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Market Outlook: ‘’I think we have to be a little nervous, obviously’’

Says Federal Reserve’s Evans

In a TV interview today with CNBC, coinciding with the Credit Suisse Asian Investment Conference, Charles Evans, Chicago Federal Reserve President, was asked about the inversion of the US Treasury yield curve. ‘’Whenever the yield curve gets flat, we see growth decelerating and, like I say, I’m looking for almost 2 per cent growth this year’’. He added that his models see that the probability of a recession in the US is no more than 25 per cent.   

Yesterday Turkish President Recep Tayyip Erdogan threatened the financial sector with heavy penalties if they were found to be adding to the pressure on an enfeebled Turkish lira. On Friday, it lost 4 per cent of face value, the biggest one-day drop since August’s slump. On Thursday, central bank data showed that his citizens were holding record amounts of foreign currency and precious metals.

DAX 30

A big bearish engulfing candle on the weekly chart against the neckline of the head and shoulders top and 50 per cent retracement resistance has seen the commodity channel index turn down.

 

SHORT TERM TRADER: Added to short position this morning so my average price is now 11450; stop well above 11625. First target 10860.

 

POSITION TAKER:  Short at 11550; stop above 11825. Target 10600.

FTSE 100

A good-sized weekly shooting star candle at exactly Fibonacci 61 per cent retracement resistance could hardly be more textbook perfect. The commodity channel index has yet to turn down though.

 

SHORT TERM TRADER:   New short on Friday’s close at 7190; stop above 7370. Target 6830.

 

POSITION TAKER:  New short at 7190; stop above 7370. First target 6600.

S&P 500

A slightly half-hearted shooting star weekly candle against final Fibonacci retracement resistance and the level that had capped earlier this month. The weekly commodity channel index has turned down and the Russel index fared badly on Friday.

 

SHORT TERM TRADER:  New little short on Friday’s close at 2800; stop above 2865. Target 2600.

 

POSITION TAKER:   New short at 2800; stop above 2900. Target 2550.

BRITISH POUND/US DOLLAR

Not Brexit immune but bullish momentum has held for most of this year. Last week’s hammer after the previous week’s bullish engulfing candle is another cautious bullish sign on this chart

 

SHORT TERM TRADER:  Square but tempted to go long. Maybe a call option.

 

POSITION TAKER:  Square.

EURO/US DOLLAR

A shooting star candle last week but as it’s not at the top of a bull trend, it’s of dubious validity. Nevertheless, it’s kept momentum bearish, as it has been for most of the last year. Italy has signed up to China’s Belt and Road programme, dividing the two deputy PMs, while Hungary’s Orban says he might resume his anti-EU campaign ahead of EU Parliamentary elections May 26.

 

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Square.

GOLD

Irrelevant little candles over the last fortnight.

                            

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Short at 1328; stop above 1320. 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.