Is The UK Heading For A 2nd National Lockdown?

Okay, very good morning. It's just gone past 7 AM now in London on Friday, 18th of September. First things first, a little bit of a different look to the briefing this morning. As you can see, as always, really appreciate it if you could subscribe and join us on the Amplify Trading YouTube channel. I've had some really great engagement as usual throughout the week, and obviously I love answering questions if I can help in any way. I always will, but I've got a special guest with me today. Sam, how's it going?

Hi, and yeah, no, really good, thank you. It's great to be back like the old days, a throwback to simpler times. But yeah, no, very well, thank you, and, you know, looking forward to this.

Yeah, so what I'll do is we'll go back to the back-to-back routine. So I'll do the warm-up and then you're the main event.

And you can go over the charts and you can look at things from more of the technical, I guess, implementation. I'll talk a little bit more about the general sentiment on things and then go through some of the headline news stories in focus.

So start off then, let's have a quick look at the, the charts.

And they're not really too much to report in the way of major significant news that developed overnight. I mean, in terms of the actual closes on Wall Street all negative across the board. The NASDAQ underperforming a touch, down around 1.5%. The other indices, S&P down about 0.8%, Dow down about 0.5%. So not too much to speak of. I'm sure Sam will look at the S&P a little bit more detail in a moment. Obviously, in the briefing yesterday, I was talking about the 50 DMA holding up as a pretty decent level of support. But as I said, he can look at that in a moment. Otherwise, in terms of the other asset classes, The dollar index is pretty flat. So any of those gains that we've seen really in the Asia session, not last night, but the night before, all of that's been taken back. And actually, any of the Fed bid mainly has been reversed now. So in terms of the major currency pairs, then, now that that dollar has pulled back, it's just provided a bit of a moderate support tone to euro-dollar and cable and the major FX pairs.

Cable obviously has been on a bit of a roller coaster.

Yesterday, of course, we had the Bank of England come out, and they gave their strongest signal yet that they're considering using negative interest rates. They said that they will work with bank regulators on how they might implement such a policy. So if you actually track the Bank of England's kind of rhetoric over the course of the last couple of months, this is the actual— when that announcement came out, they basically started to ramp up the timings of preparation work for if it's necessary, it's kind of ready to go as a potential policy tool. And obviously this comes with October being a particularly important month for the UK, as we know, the kind of trio of events ranging from the COVID developments, which I'm going to talk about actually in quite a lot of detail in a moment, to Brexit and then the UK government's fiscal plans with things like furlough coming up for expiration. But as you can see, though, that, that selling pressure was relatively short-lived. You had a really big wick here on that candle print, and that did come amid then some of the latest Brexit updates. But before I get to that, quick look at some of the other charts. Gold Uh, minor positive this morning, uh, up about $10 at $19.59 and a half. Again, technically it was quite interesting here in terms of a retest up at the overnight Asia-Pacific highs, but there was also a low point, an area of support through periods of the last week going back to Tuesday, Wednesday.

And then in crude, I'm going to talk a little bit—

I'll give you an update on OPEC in a moment— but WTI continues to claw back some of those recent losses that we've had of late. I'm just going to quickly look on a daily, actually haven't done so in a while. And you can see here from a technical standpoint, we're coming right up to that, um, kind of cluster of activity. The 50 DMA being the red line is where we're trading. So we've reclaimed a $41 handle for the, for the time being. But look, let's get into some of the headlines. Sam will go over those charts again, uh, in more detail, as I said. So Just transition my screens.

