Will Trade Optimism Last Over The Weekend?

Hi guys, it is Friday the 15th, just gone 8 o'clock here in London. Hope everyone has had a good week. We'll have a look at the charts to see how we have got here on Friday, how the markets have acted over the last, uh, 5 days, and then have a look at the stories from overnight and look forward to the calendar and what lies ahead for next week as well. As you can see on my right-hand side, a really interesting— and it is actually a decent article, to be fair, from Bloomberg. This is Trump's trade deal from start to end, and it's not a, not a bad reflection, it has to be said, of, of the direction that we've gone in and how we have potentially got to that phase deal. Stocks are on all-time highs as we head into the weekend. Another good week, 3,100 in the S&P. You know, you've got to take your hat off to the bulls of this market, really driving price higher. Whether it's FOMO, whether it's no real negative headline yet that's driven price lower, fair enough for this big push, and it happened again overnight, breaking out this mini range that perhaps we've been in over the last 5 days and pushing higher in Asian trade. Uh, we are just coming off a tiny bit from that high, but you can see here last— well, in the Asian session, the all-time high, 3111, the Triple Nelson. A quick look over, uh, the currency pairs from the week so far. Just having a look over at the euro, it's been drifting down certainly from the beginning of the week on Monday. We then yesterday probably had the single most important release and reaction so far for the euro because it's, you know, not messed about. The ranges each day have been small. And then 7 AM yesterday, Germany avoiding recession, a decent push higher in the euro, only to be met by some euro weakness and some dollar strength in the afternoon. Um, only then in the back end of the session to then push higher as well. Have we seen the low for the euro? I think you'd be, uh, a wise person to, to say no. Obviously we are the lowest we have been now, if I just— or as of yesterday, from the relatively beginning of October around the 7th. But we perhaps are due a little bit of a respite following the last couple of weeks that have been drifting down. That's really the main headline that has come out from the Euro side of things. There's a couple of comments from Trump overnight on trade between the, uh, the US and EU, which we'll come on to. But Germany avoiding the recession there, how's that be? Is that the bottom, or is actually the good news here bad news? Um, and, uh, for Germany now, uh, you know, this is just the start of, uh, it's a struggle to, to regain any kind of growth. For the pound, it's going to be tricky, as we know, going forward. The deadline yesterday for candidates was reached at 4 PM. Farage is not taking the, the 40-seat deal. Um, unfortunately, we got sucked into watching the big announcement at 11 o'clock yesterday, and I mean, it was, it was painful to watch for, for 30, 40 minutes or so, just waiting to see, is he going to say something worthwhile. To be honest, I'm not quite sure what that announcement was, uh, unless it was just confirming what we already knew, that he's going to run those candidates in the 300 or so, uh, points. But from the, um, from the week beginning Monday, decent push higher on Faraj Maroot removing 300 or so of the 600, uh, uh, places he was going to run. The pound pushed higher, drifted lower over the, uh, the next couple of days, and we are um, near enough near those highs. 1.29 traded last night on a bit of pound strength, a bit of dollar weakness as well, which we saw into the back end of session in that euro as well. Ultimately, polls are now going to be the driver. Brexit comments, you've got to imagine, are probably going to take a bit of a back seat overall until December the 12th is done. And are we going to have a majority, minority, coalition, etc., will be the, the main driver. So for the pound, it's probably, other than that Monday been pretty tricky to trade unless you took the approach of, okay, the pound is, you know, I'm expecting still a conservative majority, where's a good place for me to buy this market? Well, how about the lows where the buyers have taken over? And it's in hindsight been a good little trade to keep an eye on. If that is the view, then the pivot today looks good. You've got the high of yesterday morning, the pivot as a place to potentially get in to drive price higher. as well. So only the, the main headline you would say is Farage removing seats. They're not taking the deal, uh, for now. The polling is going to be that main driver. For the Aussie dollar, like with many of the, the dollar pairs, has just been drifting lower over the week. We then had in the employment data overnight yesterday, that was bad, uh, and of course we drifted lower and we haven't really recovered, uh, or we didn't