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1 hour ago, elle said:

stuff like this works

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Interesting Dow daily chart for Friday with strong buying for the last hours into the close giving a long tailed pause bar, whether a prelude to a reversal or bear directional continuation may be determined by any China response over the weekend so worth keeping an eye on the Weekend Dow.

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Though I've written a lot about this since early 2018 pointing out every confluence of the market highs and Trump ratcheting up the stakes in the trade war others on twitter now doing the same (see pic below), it's worth revisiting this as the cycle keeps repeating itself so let's review the causes.

A long while ago China and the WTO reached an agreement whereby China agreed to certain commitments and would be allowed full access to world markets, great, only China then reneged on the commitments while enjoying booming exports. Obama and Merkel decided to do nothing. That caused a bit of a problem, if you're playing Monopoly and someone is cheating they will end up the winner if no one is prepared to challenge them.

Along came Trump, he decided to take on China and it's intellectual property theft and restriction of foreign access to the growing Chinese market (no FANGS here for a start). And so the trade war begun.

Trump was smart, only attack from a position of strength and avoid using the anti Trump Main Stream Media for announcements. So when the US indices reached a high in early 2018 he announced the first salvo of tariffs on China using twitter and thus avoiding any twisting of the narrative by msm, it was a boon to traders, real news in real time and no subscription fees.

The market plunged, there was a pause then a second wave down on the news of Chinese retaliation, then a stop. With no new news the market could only look back at the fundamentals for direction and they were good for the US economy, the market headed back up.

Four times Trump has repeated this tactic over the last year and a half and it keeps on working, the Chinese economy keeps getting hit and slips deeper into the mire while the US economy remains strong.

A lot of amateur traders say none of this matters, it's all down to technicals and anyway they have all possible scenarios built into their trading plan, yeah right but the fact that the immediate future is being telegraphed to you via twitter should make you sit up and take notice.

Hard hit in all this have been the permabears who believe every downturn is the one they've been waiting for all these years, 'this is finally it, the great crash', but they are confounded each time, the thing is strong economies don't just crash, oh 'but what about the debt?'. Permabears have a self imposed blind spot and that is Japan and MMT, Japan with it's huge debt was supposed to sink into the sea years ago but there it still is, the permabears should be doubting their longterm bias but they are all so immersed in the echo chamber with the likes of Hedgeye and Zerohedge they just can't see the obvious.

So you have a market that is clearly being driven by urgent fundamentals and that means technical analyst becomes less relevant to the point of being not relevant at all simply because those in control of the market are no longer using historical data as reference points, they are making fresh calculations as to true value with each new piece of information on a continual basis, that takes a lot of resources that are simply not available to retail traders, so retail, as ever, can only catch the prevailing sentiment and try to hitch a ride regardless of whatever they might have drawn on their charts.

 

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I wonder if the American people will ever wake up and notice what's going on.  Probably not.

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JPY bank holiday today. Light week for news this week so will be interesting to see how the indices handle the recent resistance levels clearly marked.

China 300 chart added though I think IG might be phasing that out in favour of the more popular China 50.

H4 charts.

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Dax resting on the weekly chart support level 11608 may be in trouble with econ sentiment data at 10:00am on top of the 3 month and 10 year bond yields inverting.

Dow put in a strong directional bear bar yesterday, unclear if it has found support yet so will be watching closely.

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Guest update

Asian and European stocks started the week under pressure, and US futures pointed lower, amid concerns that US-China trade talks could break down next month. The Shanghai Composite index closed up nearly 1.5% on Monday after China’s central bank fixed the yuan at a higher-than-expected level to the US dollar. Hong Kong equities fell however as prolonged anti-government protests in the territory spread to the main airport. Investors remain focused on how lower government bond yields could affect equities this autumn.

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Trump makes a slight alteration to the world markets and future outlook but still expecting some fireworks beginning of Sept. As is mentioned in Sunday's post above, to get real time unadulterated subscription free market moving news just sign up for Tweetdeck and follow Trump.  

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Dax, Dow and Ftse very much in sync and trying to lift, strong support just below. After these big daily swings this week may be time for a pause candle.

