Claudio Borio, head of the Bank for International Settlements’ monetary and economic department, added, ‘’on the financial side, things look rather fragile. Markets in advanced economies are still over-stretched and financial conditions still too easy. Above all, there is still too much debt around. With interest rates still unusually low and central banks’ balance sheets still bloated as never before, there is little left in the medicine chest to nurse the patient back to health or care form him in case of a relapse’’.
Autumnal Equinox public holidays in China and Japan today so markets are closed. Yet over the weekend Bloomberg reported that Friday in Hong Kong, the local dollar, which has struggled at its weakest level against its peg to the US dollar since March (requiring much HKMA intervention), last week swung to the other end of the allowed range at 7.8000. This then caused turmoil in the money markets which had to reverse short positions in the currency carry trade so that overnight HK dollar interest rates surged from roughly 50 basis points to 350.
DAX 30
Despite Friday’s blip above 12400 immediate trendline resistance remains intact and the weekly MACD is also bearish.
SHORT TERM TRADER: Square.
POSITION TAKER: Very cross about being stopped out above 12400 on Friday morning’s blip.
FTSE 100
Settling on Friday at 7490 giving me a whole weekend to fret about my position. Rather worrying that on the weekly chart the last 3 candles have formed a bullish morning star combination. However, momentum is still bearish and we are back towards the middle of the range of the last 21 months.
SHORT TERM TRADER: Square.
POSITION TAKER: Short at an average above 7300; stop above 7535. Target 6925.
S&P 500
The highest ever weekly close and, needless to say, the market is overbought again.
SHORT TERM TRADER: Square
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
Yet more Brexit news slapped cable down on Friday (luckily after we had taken profits), creating a huge bearish engulfing candle. However, all is not lost as long term trend line support is trying to stop the rot, we are holding at 38 per cent Fibonacci retracement support, and momentum is still bullish.
SHORT TERM TRADER: New long at 1.3105; stop below 1.2900. Target 1.3300.
POSITION TAKER: Long at 1.3110; stop below 1.3050. Target 1.3600, maybe more.
EURO/US DOLLAR
A pathetic attempt at turning momentum bullish on the weekly chart and news from Italy over the weekend a little worrying as all too many politicians have been sharing their views with the press.
SHORT TERM TRADER: Long at 1.1780; stop below 1.1600. Target 1.2000.
POSITION TAKER: Square.
GOLD
Still oversold on the weekly chart while retreating from long term trend line resistance on Friday.
SHORT TERM TRADER: Square.
POSITION TAKER: Short at 1194; stop above 1215. First target 1160.