really recover yesterday. The pivot today, worth keeping an eye on, not really for any other reason than it is the pivot, but also the Asian session high. I'd still be keeping a watch on that 240 timeframe of any of those previous lows, uh, here looking at the, the 25th of October. If we can come back to test that today around 6817, that could be relatively important. We did on Wednesday morning have a push higher, that in correlation with the, uh, the Kiwi pushing 1% on the interest rate decision. They kept rates on hold despite 3 cuts this year, saying that not much had changed since their August meeting to warrant a cut. That pushed price higher, dragged down yesterday by the Aussie dollar weakness, only to push higher with a bit of dollar weakness as well into the back end of the session. And that's sitting relatively middle range for the Kiwi, uh, going forward. But the fact that they're not looking to have cut rates for now, I think has to be seen as an overall positive in the market. The yen actually has been a market which has drifted higher this week. And if you were to say, well, stocks are at all-time highs, um, you know, you'd be a bit surprised to see the yen has had a decent week where, you know, you can see here we started— where's the 11th here— and we pretty much 1, 2, 3, 4 days in a row. Of course, this is the 5th where we have made a new high. Um, so interesting to see the yen has been, been going higher. Yes, there's been a couple of mixed trade signals which have brought stocks down a touch, but stocks are at all-time highs and the yen, you can see, also following suit. So there's a sign there, a bit of dollar weakness perhaps, but the euro and pound also have been— and the Aussie dollar have been under pressure themselves. So the yen pushing on But perhaps if the stocks go into the week on those all-time highs, the level we've seen just traded now, which technically looks really nice, you can see that breakdown area that we had from the beginning of the month, you know, it wouldn't be surprising to see that as a potential high for a while. The trend line from those lows, even though it's not perfect, is something I'd be looking to have on, uh, as well for an opportunity to get short, uh, for the close of the week. Moving over to oil, main comment, uh, in a very range-bound last couple of weeks, it has to be said. Positive talk from Barkindo two days ago in the afternoon, that pushed price to the top of the range, but yet again it cannot close above the all-important 57, mid-57s, and we're now back down in the middle of the range. DOE is obviously not helping things Yesterday, of course, as you can see, a bearish release. But in this longer time frame, why is that level important? Well, you can see going back to September time, uh, we— that's where we broke down and we just cannot close above. When we do, if we do, I should say, opportunity-wise, you'd have got to imagine there's a nice little push there towards 59.60. But for now, it's a range-bound market and we're in the right in the middle, uh, here as well. I guess going forward, always worth with these to see if we can get any trend lines on. They're not matching up as of yet, but if we were to have a trend on these lows, also with yesterday and the low of the day, that's coming in around 5660. Gold has been certainly an interesting market. I mean, if you were to look at just the— well, let's go back, where's the 11th? Just the 5 days of this week, you can see we're pretty much exactly where we opened on Sunday evening. Not much has changed. We pushed obviously lower from the, the big break, and I've got it marked up here around 1464, 1466. Let me just make this a bit of a thicker line because this is your line in the sand for the week. Do we close back above there? Bullish. Do we close below? Bearish. We've had a couple of days where the bears have been in control and it looked like this level is now going to be such a strong resistance and we go then at the back end of some sessions we have poor negative trade comments that we've reached the snag and gold has gone higher. Uh, we now just hit that key line in the sand, which is the S1, and perhaps having a little bit of a push higher. But for me, it's all about where do we close this week, and you can see the importance of that level. Also, looking longer term, I've seen quite a lot of talk on Twitter about people wanting to get short 1480. You can see why such good support, uh, for the whole, uh, of, uh, October, breaking down early November. That will certainly attract some sellers, uh, technically anyway. S&P, as we mentioned, pushing, pushing on, keeping a watch on any of these previous levels of resistance. They can of course act to support, uh, today, uh, as long as the trend continues. Pin news, and it seems as though it's going to take something pretty bearish to, to throw things off course. FOMO, uh, taking over. I