Trading with point and figure

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ear Jeffrey,
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At the start of the year I warned that the FTSE 100 would go down to 5,000 by the
end of the year. Given the devaluation of the pound following Brexit and improved
economic activity in the US and China during the second quarter, this forecast is
still valid but it may take longer for the FTSE to get to that level. Nothing has
changed in the long term and I expect my target to be hit in 2017. In the short
term however, we will see a larger than previously thought counter trend rally,
in time and magnitude. The bottom line is, the collapse in the stock market has
been delayed.
Negative developments to watch:
Central banks are running out of ammunitions, an unprecedented wave of stimulus
/ quantitative easing around the world has failed to put the global economy on a
firm footing. It seems Europe and the US are going to experience what Japan experienced
at the end of the 90's, a deflationary cycle that could last many years. The International
Monetary Fund warned "The UK's vote for Brexit has added significant uncertainty
to an already fragile global recovery".
The Japanese stock market peaked in 1989 and is down 57% in the last 27 years.
Despite multiple interventions by the ECB since the credit crunch of 2008-2009,
growth in Europe is still weak. The ECB introduced negative interest rates in 2014
in a desperate move to save the economy, but growth is still weak. Like in Japan
the spectre of deflation is real and it's just a matter of time before deflation
spreads to other parts of the world. Already bond yields are at record lows in anticipation
of a global crisis.
The slowdown has now spread to the UK. The pound has dropped sharply in the last
four weeks since Brexit, and consumer confidence is low. The Bank of England must
find a solution to revive the economy but cutting rates is not the answer, this
would import inflation. The UK is facing stagflation, a long period of low growth
and rising inflation which is negative for the stock market. We can expect asset
prices in the UK to deflate including house prices.
Italian banks but also Deutsche Bank are in trouble, another banking crisis looms.
Any bank failure would spread to UK and US banks. Lowering interest rates won't
help profits at UK banks, this explains why UK bank shares are trading near their
post credit crunch lows. Ask a simple question: why are bank shares going down while
the FTSE 100 is going up? This is normal behaviour in a bear market. This time however,
banks won't be too big to fail.
A massive debt bubble in China is about to burst. Remember the debt bubble in 2007?
This one is even larger. God knows what will happen if China debt bubble bursts.
Perhaps the most worrying development is the rise of terrorism in the West. A number
of incidents have taken place in France, Belgium and the US. Such incidents and
if they become more frequent as I suspect, will impact on the economic recovery.
An increase in the number of terrorist incidents would cause a contraction in both
consumer spending and investment, that would be another drag on the economy.
As you can see, you must wonder why investors are in the mood to buy stocks. Greed
is the answer. Sentiment is bullish and there is no alternative with better returns.
Well, there is an alternative and it's called cash but investors are too bullish
on stocks to contemplate a cash position. My sentiment indicator has been rising
for a while, when it's rising investors are in bullish mood and when they are in
bullish mood they focus on the positive news like stimulus, and ignore the negative
developments. As long as they are in bullish mood the FTSE has the potential to
move to 7,000 in the next month or two, then it's the big short. Not the film but
the most powerful decline since August 2015. In Elliott wave analysis we call this
decline a third wave down, following wave (2) which is the current rally. In a bear
market, markets decline in five waves and the next major decline will be the third.
It's also called the recognition phase, when investors finally realise it's a bear
market, then they will rush for the exits. Increased participation from sellers
will create a longer and more powerful wave down than the first wave that ended
in August 2015. This third wave will subdivide into five waves [1,2,3,4,5]. At the
end of wave 5 the FTSE will be trading near 5,000.
Meanwhile we trade the short term and intraday trends, so it does not matter if
the FTSE 100 rallies further before the big drop begins. We will continue to track
the short term moves up and down as always and we have done very well over the last
fifteen months with our mixed strategy of swing trades, intraday trades and options
(+177% based on stakes of £1 per £1000 trading capital). I hope you will join us.
The FTSE 100 will peak during the summer, be ready for the next move down
To receive regular analysis and trading signals on the FTSE 100, options, S&P 500,
EUR/USD and Gold subscribe to Better Trader Premium [http://r20.rs6.net/tn.jsp?f=001WPVF...rPT9VxseOC3FqmzOVhsfh_TlA9KrTwYfb6_kbIdc8g==]
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ear Jeffrey,
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....Sentiment is bullish and there is no alternative with better returns.
Well, there is an alternative and it's called cash but investors are too bullish
on stocks to contemplate a cash position..... ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
No Logic in stockmarket atm... the part above says it all...its a self-licking ice cream until the music stops. Money managers have to make returns and every dip will be viewed as a buying opportunity. The smart money as always will be out and diversified ready to pick up opportunities on the cheap.
 
dax
care with shorts...trend is still up
a few areas marked on the chart
there should be decent supp 10k-10050
lets see
 
Morning all looks like down initially but as 007 says be careful, we could be at or nearing a turning point

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not sure if we get movement until the bond market opens
they rallied yesterday
went up to our 132.40 rez area..as per the chart posted
 
** EVENTS PREVIEW **
********************

So to end another week of geo-political fireworks, that have been largely shrugged off by financial markets, we have a G-20 meeting of central bankers and finance ministers, which is expected to deliver little or nothing substantive, as well as the run of 'flash' PMI readings in Japan, Eurozone and U.S.A., with a special post-Brexit one-off edition in the UK. Elsewhere there are CPI data from Mexico and Canada, which also publishes Retail Sales, while the US Corporate Earnings calendar features GE amongst others. The broader point remains that there appears to be an emergent pendulum swing away from the 8 years of the non-panacea of monetary policy largesse to fiscal initiatives, evident in the run of headlines (see below) from Japan, South Korea, Philippines and China overnight. Fixed income fund managers may thus find that the sun may start to set on being 'crowded out' of their markets by central banks.

** G7 - July 'flash' PMIs **
- The overarching point about today's PMIs is that contrary to the claim that they are a snapshot of actual business flows and activity, they will in fact reflect a lot of emotional responses to the Brexit 'shock'. The overnight Japan reading did post a marginal gain to 49.0 from 48.1, though the Export Orders index sunk to its lowest level since 2012. Eurozone readings are expected to fall, though still underline relative strength in Germany and weakness in France, the more so given the barbaric Nice atrocity. It is doubtful whether the one-off flash readings in the UK will really add anything material to the more comprehensive Bank of England Agents Report, and unsurprisingly expected to post readings universally below the key 50.0 level. Of rather more interest will be the US Manufacturing PMI, which is expected to grind out a modest gain to 51.5 from 51.3 in June and the recent low in May at 50.7. While yesterday's Philly Fed Manufacturing headline reading unexpectedly fell, the details were much improved, above all orders and CapEx expectations, which suggests some upside risks to today's PMI, and thus adding to the gamut of US statistics which point to a solid profile to US growth.
from Marc Ostwald
 
UK PMI numbers likely to move lines - coming out at 9:30.

Cable not doing much but just treading water along with other indeces.

German numbers look reasonable. Let's hope UK matches. If so expecting cable to get-on up a little. If numbers poor expecting some tanking :rolleyes:
 
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