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Market Outlook: Sino-US relations take a turn for the worse

Huawei to sue US government
March 7, 2019

From its base in Shenzhen yesterday, rotating Huawei chairman Guo Ping accused the US Congress of acting as ‘’judge, jury and executioner’’ when it banned the government from buying any of the telecom company’s equipment. They have filed a lawsuit in the Eastern District of Texas against the ‘unconstitutional’ move “after exhausting all other means to allay the doubts of some US lawmakers, we are left with no choice but to challenge the law in court.”

At today’s ECB meeting interest rates should be kept on hold at their current negative 40 basis points. However, they are widely expected to introduce further measures to try and prop up the Eurozone’s ailing economy. Measures might include even more cheap loans, targeting banks in particular. This would be seen as a dramatic loss of face and backpedalling on the trumpeted ending of quantative easing – which was only wrapped up in December.

DAX 30

Stalling around the Fibonacci 61 per cent retracement level and the neckline of the giant head and shoulders pattern that’s been building for years.

 

SHORT TERM TRADER: Short at 11600; stop well above 11800. First target 10800.

 

POSITION TAKER:  Square.

FTSE 100

A tiny shooting star candle yesterday just above the psychological 7200 might form the right shoulder of a potential interim head & shoulders top that’s been building for a month.

 

SHORT TERM TRADER:   Small short at 7120; stop above 7275. Target 6800.

 

POSITION TAKER:  Short at 7105; stop above 7275. Target 6700.

S&P 500

Retreating a little again on a trade deficit which ballooned in December to $59.8 billion as imports rose 2.1 per cent and exports fell 1.9 per cent. I was reminded that yesterday marked the 10th anniversary since the post-financial crash low at 666 for the S&P 500. I wonder if the Rule of 8-10 is valid on an annualised basis.

 

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

Hovering around what had been trend line resistance as EU negotiators give the UK 48 hours to come up with fresh plans to unlock Brexit deadlock – adding that they will work over the weekend to see if a compromise can be found. These people have had two and a half years to sort it.

 

SHORT TERM TRADER:  Square but might go long again today/tomorrow.

 

POSITION TAKER:  Square.

EURO/US DOLLAR

Dull and little volume going through.

 

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Square.

GOLD

Back inside the old trend channel and reverting to tiny daily ranges.

                            

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Short at 1328; stop above 1326. Target 1255.

Nicole Elliott is a long-standing member and Fellow of the Society of Technical Analysts and has taken over the IC’s trading coverage.  She is regularly interviewed and quoted by the financial media, is a conference speaker, and author of several books on charting.