After the Labour Party’s worst showing in a general election since 1935, leader Jeremy Corbyn doesn’t even have the decency to stand down immediately. Over-confident Liberal Democrat leader Jo Swinson not only lost in her own seat, but her party managed to scrape together a meagre 11 seats with which to represent remaining voters in Westminster. Scotland’s SNP wins something like 47 of the 59 seats available. Boris Johnson brandishes his dog on the steps of Downing Street, wearing a Brexit-coloured bandana (the dog, that is). Donald Trump Tweets: ‘’Congratulations to Boris Johnson on his great WIN! Britain and the United States will now be free to strike a massive new Trade Deal after BREXIT.’’ You really couldn’t make it up.
The Financial Times reports that yesterday the Federal Reserve Bank of New York plans to double repo market intervention to avoid a year-end cash crunch. It is expected to pump almost half a trillion dollars into the system, dramatically increasing its current level of intervention that’s been continuing for almost 3 months. Overnight cash available will rise to $225 billion per day, term-repos to $190 billion, plus the $75 billion outstanding. Despite this largesse, the overnight interest rate for the 31st December hit 4 per cent this week.
DAX 30
Not yet overbought despite inching above November’s high. Can only imagine the rally was prompted by comments yesterday from Christine Lagarde at the ECB who described herself as nether a dove or a hawk, but as a wise owl.
SHORT TERM TRADER: Stopped out on the move above 13375 and OK with that as it squares me up over the year-end.
POSITION TAKER: Square.
FTSE 100
Momentum much less bearish as we thrash around weighing up the pros and cons of a clear Conservative majority in parliament versus a stronger pound (which hit 82.75 pence per euro overnight).
SHORT TERM TRADER: Square.
POSITION TAKER: Stopped out for a tiny loss on yesterday’s strong rally. Will now remain square for the rest of this year.
S&P 500
Rushing to put in a new record high, becoming overbought again in the process, as traders cling to new mutterings about a stage 1 trade deal between the US and China before new tariffs kick in on Sunday.
SHORT TERM TRADER: Stopped out here too.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
Overbought again, as we were mid-October, as the flag pattern’s bullish prediction kicks in.
SHORT TERM TRADER: Square.
POSITION TAKER: Took some rather welcome, hefty profits on my long position late yesterday.
EURO/US DOLLAR
Joining in with cable’s rally and it too has become overbought in the process, reaching its highest level since early August.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
GOLD
Another rejection from the 1480 area as hinted at by the commodity channel index yesterday.
SHORT TERM TRADER: Short at 1520; stop above 1500. Target 1440.
POSITION TAKER: Short at 1507; stop above 1520. Target 1440.