So you should be able to see now some news articles. And the first one I'm going to talk about is Brexit. Remember, I just showed you that pound chart after the Bank of England comment about kind of preparation of negative rates. The pound fell, but then we saw a big pop on the upside and reversal after an FT report that came out citing the EU Commission president talking about that there's still a prospect of a deal with Britain being done. The UK government has now said that a round of informal EU trade talks this week was useful, and obviously following that comment where, uh, Van der Leyen said that she's convinced the deal is possible. Negotiators, in terms of timing, of course, are kind of working overtime now trying to come to an agreement by mid-October— is that tentative timeline— to provide time then for the deal to be ratified before year-end at the end of the transition period. So not too much really to add here other than you can expect the Brexit headlines to remain quite a constant feature, I think, of British press going forward. However, that could well be superseded by an increasing issue confronting the nation, and that is this: reports this morning— and we've already had the Health Secretary Matt Hancock, he's already been speaking 7 AM this morning, so he definitely is trying to get ahead I would say tactically from a PR point of view, a lot of the papers are running this as a major headline this morning, so he's already been out talking about it, and that's the prospect of the UK heading potentially for a second national lockdown. This comes after, as it states here, some advice that's come from some scientific advisors, and what's happening here is that they're suggesting the UK government should impose a 2-week national lockdown in October to coincide with the October school half term. The number of positive COVID-19 cases is doubling every 7 to 8 days in England at the moment, and so this is what that looks like at the moment in terms of on a nationwide basis, very much situated in the, in the north west for the time being, but has been also areas now in the northeast which have gone into kind of localised lockdown. So new restrictions have come in in areas in Newcastle, Northumberland, North Tyneside, South Tyneside, Gateshead, County Durham, and Sunderland. And this means now that the current Imperial College London Ipsos Mori data, again doubling every 7 to 8 days in England in COVID cases, putting the R rate now at around 1.7, which, yeah, it's definitely not as high as obviously the peak of where it was in the initial first wave, but certainly would indicate then further increases to come in this. Now, a couple of things here. Cases is one thing, hospitalizations and deaths are another. So what does that look like? Well, this is the actual number of infections per day in the UK, so just wanted to give you a bit of context. So you can see here we printed yesterday at 3,395 when we were peaking up at around north of 6,000 if we go back to the main part of when the, the country was in the first national lockdown. So here you can see this is the highest, clearly, the rates that we've been on a number of infections going all the way back to April-May time. From a hospitalisations point of view, it's been fairly minimal. This has been one of the things why the market has been fairly comfortable with what has been— what we're looking at here in the UK, very much mimicked in other mainland European countries. But the point is, though, that these numbers are starting to rise, and once they do, they can rise very quickly. And in terms of hospitalizations in the UK, here you can see a bit of an uptick that we've had over the course of the last kind of 2 weeks or so. One of the things that you might have seen me on Twitter commenting on was I went for a walk down South Bank in central London along the river last weekend, and that Sunday marked then the commencement next— the next day, this week's Monday, of the gathering numbers dropping from like 30 to 6. And absolutely what I saw was a a heck of a lot of young people out in big groups, well in excess of 6, just drinking and socializing and, and certainly not really adhering to social distancing rules. And that obviously has been one of the main demographics which has been hit the hardest in terms of the, the new case rates. So hospitalizations, it looks minimal on this chart, but actually, if you actually look at it comparative, if I had my Excel sheet up with all the numbers, this is increasing fairly rapid pace. And in terms of deaths, I went on the NHS website this morning and tried to look back to some of the data. As far as I could see, as of Monday, there was only one person in the UK that died of COVID-19. As of the most recent data in the last 24 hours, that number has gone from 1 to 20. So again, 20 is not, in the grand scheme of things, comparative to where we were previously. A big number, but going from 1 to 20 is a pretty rapid acceleration. So what's happened this morning, the Health Secretary Matt Hancock has come out and said the national lockdown is— the quote he said, "We never take a