As opinion polls had been signalling for weeks, outspoken right-wing presidential candidate won resoundingly as 147 million voters steered clear of corruption-tainted PT which has been in power for the best part of 15 years. Support for the ruling German coalition parties, CDU and SPD, collapsed in Hesse, the region around Frankfurt, something we had witnessed earlier this month in Bavaria. Mirroring the general election result, the Green Party and Alternative for Germany picked up support from all hues. Antipathy towards ruling elites has increased over the last 2-3 years.
Late last night IBM announced that it would buy Red Hat at $190 per share; they closed on Friday at $116.68. At $34 billion this is Big Blue’s biggest ever acquisition and the third ever biggest in tech history. (Excluding AOL-Time Warner, the biggest was Dell’s $67 billion merger with EMC and then JDS Uniphase $41 billion for SDL). A distributor of open source software, it will become a part of the Hybrid Cloud division reporting to CEO Ginni Rometty.
DAX 30
Consolidating under first Fibonacci retracement resistance for much of last week, and under horizontal resistance from the neckline of a massive head & shoulders top. Momentum is more bearish than it has been in two years.
SHORT TERM TRADER: New short at 11200; stop above 11730. Target 10400.
POSITION TAKER: Short; stop above 11700. Next target at 10700.
FTSE 100
A massive doji-style candle last week as first we try to rally and then test March’s low (6840). Momentum is more bearish than it’s been in two years so we feel it’s just a matter of time before we test the bottom of the massive broadening top chart pattern. Sky News reported that Stephen Haddrill, head of the auditors’ watchdog the FRC, is about to step down as a government inquiry into its operations is underway.
SHORT TERM TRADER: Short at 7025; stop above 7125. Target 6400.
POSITION TAKER: Short at 7075; stop above 7125. First target 6800.
S&P 500
Price action mirroring that in Q1 2018 with two sudden weekly down drafts. As well as increasingly ugly electioneering in the US Friday US October payroll data is released.
SHORT TERM TRADER: Short above 2740; stop above 2750. Target 2600.
POSITION TAKER: Short at 2770; stop well above 2780. Target 2600.
BRITISH POUND/US DOLLAR
Some are at last waking up to the fact that the relatively strong US dollar and higher US interest rates are beginning to impact consumers and the trade deficit.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
EURO/US DOLLAR
Half-way between the high and the low of the last two years. Yesterday French finance minister Bruno Le Maire told Le Parisien, ‘’we do not see any contagion in Europe. The European Commission has reached out to Italy. I hope Italy will seize this hand. But is the Eurozone sufficiently armed to face a new economic crisis?’’ It is estimated that French banks have lent €280 billion to Italian corporates and households.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
GOLD
No longer oversold after the little rally of the last three weeks.
SHORT TERM TRADER: Tiny short at 1227; stop above 1240. Target 1190.
POSITION TAKER: Square.
