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Market Outlook: First interest rates turn negative, now prices

Most people fear inflation

People of a certain age, who lived through surging prices in the 1970s, have their mindsets anchored by that period; the same goes for those of any age who have lived with hyper-inflation. But the reverse, deflation, is just as difficult to navigate and maps or methods are few and far between. Earlier this month we warned of falling factory gate prices in China. Today it’s Switzerland’s turn, where in August producer and import prices fell 0.2 per cent taking the annualised rate of decline from 1.7 per cent in July to minus 1.9 per cent last month.

A big surprise in London yesterday as the London Stock Exchange was hit with a $36.6 billion dollar bid from the Hong Kong Exchanges and Clearing Ltd (HKEX). In a statement, they added that the proposed deal would involve scotching London’s plan to buy Refinitiv, the data group.

DAX 30

Overbought as we rally through all retracement resistance levels for potentially a seventh consecutive working day. Too soon to tell but watch for a shooting star candle tonight.

 

SHORT TERM TRADER: Square.

 

POSITION TAKER:  Square.

FTSE 100

A potential spike high above the 50 per cent retracement level on lacklustre momentum.

 

SHORT TERM TRADER:   Stopped out this morning and rather cross.

 

POSITION TAKER:  Square.

S&P 500

The commodity channel index is yet to turn down as the markets spikes   the record highs on President Trump extending by a fortnight the deadline to impose more tariffs on Chinese imports.

 

SHORT TERM TRADER: Stopped out at a ridiculously small profit.

 

POSITION TAKER:   Square.

BRITISH POUND/US DOLLAR

Holding quite happily just under 1.2400 level despite negligible bullish momentum.

 

SHORT TERM TRADER:  Small long at 1.2345; stop below 1.2200. Target 1.2550.

 

POSITION TAKER:  Square.

EURO/US DOLLAR

Barely holding at current levels as many wait to see what the ECB will do at their rate-setting meeting today, the penultimate with Mario Draghi at its head.  

 

SHORT TERM TRADER:  Stopped out with a negligible loss.

 

POSITION TAKER:  Square.

GOLD

Holding neatly in this slightly lower trading band with the MACD decidedly bearish.

                            

SHORT TERM TRADER:  Short at 1520; stop above 1535. Target 1440.

 

POSITION TAKER:  Short at 1507; stop above 1560. Target 1440.

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.