in Q3 2017, 1.5 per cent, the fastest in 7 years. Exports dropped by 5.4 per cent from the previous quarter, mainly due to fewer car sales.
The ONS published UK November employment data yesterday showing that wages rose 2.4 per cent over the year, unemployment remained at 4.3 per cent, and the number of those in worked matched 1971’s record high (when this series was started) of 32.2 million. This equates to 75.3 per cent of 16 to 64-year-olds doing some form of paid work. In the US, where unemployment is 4.1 per cent labour force participation stands at 62.7 and in Germany 60.9.
DAX 30
Another quick about-turn from a new record high as we saw in November. The RSI is not as overbought though. The ECB meets today and while the key interest rate is expected to remain at minus 0.40 per cent all eyes will be on what Mario Draghi has to say about QE. Might also be interesting to see if he mentions Italian sovereign debt where he is currently the only buyer in town.
SHORT TERM TRADER: New tiny short at 13360; stop above 13600. Target 13000.
POSITION TAKER: Square.
FTSE 100
Momentum is no longer bullish and we have a potential complete little head-and-shoulders top at the record high. While we hold above previous resistance (which should now act as support) at 7600, the jury is still out. A weekly close below 7600 would suggest the break above here was an extension and false break.
SHORT TERM TRADER: Square.
POSITION TAKER: Stopped out of my long position on yesterday’s sudden slump. Rather shocked, really.
S&P 500
Slightly scary dragonfly doji yesterday in a runaway market that is overbought.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
See how they run! When even David Cameron says that Brexit is a ‘mistake, not a disaster’, you can hear the pedals turning backwards. Note that bullish momentum is at its strongest since the summer of 2010 giving you some idea of the huge shift in outlook that is taking place.
SHORT TERM TRADER: Target at 1.4250 comfortably met so have taken profits and will see where we settle on the week and on the month.
POSITION TAKER: Long at 1.3730; stop below 1.3870. Holding out for my second target around 1.4600.
EURO/US DOLLAR
At 87 pence, the euro is at its weakest level against sterling since June. It is also not keeping up with dollar/yen which, at 109.00, is close to its strongest levels in a year.
SHORT TERM TRADER: Long at 1.2150; stop below 1.2250. Target 1.2575.
POSITION TAKER: Long at 1.2200; stop below 1.2150. First target 1.2600, then maybe 1.3000.
GOLD
Rallying to multi-month highs like all commodities denominated in US dollars. Overbought on the RSI and hovering at a second long term trend line resistance. Watch for a weekly close above it to confirm a significant break.
SHORT TERM TRADER: Square.
POSITION TAKER: Stopped out of my short position this morning and nursing a nasty loss.
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.
