At its annual meeting starting in Bali today, the International Monetary Fund’s chief economist Maurice Obstfeld trimmed their global growth estimate to 3.7 per cent from 3.9 per cent. This tinkering has been caused by ‘over optimistic’ forecasts in April’s bi-annual report, by Q2 growth being slower than predicted, and because of escalating trade tensions. Estimates for global trade were slashed: originally expected to increase by 4.8 per cent this year and 4.0 in 2019, they are now forecasting 4.2 per cent and 4.6 per cent respectively. Note that there are only 3 months until the end of this calendar year.
Keeping a wary eye on sovereign bond yields, some of which are dropping in value and yielding the most in several years. Not across the board, mind you, as China has taken a series of steps to loosen the purse-strings to help its economy and monetary policy rates in the Eurozone, Japan and the UK are not expected to budge.
DAX 30
Fast approaching September’s low, just ahead of this year’s low set in Q1 at 11700. Daily and weekly closes below 11800 should add to bearish pressure.
SHORT TERM TRADER: Short at 12330; stop above 12400. First target 11900.
POSITION TAKER: New short at 12100; stop above 12400. Target 11700.
FTSE 100
Back down under the old trend channel at matching September’s low. A sustained break below 7200 looks increasingly likely this week and will probably set off a sudden drop to March’s low at 6840.
SHORT TERM TRADER: Took profits just ahead of the original target at 7200.
POSITION TAKER: Short at an average above 7300; stop above 7535. Target 6925.
S&P 500
Slipping under the old triangle to recover at the close and form a hanging man/dragonfly doji; both denote instability at current levels.
SHORT TERM TRADER: Will go short on a daily close below 2860.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
Re-drawing trend line resistance as we are dealing with a rather messy chart.
SHORT TERM TRADER: Long at 1.3075; stop below 1.2900. Target 1.3300.
POSITION TAKER: Square.
EURO/US DOLLAR
Still clinging around 1.1500 and looking increasingly weak. Italian political tensions and 10-year BTPs yielding above the watershed 3.5 per cent.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
GOLD
Still reacting to trend line resistance while keeping inside September’s tiny range.
SHORT TERM TRADER: Square.
POSITION TAKER: Short at 1194; stop above 1218. First target 1160.