mean, what's going to happen if there actually is a deal? Where is this market going to go? Has Trump played a blinder, or is this something we've seen before? Which we'll come on to, of course, with that, uh, the article from The Map Design. The DAX range-bound. The DAX is range-bound. Look at that, big ranges, um, to, to take into consideration. If you want to maybe wait for more momentum, big headline to come through, looking for a break either way. Uh, predicting which way that will go for now, I have to say, is relatively difficult, um, as well. Um, but yeah, it's coming off, uh, in the first part of, uh, the open, uh, and you would have to say the pivot, while there's a level, uh, is bang on in the middle of the range, uh, as well. So whether you'd want to take a trade on there or not remains to be seen. T-notes followed the yen and to an extent gold in pushing higher in the last couple of days, only to come down in early trade. But we are just having a bit of a recovery this morning. No real headlines have come through, uh, that I have seen, uh, so maybe just a slight bit of risk on to open up the morning. Um, having a look at the calendar for today, so we've, you know, that's how we've got to where we are for for now. I'm just going to drag the, the calendar into the picture and have a look what could drive price into the back end of the session. Well, the morning we've got final readings out of Europe for inflation numbers, so not expecting a big move from that. Germany avoiding recession only saw a little spike either direction. Uh, 1:30 retail sales will be something to keep an eye on, but we know usually when that data comes out, there's suddenly a reason for it, price comes back and we move on as well. So not expecting really this data to have a long-lasting impact on the markets. Industrial production, something else to, to keep an eye on, and as well as the, uh, the New York Fed manufacturing numbers also at 1:30. A couple of speakers, uh, but, uh, nothing of real note. Powell has finished his 2-day testimony, uh, summary. Not much, uh, really there. So relatively quiet on the data front. That could move markets. So business as usual unless there's some negative trade headlines that come through, and really that could be a great opportunity to see these markets come lower. The pound is going to be, I guess, on polling, but we've only just started, and whether you're going to have a long-lasting move off that, I'm not too sure. Headlines overnight though, what were the, the comments? Larry Kudlow, potentially the, the main talking point of markets, of why we had pushed higher in Asian trade. Um, they rose in the back end of, of the, uh, the Asian session and overnight as White House advisor Kudlow said an agreement is coming down to the short strokes. Concerns about the difficulty of completing a Phase 1 pact had propelled Treasuries earlier in the week, as we said, with the yen as well, and arrested stock market rally that had took benchmarks took benchmarks to record highs. However, of course, we have continued to push on. Larry Kudlow going to say we are coming down to those short strikes, we are in communication with them every single day right now. This actually followed from Trump earlier saying that a deal was close but not done yet. So it seems as though Trump is just, just say, just on the other side of things, not wanting to to give it away. And there was a tweet— let me see if I can just bring this into picture— from, from Anthony Cheung. Actually, I retweeted it, and it seems as though it is about to start to come to fruition, in my opinion anyway. So Anthony here tweeting back in the beginning of the month: China has requested to stop further tariffs, roll back September, and lower those from last year. Recent US data has been firm. Agreed. US stocks at all-time highs. Still deal to be signed in US political appearances and US would lose leverage. I just can't see the US conceding here. For me, the whole deal blows up. Listen, the, um, we've been here before. We've absolutely been here before. If we look back to, uh, sort of quarter 2 of this year and the same thing has happened. So I don't think that's a bad prediction, and it's one where if you're looking to trade it, you're waiting for that signal, and the market has to come down quite a fair bit We're at record highs, we've been pushing higher on FOMO. We can't have 2 days in a row, uh, that are negative. This market, of any real concrete bad news, I mean, it's coming down, uh, it's going to come down pretty quickly. Um, uh, the US, what they, uh, are demanding, uh, of this deal, of course, getting into the weekend when we were expecting that chilly meat, uh, at the summit to be this weekend. Of course, that has been delayed. But the US demanding that China spell out how it plans to reach as much as $50 billion in agricultural imports annually has been one sticking point, as