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Market Outlook: Banks counting the cash

Pile on another €21 billion
September 25, 2018

In a report published by the ECB yesterday they noted that banks in the single currency area had been saving euro notes rather than parking deposits at the European Central Bank.  In the 8 years to March 2016 they held on average €50 billion in notes; since then, paper notes held have increased by €21 billion to €76.8 billion, 70 per cent of this increase down to German lenders.  Note that it was in June 2014 that the ECB’s key rate turned negative.  Separately, yesterday Germany’s bank regulator Bafin announced that it was keeping an especially beady eye on Deutsche Bank’s regulatory and compliance departments.  This is because they are worried about anti-money laundering and terrorist financing controls.  So much so that for the first time ever they have appointed a ‘special representative’ to this particular task at this specific bank.

Last night’s lovely Harvest moon could be seen clearly in London, as high pressure kept the clouds away – making for a nippy morning too.  Interesting that with yesterday’s agreed takeover of Sky by Comcast, the latter’s shares dropped by 8 per cent, as did those of Michael Kors who reported that it was looking to take over Italian fashion designer Versace.  Thomas Cook’s shares topped these two falling 28 per cent yesterday as its outlook was slashed.  Keep an eye on Facebook shares today because the two co-founders of Instagram, bought by the former in 2012, announced they were leaving the group.

DAX 30

Dipping back below 12400 with the potential for the commodity channel index to turn bearish at today’s close.

 

SHORT TERM TRADER:  New short at 12330 this morning; stop above 12460.  First target 11900.

 

POSITION TAKER:  Square.

FTSE 100

Stopped at the 50 per cent retracement level.

 

SHORT TERM TRADER:   Will sell if the commodity channel index turns down tonight.

 

POSITION TAKER:  Short at an average above 7300; stop above 7535.  Target 6925.

S&P 500

Tiny doji just above the top of the right-angled triangle and the MACD looks unconvincing.

 

SHORT TERM TRADER:  Square

 

POSITION TAKER:   Square.

BRITISH POUND/US DOLLAR

Valiant attempt at a bounce from a re-drawn trend line (taking in the early August low).

 

SHORT TERM TRADER:  Long at 1.3105; stop below 1.2970.  Target 1.3300.

 

POSITION TAKER:  Long at 1.3110; stop below 1.3050.  Target 1.3600, maybe more.

EURO/US DOLLAR

Rather large and worrying dragonfly doji yesterday against the 1.1800 level. 

 

SHORT TERM TRADER:  Long at 1.1780; stop below 1.1600.  Target 1.2000.

 

POSITION TAKER:  Square.

GOLD

Rubbish momentum as we snake along long term trend line resistance.   

                            

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Short at 1194; stop above 1215.  First target 1160.

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.