Data from Japan early this morning showed that economic growth in Q4 2019 fell by 1.6 per cent Q/Q and on an annualised basis it slumped by 6.3 per cent. This is the worst performance in 6 years, caused in great part by the consumption tax hike, and Q1 2020 has got off to a bad start due to the new virus which has stranded thousands of tourists on a cruise ship in Yokohama harbour holding the biggest cluster of confirmed cases outside China. Worries are beginning to grow about this year’s Olympic Games to be held in the country.
A second cruise ship with 1454 passengers and 802 crew which was denied entry at five countries was finally allowed to dock in Cambodia. The tourists have disembarked and are now making their way back to their homes. One American one was subsequently found to have the Covid-19 virus, and so the operator, Holland America Line, is chasing up all the others. Malaysia has banned entry to all passengers from this ship.
DAX 30
Holding close to the record high and almost overbought as traders keep a wary eye on the shrinking value of the euro against the US dollar.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
FTSE 100
Despite price action of the last fortnight the MACD remains just bearish and last week’s shooting star candle might increase downside pressure for a sustained break below 7400 and then the bottom edge of the massive diamond pattern.
SHORT TERM TRADER: Short at 7470; stop above 7550. Target 7230.
POSITION TAKER: Square.
S&P 500
Still overbought on a weekly basis as several US stock indices settle at record highs on Friday; best performer so far this year is the Dow Utilities. Today the People’s Bank of China cut the interest rate it charges on medium-term loans (1 year); they are expected to cut the loan prime rate on Thursday.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
Negligible momentum and, by historical standards, a narrow trading range ought probably to be seen as a ‘good thing’ ahead of Brexit – where negotiations, the French foreign minister warned yesterday, are likely to ‘’rip each other apart’’.
SHORT TERM TRADER: Long at 1.2970; stop below 1.2900. Target 1.3200.
POSITION TAKER: New long at 1.3040; stop below 1.2900. Target 1.3400.
EURO/US DOLLAR
Last week’s weak close, the lowest since April 2017, has turned the MACD bearish – at last. Implied volatility has picked up from what has been extreme lows and is likely to pick up the pact as global headwinds hit.
SHORT TERM TRADER: Square.
POSITION TAKER: Currently considering a short position.
GOLD
Weekly momentum remains more bullish than we had thought.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
