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Market Outlook: ECB spots €10 billion black hole

Bad debt rules may be redundant

In a report out late yesterday the European Central Bank announced it had found ‘shortcomings and miscalculations’ worth over €10 billion following inspections at Eurozone banks through 2017.  Mario Draghi said, ‘in 2018 banks continue to face some key challenges.  These include cleaning up their balance sheets, reducing legacy exposure originating from the financial crisis, such as certain non-marketable financial products, and from the Great Recession, such as non-performing loans’.  Ten years on and still a train wreck.  Daniele Nouy hinted at a change of view on bank capital ratios.

Swedish fashion retailer H&M reported Q1 profits of 1.2 billion kronor, 62 per cent down on this time last year and the lowest in 16 years, Bloomberg reports.  They blamed it on severe and changeable weather which left the chain with the biggest unsold inventory of clothing in two decades.     

DAX 30

This chart is suspect as it’s dropped off Monday’s price action (though intra-day charts have a low at 11700).  The Financial Times reports today that the companies in the Dax are ‘ground zero’ for money managers because of ‘the implications of an escalating trade war’.  Trending on Twitter is Deutsche Bank – for all the wrong reasons - as their credit default swap price balloons suddenly, is accused by a top exec of being ‘dysfunctional’, and rumours that CEO Cryan might be about to be replaced.   

 

SHORT TERM TRADER:  Short at 11800; stop above 12200.  Target 11400.

 

POSITION TAKER:  Short at 11800; stop above 12400.  Target 9500.

FTSE 100

Another dodgy chart where yesterday’s low was 6866 and the MACD is now bearish.

 

SHORT TERM TRADER:   Small short at 7055; stop above 7100; target 6700.

 

POSITION TAKER:  Short at 6850 and at higher levels; stop above 7100.  Target the 6675/6700 area.

S&P 500

Jubilation in some media circles as the index is back to where it started in January.  However, it’s still just under the half-way point between the record high and this year’s low.

 

SHORT TERM TRADER:  New small short at 2675; stop above 2800.  Target 2585.

 

POSITION TAKER:  Square.

BRITISH POUND/US DOLLAR

Rallying again as more countries play copy-cat expelling Russian diplomats.  Bullish momentum has increased fractionally and we favour a re-test of this year’s high at 1.4345.

 

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Took profit this morning and will see how the market reacts at this year’s high.  Planning to re-buy.

EURO/US DOLLAR

Bullish momentum has increased fractionally as we attempt a re-test the upper edge of this year’s triangle consolidation.

 

SHORT TERM TRADER:  Took profit this morning just ahead of target.

 

POSITION TAKER:  Small long at 1.2270; stop below 1.2250.  Target 1.2500.

GOLD

Let’s see how prices react here close to this year’s highs.

                            

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.