Unsurprisingly given the news, Facebook’s shares at one point yesterday had lost 7 per cent. Over in Arizona a driverless car being road-tested by Uber killed a pedestrian on Sunday; their shares were down too. FANGS generally got caught up in the turmoil and the NASDAQ index closed down 1.84 per cent from Friday’s close. Not to be outdone the FTSE 100 was off 1.69 per cent because of a strengthening pound, and despite agreement on Brexit transition period and terms.
Subtle signs of increased pressure are emerging both in the money market and in sovereign bond yields. The spread between 3-month Libor and the overnight interest rate swap is now over 50 basis points, the biggest difference between what banks have to pay for money and where the central bank’s lending rate lies since 2012. Yields on many EU sovereign bonds are lower than they have been in over 12 months. And yield curves in the UK and US are at their flattest in a decade or so.
DAX 30
The third in a series of interim descending highs appears to be in place and we expect a re-test of key support just under 11800.
SHORT TERM TRADER: Small short at 12425; stop above 12525. Target 12000.
POSITION TAKER: Square.
FTSE 100
The first daily close clearly below important support at 7100 this year has turned momentum bearish again.
SHORT TERM TRADER: New small short on yesterday’s close at 7055; stop above 7300. Target 6800.
POSITION TAKER: Short at 7250; stop above 7300. Will add on a weekly close below 7100. Target the 6675 area.
S&P 500
Dropping back towards long term trend line support. Yesterday by executive order President Trump banned all US citizens from trading Venezuela’s ‘petro’ cryptocurrency. Remember that tomorrow the FOMC meet and Chai Mr Powell is widely expected to increase the Fed Funds target by 25 basis points.
SHORT TERM TRADER: Small short at 2760; stop above 2880. Target 2620.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
Lovely, and just as we had hoped, cable rallied from the top of the right-angled triangle. Interestingly in a report out today from the Institute for Fiscal Studies they claim UK consumer prices won’t dip much with post-Brexit abolition of tariffs. This they claim is because sterling weakness after the referendum. Mmm…
SHORT TERM TRADER: Small long at 1.3835; stop below 1.3880. Target 1.4100.
POSITION TAKER: Small long at 1.3775; stop below 1.3880. Target 1.4250.
EURO/US DOLLAR
No momentum, nothing happening, no point.
SHORT TERM TRADER: Small long at 1.2267; stop below 1.2250. Target 1.2500.
POSITION TAKER: Small long at 1.2270; stop below 1.2250. Target 1.2500.
GOLD
Momentum marginally bearish as it clings to horizontal support.
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.
