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Market Outlook: Bank of Korea’s turn to cut

First, and surprising move, since 2016

Today the Bank of Korea, South Korea’s central bank, trimmed its key interest rate by 25 basis points to 1.5 per cent. Governor Lee Ju-yeol said ‘’economic circumstances have deteriorated since April. With the rate cut, we took into account the effects of Japan’s trade restrictions’’, reducing forecast growth to 2.2 per cent, lower than the government’s own 2.4 per cent forecast. The first three months of this year saw the country’s worst economic contraction since the global financial crisis.

 

At a public meeting in Moorgate yesterday Andrew Bailey, head of the Financial Conduct Authority, was heckled, told to ‘stop protecting the crooks’, and to ‘run away, slimy’. This was at the end of a crowded meeting with investors who had lost money or suffered with cases the FCA should be overseeing, like Mr Woodford’s fund, RBS’s Global Restructuring Group, and London Capital & Finance. Let’s not forget that the FCA was created out of the discredited FSA, chaired by Lord Turner and run by CEO Hector Sants until it was wound up by the government in 2012.

DAX 30

Retracing just over a Fibonacci 38 per cent of June’s rally, with another 3-candle evening star combination. Bearish momentum has increased. Worth noting that European car sales slumped in June, France down 8.4 per cent, Spain 8.3, UK off 4.9 per cent and Germany minus 4.7 per cent – overall the steepest drop since December.

 

SHORT TERM TRADER: Short at 12530; stop above 12500. Target 11850.

 

POSITION TAKER:  Short at 12385; stop above 12665. Target 11600.

FTSE 100

All change as we’re back down at 7500, increasing bearish momentum, as weak sterling may not be quite the panacea shareholders might have thought.

 

SHORT TERM TRADER:   Short at 7550; stop above 7625. Target 7200.

 

POSITION TAKER:  Short at 7515; stop above 7625. Target 7100.

S&P 500

The MACD turning bearish on yesterday’s retreat, helped in part by Netflix whose shares fell by 11 per cent after-hours on disappointing subscriber sign-ups.

 

SHORT TERM TRADER:  Watching to see whether this week’s candle combination will signal a sell.

 

POSITION TAKER:   Square.

BRITISH POUND/US DOLLAR

As they say: ‘’be careful what you wish for’’. Cable’s less oversold after yesterday’s small bounce from the bottom of the potential broadening base formation.

 

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Square.

EURO/US DOLLAR

The commodity channel index trying to turn up again in what might be a double bottom (letter W) formation.

 

SHORT TERM TRADER:  Long at 1.1240; stop below 1.1180. Target 1.1340.

 

POSITION TAKER:  Square.

GOLD

Ichimoku moving averages are supporting price action this month, while Ray Dalio keeps on banging on in the media about how he’s selling stocks and buying gold.

                            

SHORT TERM TRADER:  Short at 1406; stop above 1440. Target 1340.

 

POSITION TAKER:  Short at 1404; stop above 1440. Target 1320.

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.