In a surprise move today the Peoples Bank of China added 200 billion yuan via MLF to its financial institutions, CNBC reports. Last week the bank also unexpectedly failed to raise its cost of banking loans in line with the Fed’s move to raise the Fed Funds target rate – something analysts had thought had become a pattern. Today’s move follows President Trump’s new threat to add a 10 per cent trade tariff on another $200 billion worth of Chinese made goods.
A report from the auditing industry watchdog, the Financial Reporting Council, out today said that the quality of audits had deteriorated over the last year and that one third of all work done by the ‘big four’ needed some improvement. Errors were especially noticeable in the audit of pension balances and banking, especially loan loss provisions. Singled out for the harshest criticism was KPMG where half of their FTSE 350 company audits were ‘in need of more than just limited improvement’.
DAX 30
Momentum might turn bearish today as the potential double top at 13150 becomes clearer – and would complete on a daily close clearly below 12600.
SHORT TERM TRADER: Short at 12955; stop well above 13200. Target 12200.
POSITION TAKER: Might re-sell on a completed double top.
FTSE 100
Momentum turning fractionally more bearish as we slither to our lowest level since early May.
SHORT TERM TRADER: Tiny short at 7855; stop above 7800. Target 7400.
POSITION TAKER: Small short at 7799; stop well above 7800. First target 7400, then 7100.
S&P 500
The MACD might turn bearish again as this index suddenly becomes aware of gravity after working in an upward-sloping wedge formation since April – a difficult reversal pattern.
SHORT TERM TRADER: New short at 2735; stop above 2800. First target 2680.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
Oversold again as we re-test 1.3200. Interesting to see that the Bank of England’s regulation committee has two new members, both women. Professor Julia Black, a regulation specialist at the London School of Economics, and Jill May, previously with S. G. Warburg and UBS.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
EURO/US DOLLAR
Not quite oversold but not looking too perky.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
GOLD
Momentum fractionally more bearish as we hold towards the bottom of Friday’s big Marabuzo candle which might be the pole of an inverted flag formation. The measured target based on the height of the symmetrical triangle is $1267.
SHORT TERM TRADER: Tiny short at 1294; stop above 1303. Target 1265.
POSITION TAKER: Short at 1298; stop well above 1310. 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.
