And about time too, some will say. This morning index provider MSCI said the weighting of Chinese mainland A shares in its global benchmarks will be quadrupled later this year, Reuters reports; from 0.71 per cent to 3.3 per cent weighting in its emerging markets index. The effect of this could be that as much as $80 billion would be forced into the Shanghai and Shenzhen stock exchanges. See this week’s Investors Chronicle magazine where detailed technical analysis on four major China-related indices are covered.
St David’s day today and The Trader heads west for a long weekend. Therefore, I’m afraid her Stock Market Outlook will not appear Monday 4th and Tuesday 5th March; back to normal on Wednesday.
DAX 30
Almost overbought as we inch just above the early December high.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
FTSE 100
A shooting star monthly candle against the 50 per cent retracement level suggests this year’s bounce may have ended even if momentum is no longer bearish. On the weekly chart, we have a potential evening star 3-candle combination – a fractal of the monthly picture. The daily chart has a rounded top with momentum bearish since Tuesday.
SHORT TERM TRADER: Small short at 7120; stop above 7275. Target 6800.
POSITION TAKER: New short at 7105; stop above 7275. Target 6700.
S&P 500
The bodies of January and February’s candles lie inside that of December underlining just how dramatic the collapse that month was. Currently re-testing January 2018’s high, and close to the record high, yet momentum is not nearly as bullish as it was on those occasions. We see this year’s price action as corrective and a pregnant pause (harami pattern) before the market gets going for good.
SHORT TERM TRADER: Short at 2775; stop a bit above 2820. Target 2600.
POSITION TAKER: Short at 2795; stop above 2875. Target 2600.
BRITISH POUND/US DOLLAR
The commodity channel index suggested going long on December’s monthly chart and while it didn’t quite catch the low, it pointed to this year’s rally. February’s hammer candle is another bullish sign and it’s managed the strongest monthly close since May last year. One step at a time and watch to see when serious unwinding of short positions kicks in.
SHORT TERM TRADER: New small long at 1.3260 on February’s close above 1.3200.
POSITION TAKER: Might buy more again on a close above 1.3200 today.
EURO/US DOLLAR
Monthly momentum is stronger than one might have thought as the euro bumps along the bottom of last year’s range.
SHORT TERM TRADER: Long at 1.1305; stop below 1.1325. Target 1.1480.
POSITION TAKER: Square.
GOLD
Rubbish momentum as we form a tiny shooting star in February just ahead of the 38 per cent Fibonacci retracement resistance are that has capped many times since 2013.
SHORT TERM TRADER: Short at 1326; stop above 1350. First target 1300.
POSITION TAKER: Short at 1328; stop above 1350. Target 1255.