national lockdown off the table, but it is the last line of defense." Obviously, this could be the worst possible situation, not just for the UK government, but for anyone who adopts a nationwide lockdown. That is the most economically damaging. Absolutely. Even just for a 2-week period would have a significant impact on this kind of speed and shape of the economic recovery. Certainly would be one of those things then would lead markets to believe then that the Bank of England really compounding with Brexit risk, you know, more QE, more negative rates, the market's probably going to start pricing that in more. Certainly if we actually do see a second national lockdown. So yeah, worth keeping an eye. I mean, Sam will look at the pound. I mean, I've just got the chart in front of me and there's quite a good area of resistance in sterling over the last 24 hours. And actually there's a heck of a lot of headwinds for sterling at the moment. And ultimately we had a little pop yesterday on that positive kind of EU comment about the potential for concession negotiations on the Brexit front. But if this national lockdown starts to get a bit of traction, the other kind of indirect implication this could have economically is if the press really run with this narrative, think about what that does then for the public psyche and general consumer confidence. You know, one of the big things about the first lockdown, which I think was kind of underplayed to a certain extent, was fear, not so much actually contracting or dying of this virus, but fear of that then can have massive reverberate or massive repercussions on then the economic performance, because ultimately, you know, we are a service-driven economy, and if the consumer stops spending, and then you start throwing in the fact that there could be millions of new layoffs coming at the end of furlough as well in the coming weeks. It's hard to try and, try and not be bearish at the moment for sterling. So it'd be interesting to have a look at that technically when Sam comes on. But yeah, hopefully that makes, makes some sense. What I'm saying here is that I believe that the UK situation on COVID, I think case numbers will start to increase quite rapidly. I think we're already starting to see it, but hospitalizations and deaths will then start to increase as well. The tipping point here is what does the government say and how far away are we from going from localized to national lockdown. If talk starts to move to national lockdown intensifies, pound's going to get hit in the first instance. Any, any feeling that that's becoming a higher prospect is going to be in the intraday environment quite a big negative short term, and that again it gets further exacerbated by the fact that the only thing the Bank of England can do at this point is then just ease further, uh, in, in as per they were kind of signaling yesterday. Um, okay, a couple of other things to, to quickly mention. Um, on the US political front, uh, the Democrats weigh next steps after Trump backs a bigger stimulus. You know, one of the things that Jerome Powell was quite sure of, um, in the press conference earlier this week was about and the usual central bank stance that fiscal policy has got to accompany monetary policy for it to have a real potent impact on the overall broader economy. And I was just kind of figuring out in my head this negotiation. And if you think about it, the Democrats started at $3.5 trillion, Republicans at $1 trillion. That was the original kind of starting post of this latest round of potential US fiscal stimulus. Swing district Democrats now want $2.2 trillion. Okay, so we move that down a little bit. A bipartisan group of House lawmakers put forward $1.5 trillion, um, yesterday. That got welcomed by Trump because that's nearer to the trillion of which then the Republicans originally wanted. But remember, the Republicans earlier this week put forward $500 billion, so we're getting a little bit closer. But Pelosi and Senate Democratic leader Chuck Schumer said they want $2.2 trillion. So the Democrats have gone from $3.5 all the way down to $1.5, but the people that really matter have said they want $2.2. Trump's gone from $500 up to $1.5 now. So for me, there is going to be a stimulus. It's in both political parties' interest to provide another stimulus, right? Does it— this isn't about blocking Trump or blocking the Democrats. This is about coming across as in you are further assisting people in their jobs, in their livelihood, you're boosting the economy. And so it's a positive in both cases. So for me, this will happen. I guess it's about who's going to get the win, you know, a bigger number. The Democrats can bark if it's a little bit more controlled, but I think Trump could spin it anyway that he's giving more to the people. So net-net, I think it's coming. And that's why I think that the market's not that bothered by the fact that it hasn't been that forthcoming, because I think ultimately it will. And as long as markets believe that, then I think it's a bit of a moot point at this particular juncture. OK, moving elsewhere, just wanted a