have discussions over what action the US will take to roll back tariffs in return for Phase 1 deal. So a bit of murmurs this week on that, but nothing really concrete that's coming through. Any bad headline has then been met with a good one, and the algos are going off that. Late last night there was a comment from the FT, uh, or a source from the FT saying that the trade deal wasn't looking likely. Algo, little spike, then you get the, the pump from Kudlow and look, we go all-time record highs. But you know, from a perspective of a bull where you think this deal was going to get done, and you know, why on earth would you not be buying these dips if a market keeps making highs and highs and highs? Any dip is an opportunity to buy. And if we take the, the S&P and go back to, um, when I was, you know, so, so confident in that we are going to make all-time highs— and this is, you know, going back to 2017 here— any dip was a buying opportunity. You had obviously Trump getting in the election the previous year, promising this all amazing tax deal, and we were just pushing higher and higher and higher, and people couldn't believe it. But look how, you know, this is going back to where we're trading sort of mid and early 2000s. We're now 1,000 points higher than that, and people are just going off that, uh, that this deal is going to get done. Any dip is a place for me to buy. I also think maybe the Fed are going to continue to be dovish. Well, this market does continue to go higher, um, until we get a concrete bad headline. I just realized I didn't have the, uh, the chart up there, so just going back to 2017 and just reiterating the fact that this market ground higher and higher and higher, and the opportunity to buy the dip was there, and it is now. There's— those dips are a lot smaller for, for the moment. They're still— both sides have sent positive signals, though. Let's not just say it's all been negative this week. They are still intent on an agreement. China has resumed significant purchases of farm exports since Trump mentioned and announced plans for the Phase 1 deal on October October 11th, so just over a month ago. Yesterday, Beijing also lifted a ban on American poultry, which has been in— has been a ban since 2015, after the US Department of Agriculture made a similar decision to allow Chinese poultry into the US. Following that and moving over to the US and Uh, Europe— Kudlow went on to say that no decision has been made on whether to impose or delay, uh, as many expect, new auto tariffs on imported cars and parts from the, the EU. Uh, the president received a letter from Lighthizer's office and he is considering it, Kudlow said. So one to keep a watch on maybe over the weekend, in the coming weeks, between the EU and US. I know many people have different views on, on what's going to happen. But it looks like at the moment a delay is inevitable. So maybe if they are to impose, that could be an opportunity to sell the DAX and actually look to get down to the bottom of that range. Interesting article, as I mentioned in the briefing, this one here. And I know it takes the mickey a bit, and maybe Trump has played a blinder and he's still maybe got one correction to deal with in stock markets Before we're at all-time highs next year. It's a really good one. I'm just going to post this in the chat now. We've tweeted it from Amplify's Twitter. I would have a bit of light reading perhaps in this morning. It's a fair whack of a, of an article, and it just goes over the key points and dates from the trade war, trade talks over the last few years. Actually, an important point I I want to make in summary of this is, if you give me one second, and it's this: are we there yet? Are we finally there? The events of the fast, uh, the past few weeks fit a pattern of false dawns in the trade war. So this immediately sort of drew my attention. It reminded me of what happened in May when we were very close to a deal that had taken months to put together, and then within days Trump had threaten new tariffs and place Chinese telecommunications gear maker Huawei on, uh, a blacklist, restricting its ability to buy hardware, software, and services from American high-tech suppliers. So we have been here before when stocks have been at all-time highs, when a deal has been close, and look what happens when that, uh, that comes to play. And here is that, that sort of that that time, sorry, around May, and the stock market will come under pressure. You can see from that high to the low, you're talking, you know, nearly 8%. And I mean, looking at this here now is, I think, a collapse in trade. And yeah, I would say 2950 comes quite quick. If you're Trump, what would you do? Would you, would you want it now, this early, for the phase one deal, or do you still want the Fed to be dovish at the beginning of next year and have a cut. Because in summary from yesterday of, uh, Jerome