Trading with point and figure

SPX since friday

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DOW
since 10th NOVEMBER
some...might say its slightly overbought
 

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DOW
we can see from lastest chart the overbought
that does not mean anything...lol
bull test in 50% area is 19K
18928-19K is a mass of supp...it gets nasty if that becomes rez on a bounce
otherwise ..we move higher
other index should follow...euro index are probably more resilient as they have not been too bullish
DAX 10600 should be decent supp
ftse..6776 area
lets see what happens
 
- Busy week kicks off with Draghi testimony, Eurozone M3/Credit, OPEC
meeting speculation as markets digest Fillon victory, as month end
flows assert themselves

- Week Ahead: Oil, Politics, ECB and Fed speakers, Beige Book, Eurozone
CPI, US Auto Sales, revised Q3 GDP and labour data, Japan Industrial
Production and Oz CapEx accompany OPEC meeting

- Fillon victory perhaps a relief, but caution advised on multiple fronts

- Charts: WTI, US Dollar Index, S&P 500 vs. GS Financial Conditions Index

..........................................................................

********************
** EVENTS PREVIEW **
********************

As markets return to full strength after the Thanksgiving hiatus, with month end and a busy week of data and events, the focus will be on the ECB as Draghi testifies to the European parliament, where he may well drop some hints about the December 8 meeting, though it is already clear that tapering will definitely not be on the agenda, and a 6-month QE extension to September 2017 seems likely. Though Stournaras' hints that He is likely to underline that the lack of any upward momentum in core CPI is a particular disappointment, and while he will likely sound positive on incoming growth data, he will stress that the risks are skewed firmly to the downside given the array of political and economic risks. Ahead of his testimony, the ECB also publishes the latest M3 and private sector lending, which have displayed a quite sharp loss of momentum in recent months, even if that should be rather unsurprising in the context of all the Euro area banking sector woes. The OECD will also publish its semi-annual Global Economic Outlook, and while its forecasting record hardly bears much close scrutiny, changes to forecasts will doubtless generate the usual plethora of headlines and commentary. The Dallas Fed Manufacturing Activity Index and the latest Saudi FX reserves are likely to be the only other statistical items to attract much in the way of market attention. Initial market movements for the week - dollar weaker, Yen/EUR firmer, EM equities recovering, Treasury yields slipping, gold higher - look to fit well with the scenario outlined below for month end flows, even if there are spurious attributions being made to lower oil prices as a key swing factor. These are markets which are flow driven, under the overarching and enduring theme of persistent financial repression ('desperately seeking yield and returns), with politics as their joker card, most other narratives are largely post hoc explanations.

If there is one clear lesson from this year, it is expect the unexpected. Fillon's victory in the French Republican presidential primary is understandably being greeted as diminishing the chances of a FN/Le Pen victory. Yet Fillon's policies are undeniably rather nationalistic, and per se more likely to see France at loggerheads with many other countries in the EU and Eurozone. His reform agenda sounds admirable, but the list of Republican presidents and PMs who have outlined such agendas, and have delivered little or nothing is long, and all too often (most recently under Sarkozy) reforms are watered down or reversed in response to strikes, protests and blockades. It also remains to be seen whether the parliamentary elections that follow the presidential election will deliver a solid Republican majority, or the prospect of 'cohabitation'.


UPDATED: The Week Ahead - Bullet point highlights: 28 November to 2 December 2016

- It is safe to say the week ahead will offer a cornucopia of potential talking points, and politics continuing to cast a long shadow with speculation around Brexit and the Trump administration ongoing, but also with next Sunday's Italian referendum and Austria's Presidential election re-run, which follows the run-off for the French Republican Party candidate for president. Let us also not forget that South Korea faces the likelihood of seeing a first ever impeachment of the country's president Park, which all underlines the degree of broad based instability. On top of all this, the week sees full OPEC ministerial meeting takes place on Wednesday, with Monday's meeting between OPEC and non-OPEC oil producers to see if the latter are willing to join the OPEC production curbs having been cancelled late on Friday, as Saudi Arabia pulled out of the meeting, which underlines that an OPEC agreement, let alone anything else, still looks rather elusive.

- Statistically the week kicks off with monthly growth and labour market indicators from Japan, works through an array of November CPI readings in the Eurozone (seen edging up at headline, but stuck at 0.8% on core CPI) and Australian Q3 CapEx, while the US has Personal Income, PCE, Auto Sales, Construction Spending and revised Q3 GDP ahead of Friday's labour data, for which forecasts are what they always seem to be these days: Payrolls +175K, Unemployment Rate 4.9% and key Average Earnings 0.2% m/m 2.8% y/y; but certainly fitting the bill for a December rate hike.

- In central bank terms, The Bank of England will publish the results of its annual bank stress tests alongside its latest Financial Stability Report, accompanied by a press conference with Carney. Given that the BoE was swift to ease capital buffers in the immediate aftermath of the referendum, it would seem apposite to 'stress test' for the impact of a GBP crisis, though whether that actually proves to have actually been the case remains to be seen. There will also be a goodly number of Fed speakers through the week, and the Fed will also publish its latest Beige Book ahead of its key December FOMC meeting. Brazil's central bank is expected to cut rates cautiously by 25 bps to 13.75%, though the travails of the Temer govt, which is becoming bogged down in more corruption scandals may prove to be the bigger story, particularly as the current crop of allegations are in many ways worse than those that unseated Dilma Rousseff.

- On the govt bond front, the S&P ratings review for South Africa next Friday will be closely watched after Moody's puts the country's rating on negative outlook. In auction terms, Japan sells 2 and 10-yr, the UK sells a 5-yr conventional Gilt, Germany also sells a small EUR 3 Bln of the same maturity, while France sells 15 & 25 yr, and Spain offers 2021, 2026 & 2041 conventional Bonos and 3-yr I-L.

- Month end flows will also be watched v closely, with the poor performance of many govt bond markets and a generally firm to many equity markets over the month expected to see some reasonably sized 'rebalancing' by multi-asset funds from the latter to the former.


from Marc Ostwald
 
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