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‘K’ could you repost David’s last two posts from the W/B 25th April thread to this thread please.
Oh looks like I moved them and so David reposted.
David, it was certainly a very interesting week. I have not studied for this week yet and will start shortly.
Plan your trade, trade your plan!
I get frustrated nowadays with trading more so than I used to. I have kept going on about the FANG stocks this time round.
It’s ridiculous that the economic numbers are so,so atrocious yet the market goes up. I know we all put a different spin on it, but at the end of the day, that is not correct.
This article explains it perfectly.
It was the same with FTSE, I am thinking heavily dependent on Oil, Oil is in crisis as and yet FTSE went mad up.
You can’t trade another country as they all follow the US, so maybe I need to look at the composition of the Russell and it’s price action in this current climate.
Plan your trade, trade your plan!
FTSE and many other markets have seen a far more subdued rally from the lows compared to the US.
In the longer term (20 years) FTSE looks really awful – like it wants to return to 3,000.
For the moment the rally has reached an interesting point where the RSI and MACD have both reached levels which would be consistent with a reversal downwards. It’s almost an exact replica of the DJT chart posted above. I’m not saying it’s *going* to drop, just that it is in an important area.
FTSE: I think in the long run FTSE looks ghastly. It’s possible that all the movement from the year 2,000 to 2,009/11 was a 4th wave and we then got a rising wedge thing upwards to complete wave 5. The 4th wave can be placed in two different points.
After a 5th, the target becomes a return to the previous 4th. FTSE has already achieved the higher 4th. However, if this is the long awaited ‘5th of a 5th’ then the 4th wave lies much lower.
For the moment FTSE is pausing and trying to rally. The rally can fail at any time, or it might try to overlap the low at 6,600.
However, notice that major support is the double bottom at 3,400. It might take a couple of years, but it seems to me that 3,400 beckons at some point.
The differing make up of stock markets has to be a
big factor in their performance but none would be
as high as they are with out central bank pump.I wonder what the BoE are to announce on this
Thursday that they don’t want to do during
the Ftse rth !Never give up, never surrender.
Yes hatman the Ftse chart patterns are a puzzle
and the index, having fallen so far, may well
have given the clue re 3400Never give up, never surrender.
DOW: I’m counting the Dow rally as a three wave ABC thing. The target is/was 25,040 or thereabouts for C=A. However, looking at the minute patterns, it’s possible (and likely) that we got a truncated 5th wave (of C) at 24,700. If that’s so, then (once again) the obvious next move is a decline to overlap wave ‘A’ at 22,500.
However, the final rise can also be interpreted as a ‘three’ and can be (if it wants) the first part of a rising wedge up to the ‘perfect’ C=A at 25,040. This option looks less likely, but one should be aware of it.
The RSI and MACD are still positioned roughly where a bear market rally should reverse.
GBPEUR: I am really at a loss to understand quite why the Pound has rallied so much recently. Yes, Europe has had significant problems with the virus, but the UK is now worse. Also I don’t think much of the UK economy.
Still, markets are markets and for some reason they wanted the Pound higher.
Interestingly the rally has stalled at the 50 and 200 day moving averages, and the RSI and MACD are positioned right where one would expect for a bear market rally.
My long term charts still suggest parity 1:1 for GBPEUR, but the recent rise *looks* like a five (might not be).
I think if the Pound makes another jump upwards and manages to penetrate the 200 day, I’ll have to revise my long term view and assume the ‘bottom was in’ at the 1.05 low.
GBPUSD: like the GBPEUR chart, GBPUSD is sporting what looks like a distinct five wave rise from the low at 1.14.
And in my long term chart in March I *wondered* if the falling wedge was now complete.
Strange as it might seem, the ‘five up’ coupled with the possible completion of the long term falling wedge, suggests that it is no longer appropriate to be short GBPUSD.
USD: thinking aloud here. For years the USD has been rising, in part fueled by the ‘carry trade’ – people borrowing in Euros and Pounds then selling to reinvest in higher interest rates in the US. And this continued as interest rates were raised in the US. Most of the money probably went into deposits and Treasuries, but some would have speculated on Corporate Bonds and equities.
But with the massive intervention by the Fed, interest rates were cut to 0.25% and Treasury yields fell to all-time lows. Hence the carry trade disappeared.
Now all those who borrowed billions or trillions in EUR and GBP are stuck with a dud trade. And there’s a risk that the Fed will cut again or even go to negative.
So the carry trades have to be unwound by selling the Dollars and returning the money to EUR and GBP (and Yen). This *might* explain why GBP has risen so strongly in likely ‘five’ form.
It’s just a guess. The *risk* here is that the process continues for a couple of years, with a constant flow out of Dollars, for no other reason than the ‘clever’ carry trade people have to unwind their positions.
Anyone with a long USDGBP position should be aware that the ‘five up’ pattern gives an eventual target of 1.467.
I will apply best practice stop management to my Ftse short.
Futures indicate we will have the expected weakness but how
low remains something of a mystery.Ftse and Cable charts look like they will move in step.
I would very much like to see Ftse 5500 before 6000
and Ftse 5000 before 6500 but there is a doubt.Never give up, never surrender.
DOW: on this detailed chart I’ve plotted three different counts for this decline.
One count is an A, B, C=1.618 and finishes at 23,691 which is roughly where the market closed on Friday.
The two other counts finish quite close together, at 23,493 and 23,431. One is a complete ABC, the other only the third wave of five.
So it seems there is a chance that the decline finished on Friday and the market will rise (cash market, whatever the futures are doing).
However if the market falls through the first target of 23,691, then the lower target area is opened, from which a bounce should occur.
These might not be right, of course.
Great stuff David and Chris.
Personally I do not think lows are in on this run yet but we can bounce today just to reset the technicals.
I have learned that to never trust Globex on a Monday. If its SU it can remain SU. Thats about all I can predict.
Let’s see where we are after a few more of the CIT times.
As for GBP/USD, I concur, it is too high basis no Brexit deal and we are due to leave soon. I am looking to short GBP/USD
Plan your trade, trade your plan!
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