The Financial Times reports this morning that in the week to Wednesday 14th February data from fund tracker EPFR Global saw the second highest value of redemptions ever from junk bond funds; £10.9 billion, to be precise, and the largest since 2016’s record. Emerging market funds investing in both debt and equity also saw outflows in the latest week.
A study published this morning by the Institute for Fiscal Studies showed that today only 26 per cent of 25 to 34-year-olds earning a middling salary (the middle 20 per cent of all salaries and today worth between £22,200 and £30,600 per annum) are home owner occupiers; twenty years ago, the proportion was 65 per cent. This is because average house prices have risen 7 times as fast as salaries since 1995 – because salaries over the last two decades have risen by a paltry 22 per cent. Hardest hit are Millennials living in the South East.
DAX 30
As well as becoming less oversold, the MACD is a lot less bearish following triangle consolidation. Still rather ominously hovering between trend line support and horizontal resistance at 12875.
SHORT TERM TRADER: Small short at 12535; stop well above 12600. Target 11700.
POSITION TAKER: Short at 12650; stop above 12875. First target 12050, then probably more.
FTSE 100
Working in a slightly irregular inverted flag formation, hovering slightly nervously at the Fibonacci 38 per cent of the drop from the record high. Today EU heads of state go to Munich to discuss security issues where Mrs May was asked to outline her post-Brexit plans.
SHORT TERM TRADER: Small short at 7180; stop well above 7300. Target 7000.
POSITION TAKER: Short at 7250; stop well above 7350. Target the 6675 area.
S&P 500
The S&P 500 has retraced almost a Fibonacci 61 per cent of the collapse from the record high, helped along by a rapidly shrinking US dollar.
SHORT TERM TRADER: Stopped out of my short position yesterday.
POSITION TAKER: Short with a stop above 2750. Target 2455 – and maybe a lot more.
BRITISH POUND/US DOLLAR
In a position to challenge this year’s highs and momentum likely to turn bullish on today’s close. A weekly close above 1.4200 should add considerably to upside pressure, not so much for sterling but as generalised US dollar selling sweeps through all currencies. Note that today USD/JPY hit 105.55 (IG prices), the strongest for the yen since Donald Trump won the election.
SHORT TERM TRADER: Small long at 1.3885; stop below 1.3900. Target 1.4200.
POSITION TAKER: Long at 1.3930; stop below 1.3900. First target 1.4275, then 1.4650.
EURO/US DOLLAR
Euro at its strongest since mid-December 2014 adding another headache for Mario Draghi. Momentum is trying to turn bullish and ought to increase significantly on a close clearly above 1.2455. Remember that FX moves will influence pricing in other asset classes.
SHORT TERM TRADER: Square and looking to re-buy on a close above 1.2500 today.
POSITION TAKER: Looking to buy on a strong close this week for generalised US dollar weakness.
GOLD
Back to where we were a month ago as US dollar weakness works its way through other assets.
SHORT TERM TRADER: Square.
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.
