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Market Outlook: Let the war games begin

‘’Vostok 2018’’
September 11, 2018

In Russia’s far east, spread across 5 army training grounds, the biggest military exercises since the Cold War run for a week from today.  Involving 300,000 Russian troops, 36,000 tanks, 1,000 aircraft and 80 ships, for the first time Chinese and Mongolian forces will take part too.  Simultaneously Presidents Putin and Xi meet in Vladivostok to discuss large scale projects and economic cooperation.  NATO will be monitoring activities.

Seventeen years ago, on this day the United States suffered its first and most shocking terrorist attack on home turf, the Pentagon and New York’s twin towers targeted by suicide bombers in planes.  The issues have not gone away.  This week a decade ago was the week when investment house Lehman Bros was allowed to go under.  The issues have still not been cleaned up completely.

DAX 30

Perched slightly precariously at the important 12000, bearish momentum at its strongest since the late June interim low.  This week at Braunschweig’s higher court car-maker VW faces a potential €9 billion lawsuit from shareholders who were not told above emissions rigging.

 

SHORT TERM TRADER:  Short at 11940; stop above 12240.  First target 11600.

 

POSITION TAKER:  Short at 11940; stop above 12400.  Target 11000.

FTSE 100

Momentum is as bearish as it was late March as we hover at the 7300 level and below the trend channel established since late May.

 

SHORT TERM TRADER:   Short at 7280; stop well above 7400.  First target 7100.

 

POSITION TAKER:  Short at an average above 7300; stop above 7500.  Target 6925.

S&P 500

Momentum has just turned marginally bearish as this index holds remarkably well close to the record high.  Note that more than 1 million people have been ordered to evacuate areas of North and South Carolina, and parts of Virginia, as hurricane Florence is expected to hit on Thursday.  President Trump’s already Tweeted about this saying ‘’we are here for you!’’

 

SHORT TERM TRADER:  Square

 

POSITION TAKER:   Square.

BRITISH POUND/US DOLLAR

Michel Barnier, chief Brexit negotiator for 27 EU nations and their millions upon millions of citizens, put a slightly positive spin on the talks and hey, ho, up we go!  Perhaps it was next week’s EU leaders’ summit in Salzburg galvanising his thinking, or the expected Brexit summit on the 13th November that made him feel the heat.  Two years’ worth of talks and not a lot to show for it.

 

SHORT TERM TRADER:  Small long at 1.2925; stop below 1.2900.  Target 1.3275.

 

POSITION TAKER:  Will go long on a daily close above trend line resistance.

EURO/US DOLLAR

Holding up a bit better than hoped though the MACD is still very mixed.

 

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Long at 1.1595; stop below 1.1525.  Target 1.1785.

GOLD

Mixed at best.  Probably today Venezuela’s central bank will start selling not gold bars, as initially thought, but certificates of deposit on gold bars held to try and help poorer people shield themselves from the ravages of hyper-inflation.  Another experiment with fiat money?   

                            

SHORT TERM TRADER:  Short at 1195; stop above 1220.  First target 1160.

 

POSITION TAKER:  Square.

Nicole Elliott is a long-standing member and Fellow 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.