Market Outlook: Nationwide house price slump

Biggest monthly drop in years

January 4, 2019

This morning the UK’s Nationwide building society announced a surprising 0.7 per cent house price fall in December, matching that of March 2012, in turn the biggest M/M fall since December 2008. This took the annualised house price rise to a mere 0.5 per cent and the slowest rate of increase in almost 6 years.

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Yesterday afternoon December data published by the Institute of Supply Managers on manufacturing activity suddenly slipped to 54.1 from 59.3 the previous month. The reading was the lowest in 2 years and the sharpest M/M fall since 2008.

DAX 30

Nothing to report and no longer oversold as we consolidate neatly under the neckline of the massive head & shoulders top, capped by first Fibonacci retracement resistance.

SHORT TERM TRADER: Short at 10445; stop above 11000. Target 9300.

POSITION TAKER: Square.

FTSE 100

Another index that’s no longer oversold as it sits on long term trend line support at the bottom of the massive broadening top chart pattern. Note that losses in Tokyo this morning were due in large part to the fact this is their first day back at work following the New Year’s holiday.

SHORT TERM TRADER: Short at 6645; stop well above 6800. Target 6250.

POSITION TAKER: Short at 6770; stop well above 6900. Target 6200.

S&P 500

Momentum not nearly as bearish as it was at year-end and employment data due today unlikely to be decisive for price action. Keep a close eye on the yield curve which is succumbing to all sorts of pressures. Official pronouncements as to the health of the US banking system are also unhelpful.

SHORT TERM TRADER: Short at 2500; stop well above 2625. Target 2200.