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I should think most people are just sitting on their hands waiting. These things often see a lot of whipsaw – it shoots up, then plunges down, or vice versa. The first move might not be the right one.
I’d like to see the markets come down a little to form a B wave, and then start rising again looking forward to the July Fed meeting…
I’m not brave enough to have any positions open except a hedge in the currency market.
FTSE: I don’t understand FTSE. It never seems to conform to my expectations, always seems to do the ‘other thing’ and I’ve overall just had a very frustrating time with it. Haven’t looked at it in years.
However I did have a look today and prepared the attached chart.
Given Brexit, trade worries, political change etc etc (and the pretty awful UK economy and Government Debt situation, one might reasonably expect FTSE to be much lower. But NO! It screams to new all time highs!
The reason of course is the currency. If I remember correctly about 70% to 80% of FTSE earnings come from overseas, so the more the Pound falls the more translated earnings go upwards and hence the new market highs.
I wonder if FTSE is rising in a wedge thing. In other words the opposite of what’s happening in currencies. Both the GBPEUR and GBPUSD charts suggest more downside for the Pound in falling wedge form, and here the FTSE chart seems to be the inverse picture.
So it looks like the lower the Pound goes, the higher FTSE!
I blieve in classical technical analysis, when a market breaks out of a triangle a realistic expectation is a move upwards equal to the base of the triangle. In FTSE’s case that would equate to a target of about 8600.
I agree hatman
Ftse higher and GBP lower does fit the charts and how
these markets have behaved since May 2016 Brexit vote.In general the low interest rates have ‘forced’ many
who require a return on capital, out of bonds and
into stocks. In the future when interest rates rise
there will be a rush to stock market exits.Trade wars, in fact any kind of wars, will not be
the real stock market killer. It will just be a return
to more normal interest rates and inflation
based on historical norms.Never give up, never surrender.
Spare a thought for the Italians (and Spanish) who must be watching BREXIT very closely indeed. Luckily for the UK all the strain has been taken by the Pound, sending FTSE skywards.
The poor old Italians though are strapped to the Euro, watching their economy and banking industry gradually get destroyed. Italy used to devalue the Lira regularly to remain competitive and they did okay albeit with a constantly declining currency.
Now they are completely trapped and sucking up like puppy dogs to their ‘masters’ in Brussels and the ECB.
If I was Italy, Spain or Greece I’d be watching closely, not prepared to do or say anything, but see how Brexit goes after a year or so.
Here’s the FTSE MIB chart – not for the squeamish.
Dow futs break above 26250 …… need cash to confirm
that this is the direction out of the becalmed seas.Trump not happy with EcB devaluing the euro vs dollar
as it gives the EU a trade advantage.Never give up, never surrender.
If the US cash markets open at these prices ( eg Dow 26275 )
then expect some fireworks as positions are squared etc.Atleast it will not be a boring US session !
Never give up, never surrender.
US stocks tend to have many swings going into June expiry
and then the week after tends to be negative.
Based on seasonal trends.This move up could alter some possible counts for the Dow
if it is not to be a race to 27500 ( see hatman’s chart ).Never give up, never surrender.
Stocks cheer at the EcB dovish talk as they see more easing.
Then Trump comments about unfair exchange rates.
Which may carry the risk of EU trade war with the US.Sign of the times … no hiding place.
Never give up, never surrender.
Looks like ‘they’ will clean up at June expiry.
Those who did not sell in May could sell in June.
I can tick off Dow 26500 on my chart.
Still have 27000 27500 and 30000
Never give up, never surrender.
USD Index: despite all the fun and games the Dollar Index hasn’t yet broken down from the long ascending wedge pattern. It isn’t clear whether it wants another try at the upper line (likely) or if the pattern has completed and the rally of the last few days is just a retest (less likely).
It seems probable that at some point the Dollar will break downwards and once the lower trendline is broken and retested the area around 94 comes into play as a target.
Two points of interest: 1) it sure looks like a very bullish five wave pattern up from the lows 2) amazing how the 200 day MA has acted as exact support recently (blue line). Clearly that MA will get tested at some point again, and having bounced from it three times the day it breaks will likely signal the correction downwards is underway.
But until then the Dollar is trending gently upwards (until it doesn’t).
Yesterday German Government 10 year Bund yields dropped to an historic low of – 0.29%. Yes, that’s negative 0.29%.
Despite this, Draghi is indicating another cut in interest rates and possibly also starting QE again.
It seems that whatever they do nothing is able to prompt spending, investment and inflation. And the Banks are being crucified, along with retirement savers.
In the States the 10 year yields 2.1%. Perhaps this is why the USD has been so strong (and might get even stronger if it is just completing Wave 1 of a five wave C upwards).
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