quick mention about oil. I'm sorry, I'm sure Sam will look at the chart. But with oil, yeah, we've continued to just just push higher, and certainly some gains were seen yesterday. Saudi Arabia showed its determination to protect the recovery at the OPEC+ committee meeting, the JMMC, basically criticizing members that have cheated on production quotas. I mean, you can almost visualize it at a meeting, I guess virtually now. There's like this big Saudi contingent sitting there, and then you've got like Mr. Iraq and Mrs. Libya and Mr. Nigeria, they're kind of quaking in their boots, and there's all these Saudi contingents saying, if you don't do what we're saying, there's going to be repercussions. And certainly that seemed to be the tone from what I was seeing in the headlines yesterday. Basically, Saudi are just getting a little bit more assertive with just taking it by the scruff of the collar and saying, look, you need to sort this out. We're all doing it, we're all in it. We're having no flexibility for non-compliance. And the reason for this is because the EIA report, which came out earlier this week, showed that the UAE almost entirely disregarded its commitment to the quotas last month, while tanker tracking data showed that Iraq is exporting more crude so far in September— we're only halfway— than in the entire month of August. So I don't find that that surprising. Iraq is always the culprit of non-compliance, but Saudi trying to put a little bit of the pressure on them. And I think the market responded to that, as in, um, that ultimately Saudi's got the resolve to see this through. And if they have, um, and Saudi also warned short sellers not to challenge its resolve, dropping clear hints that there could be a change in direction in production policy before the group next meets in December. So they even went as far as kind of shooting an arrow across the bow saying, look, don't think that we won't do it. I know we've kind of loosened the depth of the cut, but we go back. And that seems to be enough for the market to have responded to that. Because, of course, this comes with quite a lot of that recent dip in oil being down to faltering demand that we've been seeing. Various different metrics. So all in all, I would say Saudi did a pretty good job. Uh, it was kind of akin to a little bit like a central bank meeting in the way that they're trying to talk the market back up. How long that will last though, I guess, is the question, uh, that we're all yet to be seen. On the oil front as well, it's obviously been super busy in the Atlantic in terms of developing weather systems. Um, the one that just to bring on your, your weather system radar, so to speak, is, uh, 22, which is down here, uh, obviously in close proximity to the Gulf, um, tropical depression currently. And 22 is expected to strengthen though to a tropical storm and possibly a hurricane. And the reason for that to keep an eye on, or at least be aware of, is that while moving slowly over the western Gulf of Mexico during the next few days— so obviously these weather systems are subject to changes in direction, and any shift more east would then be very sensitive to that particular geographic region. So it's a little bit early, but I think this could garner a little bit more interest as it develops over the weekend, perhaps. Um, all right, calendar-wise, what have we got? We've already had UK retail sales come out, no real impact on markets on the back of that. Uh, month-on-month 0.8 against 0.7, ex-fuel number 0.6 against 0.4. So again, I think the bigger challenge here, and overall what people are focusing on to trade sterling right now, is really what's coming in the near future, not so much in the rearview mirror about what retail sales was like, uh, in August. So no real reaction on that. Going further forward then in towards the rest of the day, it's relatively quiet. There's no real major data coming out of the States today in the 1:30s, but you do get the preliminary September University of Michigan 3 o'clock, oil traders, Baker Hughes rig count as per normal. A couple of speakers, ECB's de Guindos 10:15, Fed's Bullard, non-voter, but is speaking on the COVID-19 recovery challenge at 3 PM London, so 10 AM New York. Fed's Schnabel 3 PM, Fed's Bostic, again non-voter, at 5 PM, midday in New York. Final thing is you can see here, big chunk of expiries happening. So I did tweet this out, uh, again, my handle here, just search my name or @awmchung, but it's quadruple witching. So for any new traders, if you just go on my tweet, what this refers to is the date of which stock index futures, index options, stock options, and single stock futures all expire simultaneously. When this day occurs, it generally leads to quite a big spike in in volume, not always consequently volatility, but it's definitely something to be aware of, particularly at the expiration of these, these contracts. You tend to see quite a flurry of activity just before the expiration. So just to be aware of that if you're trading the index futures. But yeah, that's it. So I'll hand you over to Sam and he can go over some of the charts now.

