Yesterday insurance giants AIG and Swiss Re warned that Q3 2018 numbers would be seriously impacted by a string of natural disasters this year from reassessing the damage of California mudslides, Japan’s typhoons, and US East Coast hurricanes. The US-based firm expects losses of up to $1.7 billion, while the Swiss firm predicted a $1.1 billion loss, a ‘large amount for an individual quarter’. This comes ahead of Sunday’s (to the 25th) reinsurance meeting in Baden-Baden, Germany, where brokers and reinsurers meet to compare notes and pricing ahead of the renewals season that starts in January.
Today China admitted publicly what we all knew already: Q3 GDP has been affected by the country’s attempt at reining in loan growth and that capex has been affected by the trade war with the USA. Economic growth was just 6.5 per cent from 6.7 in Q2, the slowest pace since Q1 2009 and lower than economists’ estimates. Industrial production dipped in September.
DAX 30
Slipping to the bottom of the inverted flag yesterday, keeping momentum steadily bearish. A second consecutive weekly close below 11600 should add to downside pressure and one below 11400 will probably trigger a sudden sharp sell-off.
SHORT TERM TRADER: Square.
POSITION TAKER: Short at 12100; stop above 12000. Target 11200, the half-way mark of the rally that started late in 2016 and maybe 10700.
FTSE 100
Clinging to the bottom of the inverted pennant/flag chart pattern and momentum is clearly bearish. Also trying to hold on to the psychological 7000 level, a resistance level we first tested in 1999. A weekly close below here should set off the next shunt down to the 6800 area.
SHORT TERM TRADER: Short at 7025; stop above 7125. Target 6400.
POSITION TAKER: Square but looking to re-sell.
S&P 500
Yesterday’s sell-off formed the third candle of a slightly irregular three-candle evening star chart pattern that we warned about, yesterday’s price action holding inside the body of the candle of Wednesday’s rally, known as a pregnant pause. Price action since the recent low has similarities to the inverted flags of the previous two indices, one of the important tenets of Charles Dow’s theory.
SHORT TERM TRADER: Short at 2755; stop above 2825. Target 2600.
POSITION TAKER: Short at 2770; stop well above 2825. Target 2600.
BRITISH POUND/US DOLLAR
Meandering randomly as we consolidate around the same sort of levels we did in July.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
EURO/US DOLLAR
Taking another tumble under 1.1500 as more top brass decide that attending an investment forum in Saudi Arabia is perhaps not a very good look. Note to self: in 1988 Mr Donald Trump bought superyacht Nabila from Adnan Khashoggi for $100 million, renaming her Trump Princess.
SHORT TERM TRADER: Square and wondering whether to buy on this latest dip.
POSITION TAKER: Square.
GOLD
Mucking about going nowhere in particular.
SHORT TERM TRADER: Looking to re-sell against 1235.
POSITION TAKER: Square.
