What We Think We Know
We at Minter Markets have been waiting for global market turbulence to pick up for some time.
Trump vs Fed
U.S. vs Iran
Hong Kong unrest
Slower global growth
Large and ever increasing debt levels globally
Italy budget challenges
Turkey economic and political issues
Central banks that are going to be proactive again in trying to support markets
Negative debt yields of over 13 trillion USD, with more to come.
A very polarized U.S. political situation
The list goes on and on….
What we Think we know is that we have now entered a trading market that will experience increased volatility. We have left the forgiving buy on dips, and buy and hold market that we have seen for quite some time.
Discipline in trading will be key going forward, there will be opportunities to trade the market as we think there will be dips to buy and bounces to sell.
We do think with the upcoming currency wars, Gold will be a winner.
Currencies will be volatile and China has the next move, to be followed by the U.S.?
Bond yields look to continue lower with the U.S. following the Europeans yields.
Brexit looks as though it will go to the wire and be a hard exit.
Short term ideas:
- Equities may well bounce tomorrow and hold for a few days, but we still think there are lower levels to come.
- Gold we still like buying on dips.
- USD we look for it to stabilize as we await the next signals in currency wars.
- Oil we think will now be a $55 to $65 range, but difficult to handicap with trade war getting more intense.
Key levels for us:
EURUSD: resistance 1.1235 to 1.1250 support 1.1100 we look for correction short term and expect the 1.1250 resistance to hold.
Gold: resistance 1,500 support $1,445/$1,450 we look as gold as a buy on dips and for a test of $1,500 and higher.
S&P 500: resistance 2884, 2913, 2975 support 2800, 2750 we look for a bounce short term.
Dax: resistance 12,000, 12,450 support 11,600
Sometimes one chart tells us the whole story! VIX Index broken out. We expect a retracement short term.