A staggering $23.6 billion fled the world’s biggest passive investment fund, the SPDR S&P 500 ETF issued by State Street Bank, in the last week alone – Bloomberg reports. If one then adds in losses on the fund due to price falls in the stocks included in the index, the total value eliminated is $38.6 billion. Similar funds, offered by big-hitters Vanguard and Blackrock, are said to have suffered less last week.
At a conference in Dubai yesterday Christine Lagarde, head of the IMF, noted, ‘I’m reasonably optimistic because of the landscape we have at the moment. But we cannot sit back and continue to wait for growth to continue as normal. I’m ringing not the alarm signal, but a strong encouragement and warning signal’ [on recent stock market jitters].
DAX 30
Japan’s National Foundation day holiday today and Chinese Lunar New Year holidays starting Friday (and continuing for a week) mean thin markets in Asia’s biggest economies and their stock markets likely to be unrepresentative of global trends. Germany’s Dax recovered from Tuesday’s overnight (suspect) slide to settle roughly in the middle of last week’s range and above the trend line from 2016’s low. Sigh of relief all round may well be premature.
SHORT TERM TRADER: Small short at 12535; stop above 12800. Target 11700.
POSITION TAKER: Short at 12650; stop above 12800. First target 12050, then probably more.
FTSE 100
Nasty fortnight which comes as a shock after the paralysis of the last year. Closing below first horizontal support at 7200 but above the more important 7100, 50 and 200-day moving averages today threaten to form a bearish death cross – and the market is not yet oversold.
SHORT TERM TRADER: Took profits Friday at first target at 7000 and now looking to re-sell.
POSITION TAKER: Took partial profits at first target 7050. Now looking to re-sell as close to 7300 as I think I can get for a drop to the 6675 area.
S&P 500
In just 2 weeks the index has erased the gains over the previous 9 reminding us just how asymmetric stock market gains and losses nearly always are. Closing below steep trend line support but scrambling to close above the one that hugs prices more closely, it has managed to slump and close through the 50-day moving average and within a whisker of the 200-day one. And it’s nowhere near oversold.
SHORT TERM TRADER: Took profits at first target 2550 and now looking to resell as close to 2700 as I can.
POSITION TAKER: Took partial profits at first target 2545. Now looking to re-sell for another drop to 2455 – and maybe a lot more.
BRITISH POUND/US DOLLAR
Everything sort of normal to boring on the daily and weekly charts – mercifully so when contrasted from the travails in other sectors.
SHORT TERM TRADER: Stopped out below 1.3800 at a small profit.
POSITION TAKER: Long at 1.3930; stop well below 1.3800. First target 1.4275, then 1.4650.
EURO/US DOLLAR
This market’s been rallying for over a year (though some have only recently woken up to the fact) and last week’s drop is a blip in the scheme of things – though it has corrected the overbought situation.
SHORT TERM TRADER: New small long at 1.2265; stop well below 1.2200. Target 1.2500.
POSITION TAKER: Square.
GOLD
Another disappointing week for gold and his cousins as we retreat from trend line resistance and the commodity channel index turns down.
SHORT TERM TRADER: Small short at 1335; stop above 1347. Target 1280.
POSITION TAKER: Short at 1330; stop above 1350. Target 1250.
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.