So over to you.

Cheers, and thank you, thank you very much. That's good to be, good to be back. So let's just share my, my screen. We'll start off by having a look at the pound. I think the best, best place to start following that. It's, uh, it's set up very nicely going into the end of the week. And, and like you said, there's a lot of negative headwinds at present, and the second lockdown could well be the tipping point to send it further south. However, where we close the week is going to be key, so do look out for that. Video that I'm going to shoot this Sunday. This is the pound on that daily chart, and, and the reason why I'm saying it's, it's so key where we finish is you have these lows that really gave way after we closed below on the 8th of September. Yes, this down move started a bit before that, but we're retesting them now. We've had 1, 2, 3, 4, including today, 5 days where we're knocking on that ceiling. Something has got to give. Do the sellers take over? Do the bears send price action downwards, uh, and back down towards the 128? Or do the bulls step in, we close above 130, uh, we close above the, the moving average, the 50-day moving average, and, and then we start to actually push on? It's, it's so key. I think at the moment I'd rather be in the camp with the bears, uh, and potentially looking for shorts how we finish this week. But that said, above the 130 on the daily close and more importantly, I would say the low that we had here on the 24th, 1.3057, I wouldn't want to be short anymore. And I think you would get quite a good relief rally as that short squeeze takes place, much like we saw back in May here where we had exactly the same sort of price action— break the lows, retest, it works for a couple of days. Once you get that close above, that leads to another big rally. So keep a, keep a close watch on that, how we close, not just the pound, there's plenty of markets that are very well set up going into the last trading day of the week. The pound on that lower time frame then, these are those levels transitioned onto a 60-minute, um, you can see the importance now. We're really range-bound, funnily enough, after the Bank of England yesterday over the last, uh, 2 and now whatever we traded today, 7 hours 45 minutes worth of trading. What is going to give? I'd almost be you know, slightly patient and wait for either the 130 handle to come in or one nearly just below 129, probably a moving, uh, not a moving average, a sort of line in the sand around the pivot, 129.43. Have a bit of patience and, and, you know, wait for, uh, the triggers you would want at those levels. But very well set up going into, uh, the euro. I'm just going to bring this in on, uh, the longer time frame. For me if you remember from our live coverage that we had with the, uh, the FOMC, the rate decision, we were talking about how, uh, it, it looked like it would push down. And then we have this trend line on, which is worth having on. It's also, of course, the lows that we had from the 21st of August. That gets hit, the 50-day moving average acts as support, and we're now back higher. You can see the importance of these daily closes. I would still say, for those that are short, you're happy to be short, especially if you got in from, you know, Lane's comments on the sort of the 1.20. You'd be happy to stay short as long as we stay below the 10th of September high. For me, that comes in on the futures around 1.1915. As long as we're below there, I think you'd be pretty comfortable. But decision time has to come either literally at the low that we had yesterday or the high from the 10th and also the 15th. So the euro like the pound, very well set up going into the close of the week, and something's got to give. Right now, the euro just trying to get a close above this high that we had back on Wednesday evening. So I'd be watching that like a hawk, probably for a bit more confirmation, given the sort of the quietness of the calendar. Probably an hour close for confirmation before I'd be looking for a push towards the high that we had on Wednesday. And on the flip side, if we were to break the low below sort of 118.64, that's when I'd say you're more than, uh, well, you'd potentially be looking for a move back down towards that pivot. Moving to equities, like Anthony said at the beginning of the brief, and 50-day moving average has been talked about as an area of support, and you can see why. Both yesterday but also on the 11th and the 9th of September, it acted very well, as it had done in previous months as well. So Daily close below that, it doesn't look too good. You'd probably also want to see the low go as well, 3,300, 3,290, and that's when you might start to see a bit of panic. However, for me, I would say you probably would want to see this previous high here go on the 23rd of July. So that makes it an incredibly big area of support, uh, that the bears would need price to get below. At the moment, it's finally set 50-day moving average the, uh, I think this— let me just check here just to make sure. Yeah, the, um, 21-day moving average above there. And if you remember, of course, on Wednesday I was talking about 34.24 as the level if we close above. I think all-time highs come pretty quickly. I stand by that completely. And that's why daily closes are so key. Yes, they saw a decent push to the downside. 