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Yay, news articles mentioning 'recession' hit 600, even during 2016 only topped at 500 - maybe this time the market will actually listen but I wouldn't bet on it.

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We got our pause candle yesterday and this morning showing early signs of looking to reverse back up. The markets were helped yesterday by China making soothing comments but still just a war of words at the moment, something actual will need to happen or Trump will be obliged to introduce some new tariffs early September.

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Over the weekend and both Trump and Kudlow (chief econ advisor) say they see no signs of recession ahead and so continue to push on the trade war front though planned September rises in tariffs seem now to be put back to December 15th.

The Indices looking to continue the bounce and Dow bulls must be looking towards 26425 while Dax is back at old friend 11608 with resistance above at 11861. Ftse in similar shape looking to continue the bounce up off 7018 towards resistance at 7304.

Daily charts;

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All continuing to grind higher, included HK50 which is in step with the others. Dow still reaching for 26425 and Dax 11861. Ftse is the lagger trudging up towards 7304. HK50 and China 300 buoyed by another new China econ reform package effectively lowering interest rates.

S&P back up to 29407 monthly chart resistance (purple).

Daily charts (S&P weekly);

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A bear reversal bar yesterday but so far no continuation. Dax on the weekly chart support level (red) 11608 and Dow trying to retake 26000, HK50 stays within striking distance of daily chart resistance level 26419 (orange).

Daily charts;

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Another reversal day yesterday to remain in touch with recent resistance, Dow 26425 and Dax 11861. Ftse in tune but still lagging has resistance at 7231.

No major US news events today though there may be dips from the JH symposium.

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Indices just waiting at this hurdle and looking for any excuse to jump, have tried going backwards several times but just not interested. Bonds drifting down is bad news for the recession obsessionists, historically touch and go's don't count, the yields need to go deep into inversion and stay there for several months for it to count as a precursor to a recession. Long term these markets are still close to their highs.

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watch out, Trump just responded and has upped the stakes, if you have an open indices position you might want to think about looking to the weekend markets for a hedge.

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President ****-for-brains is out of control and needs to be impeached ...

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1 minute ago, dmedin said:

President ****-for-brains is out of control and needs to be impeached ...

so that you can buy these great new very cheap cars from China, but they look vaguely familiar for some reason 🙄

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Indices continuing to bounce within the recent range, Dow currently midway back up. US GDP on Thursday (prelim) expected at 2% (annualised) could provide the push either way for a break.

Ftse sagging under the weight of Brexit uncertainty. 

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Pause day candle for Dow yesterday, tried higher and lower and didn't like either so will be waiting for signs of direction. Ftse perched on the weekly chart key support (red) while Dax looks keen to check the top of the recent range. Not much news wise on the calendar today so will just have to wait for a Trump tweet 🙂 

So far a pretty good week for the S&P but the US GDP figures tomorrow will decide it.

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It's all about the US GDP (q/q) today 1:30pm and anything outside of expectations could break this recent range, 2% is the forecast.

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Something for the contrarians, latest investor sentiment data; bearish sentiment is up over 42% while bullish sentiment is down to 26%. Barron's and Bloomberg data.

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Kip Herriage @KHerriage. AAII Sentiment Survey: 26% bulls, 42% bears w mkts just 4% below ATH. Stunning readings. As a contrarian, nothing is more bullish. “It is wise to be fearful when others are greedy and greedy when others are fearful.” Warren Buffett

 

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Dax and Dow currently testing the range highs, US GDP came in as expected at 2%, consumer spending is up, 10 year yield back up to 1.5% so trade war not affecting the US economy too much while in China exporters are praying the  weaker yuan will save them from Donald Trump’s higher trade war tariffs.

Should be interesting tomorrow though month end flows and Monday is a US bank holiday which might dampen things.   

https://www.scmp.com/economy/china-economy/article/3024557/china-exporters-praying-weaker-yuan-will-save-them-donald

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Sat at range highs except Ftse which continues to struggle. Month end today so watch out for the risk manager tapping you on the shoulder and ordering you to close down all those losing positions 🙂

China release footage of large numbers of armed police training close to Hong Kong and Huawei face new allegations of technology theft by US prosecutors.

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Out of hours breakout higher of the month long range, can the US market open push it higher?

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