Germany’s DAX is advancing after retracement respected its new support level at 12400/12500. Rising Twiggs Money Flow signals long-term buying pressure. Target for the advance is 13400*.
* Target calculation: 12400 + ( 12400 – 11400 ) = 13400
Gold retraces to test $1250
The Dollar Index found short-term support at 96.50/97 but the primary trend is down. Breach of support is likely and would signal another decline. The medium-term target is the 2016 low at 92/93.
Spot Gold encountered resistance at $1300/ounce and is retracing to test support at $1250. Fundamentals, like a weaker Dollar and rising political uncertainty, still favor a continued up-trend. Respect of support at $1250 would confirm.
UK election throws up new uncertainties | Bond Vigilantes
From Jim Leaviss:
The UK has a hung parliament, with Theresa May’s Conservative Party losing seats and likely ending up 8 short of an overall majority. It looks as if young people voted in large numbers, mainly for Jeremy Corbyn’s Labour Party. The Conservatives remain the single largest party however, and together with the Conservative-leaning DUP on 10 seats, they will likely form the new government. The Prime Minister is holding a press conference at 10am – it is possible that she resigns at that time. This is an extremely poor result for her personally, having gambled that another General Election would significantly boost her majority. For an election designed to deliver a “Strong and Stable” government, we face the possibility of a new Conservative Party leadership battle (perhaps beginning later today) and even another General Election later this year.
This renewed uncertainty seems likely to be unhelpful to the UK’s Brexit negotiations, due to start on 19th June. The Conservatives did especially badly in “Remain” constituencies…… Finally, some good news for those fed up with election campaigns: the poor performance of the SNP in Scotland reduces the likelihood of a new Scottish independence referendum in the next few years.
Source: UK election throws up new uncertainties for markets – Bond Vigilantes
Upside Possibilities Look More Likely Than Downside Risks | Bob Doll
From Bob Doll’s latest weekly update:
Investors remain highly focused on global political issues. Emmanuel Macron’s victory in France has reduced some political risk in Europe, but investors are growing increasingly skeptical about President Trump’s ability to deliver on his pro-growth agenda. The growing scrutiny over White House ties to Russian operatives, escalating risks of global terrorism and rising uncertainty around North Korea are all negatives for investor confidence.
But these negatives have not offset positive global macroeconomic conditions. Global economic growth is hardly robust, but looks better than it has in several years, especially in Europe. Manufacturing activity is improving and global trade appears to be recovering. Corporate profits are also trending higher across most markets and industry sectors. Financials remain a weak spot in many areas of the world, but we expect global bond yields will rise as economic growth solidifies, which should help this sector. Finally, monetary policy remains growth- and equity-friendly. The Fed is in the midst of a rate-hiking campaign, but should continue raising rates slowly and predictably…..
S&P 500, Nasdaq, Fedex bull signal
Bellwether transport stock Fedex [FDX] broke resistance at $200, signaling an increase in economic activity.
The S&P 500 followed through above 2400, offering an immediate target of 2500. Recovering Twiggs Money Flow signals medium-term buying pressure.
The Nasdaq 100 has gained more than 20% in the last 3 months, since breaking resistance at its Dotcom high of 4800. With Amazon breaking through $1000, I am concerned that tech stocks are over-heating.
Europe consolidates
Dow Jones Euro Stoxx 50 appears unruffled by Donald Trump’s visit and withdrawal from the Paris Accord, consolidating above support at 3500. Respect is likely and would signal a further advance to the 2015 high at 3800*.
* Target calculation: 3650 + ( 3650 – 3500 ) = 3800
An unintended consequence of Trump’s failure to re-affirm NATO’s Article V, may be that European states learn to rely less on an external party and draw closer together to support each other.
Footsie stalls as Pound weakens
Sterling continues to test primary support at 1.140 Euro. Breach would signal a decline to the 2016 low at 1.100.
The FTSE 100 advance stalled, signaled by a doji on the weekly chart, with bearish divergence on Twiggs Money Flow indicating medium-term selling pressure. Retracement that respects support at 7400 would re-affirm the target of 7700*.
* Target: 7400 + ( 7400 – 7100 ) = 7700
India: Sensex advance
India’s Sensex continues to advance, breaking resistance at 31000. Rising Twiggs Money Flow indicates long-term buying pressure. Target for the advance is 32000* but expect retracement to first test the new support level.
* Target: 29000 + ( 29000 – 26000 ) = 32000
Shanghai retraces
The Shanghai Composite Index retraced to test support at 3100. The decline on Twiggs Money Flow indicates long-term selling pressure. Reversal below 3000 would confirm a primary down-trend.
* Target medium-term: May 2016 low of 2800
Dollar slides, Gold strengthens
The Dollar Index continues its downward slide. Breach of support at 97 indicates another decline. The medium-term target is the 2016 low at 92/93.
Spot Gold is advancing strongly, having broken resistance at $1260. The immediate target is $1300.