50-day moving average held things up quite well. I'm patiently waiting from a personal point of view to get long above that, uh, rather than getting in now. But that said, you know, this, this whole area, 3284, decent price action there, could well lead to the longs. Quick look over at the NASDAQ, uh, you can see it looks pretty similar, that, that 21-day moving average and those highs of recent times are capping the upside. And we had a triple bottom yesterday really, really key level. We closed the week below there, uh, and I think things could then start to maybe get ugly next week. But at the moment it's held well, and it's not the first time we've seen a triple bottom in equities that have led to a rally higher. So if you're not in a trade, I don't think there's any harm in being patient, especially the quadruple witching, especially the last day of the week, in saying I'm only going to get involved if we can get back above the highs that we've had from the 10th, the 14th and the 21-day moving averages, or short below if we break that triple bottom. Uh, in between there's obviously going to be, uh, some intraday trading opportunities, but for those bigger moves, that's how I would look to, to play that. Quick look at the Dow before we have, uh, oil and gold to wrap things. You can see the Dow, uh, certainly, you know, it's got another sort of clear top, albeit, um, you know, above its 21-day moving average. So I think the NASDAQ and the S&P look a bit cleaner than the Dow does right now. But that said, the 50-day moving average has been respected for the Dow as well. So yeah, NASDAQ and the S&P for a bit more of a cleaner trade in my opinion. But if we were to get above 28,347 on the Dow, you know, I think you then see 29,000 come in. And if 29,000 comes in, what's stopping that all-time high and Donald Trump tweeting again. Let's have a quick look over at oil. And like I said, all those moving averages really coming into play right now. And it's had a, had a decent week, it really has. I mean, these, these rallies at the beginning of the week sort of went a bit unnoticed. Um, we closed Wednesday bang on a very key level of support that we had on the 3rd of September. That then broke through thanks to some comments from, from OPEC yesterday. And of course you know, stops getting triggered. It's now coming into the next key level for me, the sort of next key resistance point where it has to hold here at $41.49. If it doesn't, then I think you get back to the high that we saw around $44. And that is a trade that I'm looking for medium term, a long above $43.71 to then go to $50 with a stop, you know, $2 below $50, sort of marking a sort of psychological level as well as some previous resistance. I think that could be a good opportunity. However, daily close, you know, again below the $40, and I think the opportunity for a short here looks good as well. So you can see the, the two currency pairs we've gone to, pound and euro, very finely set up. Something's going to give soon, as with equities, as with oil. Let's have a quick look over at gold on that intraday chart just to wrap things up. And you can see it is trying to drift higher. I'd have the resistance level, yeah, pretty much marked up on today's high. You can see some decent price action over the last sort of couple of sessions around this point. Uh, also going back to the 11th and the 14th, it's, it's fairly well respected given the time of the day right now. Our close above that for confirmation from a push to the upside. Uh, to the downside, if we were to move back below 1955, these triple tops that we had, then I wouldn't want to stay long, uh, any longer. But looking at that, it's a range-bound market over the last few trading sessions at the moment. So we're taking it sort of step by step, level by level. I actually do quite like the look of gold and silver to come slightly bit lower before getting in, looking around $1,900 on gold, $2,600s on silver. I like them as more medium-term longs with good price action around those points because I appreciate they've been tested a number of times. But yeah, that's, uh, that's my sort of daily morning, uh, wrap there for, for you. And Um, obviously guys, feel free to head over to my Twitter throughout the day. I will be posting, uh, the charts as and when. Mute.

Getting used to the, the Zoom delivery with, uh, doing it live like this. But, um, yeah, don't forget to subscribe to the channel. And we got plenty of content coming. I know Eddie's dropped a few videos. There's a big IPO, company called Snowflake, if you've never heard of it. It's actually generating quite a buzz, uh, this morning in, in, in some circles. So definitely check that out. He puts out single stock stuff. Sam will drop a video as well over the weekend where he'll look at exactly what he's just done there, but for the entire week ahead. And he normally puts out on a Sunday. So we've got to do is just find us Amplified Trading. Hit subscribe and click the bell icon to be notified as soon as we go live. But yeah, thanks very much, Sam, and I wish everyone a great weekend. Stay safe and see you Monday.

Take care, guys.