Powell, it's kind of what we said the day before. Uh, he sees a few risks likely to derail record US expansion. He's going to be, you know, data dependent, but they're on a pause right now. So they're not looking to cut as they are suggesting, uh, as, um, well, they're suggesting that they're not looking to cut. So Trump has to play this one carefully. Um, my opinion is this time next year stocks are higher, are higher than where they are now, but there's a correction that's got to come. I'm with Anthony Cheung. I think this deal blows up. I think that then gets the, uh, the Fed to be dovish. I think we get a cut in the beginning or middle of next year. Phase 1 deal then gets done. I know it seems then potentially a bit last minute Trump then gets an amazing trade deal or says it that way. The Fed have cut, stocks are on all-time highs, and he wins the election. That's how I think he will play it. But for now, while there's no real concrete bad headline, stocks have to, you know, continue to push higher as well. Looking elsewhere here, uh, a good article again from, uh, from Bloomberg. And I did see some, some decent, uh, graphics that Anthony retweeted from BBC, just going over the general election and talking about some of the seats that have majority. So do check that out from Anthony there. I'll just retweet that, uh, now for on the Amplify account. But here from Bloomberg as well, it's just going into detail about which ones, uh, are going to be targeted by each party. So here, if we're looking at the S&P, they're targeting a obviously the Labour, Conservative, Lib Dem seats in Scotland, 3 of which were won by less than 1% of the vote in 2017. Labour targeting Conservatives, uh, Loughborough in the East Midlands, which is split down the middle, 50.1% to leave the EU. They're also targeting Conservative seats in London that voted to remain in the 2016 referendum. My opinion is they actually could do quite well in, in some parts of London. Uh, the DUP sees Johnson's deal as threatening, uh, threatening the unity of the UK, meaning he can no longer rely on their votes in Parliament. Yeah, I think DUP will not be, of course, involved in that. Conservatives are targeting Labour, Labour seats in the middle and north of England that voted to leave the EU. Um, Stoke-on-Trent North in the Midlands voted 72% to leave, so targeting there. And Lib Dems want to pick up Conservative and Labour seats in London as well. So here you've got some of those targets, and you can see just the, the balance there for the Remain and Leave percentages. So that some of them are pretty tight. So you've got some of the Labour targets there. Expect Corbyn to appear in at these places. Expect Boris and his team to be appearing and doing speeches at these ones. So these are, um, you know, some of the targets that they will be heading into and trying to get some traction in. So when looking for polls to be the driver, these are the ones that I'm interested in. These are the ones that I want to, to see, um, you know, swing one way or another to then lead to potential, you know, these Conservative targets all start to go the way of Conservatives in the polls well, now I'm looking for some pound strength, and we can be talking about that majority coming in, and pound goes higher. If it goes the other way and maybe Lib Dems or Labour start to get some traction, well, hang on, now we're either looking at a minority or perhaps a Labour, um, majority, which of course at the moment is very unlikely. And the pound, uh, from what we've been suggesting, has got to come lower. So a decent article there. Again, I'll put that in Trading Live. We've retweeted it from the the Amplify account as well. Party politics, we've gone through this before, but no harm in just reiterating that. Conservatives obviously forcing that Brexit deal through. With a Conservative majority, this becomes more likely. Jeremy Corbyn renegotiate Brexit deal with the EU within 6 months and then hold a referendum. He did, he did say a referendum yesterday wouldn't be done within the first 2 years of him being in office if it was the case. I just struggle, I think, to— Labour's a tricky one. They don't really know what they want to do. If they— I mean, I honestly think if they were clear here and said, look, you know, we're just going to be a complete Remain party, we want to get out, I think they could— I generally think they could actually win the election. But under Corbyn, it doesn't seem that that is likely at the moment. Joe Swinson of the Liberal Democrats, reverse Brexit process and stay in the EU. Lib Dems, I think, will do quite well. And the SNP, halt or reverse Brexit process. It would be a massive, massive, massive shock if they were to get some real traction as well. You've got some of the, the points there on the economy and health. I think unfortunately they will really get swept under the carpet here, as it is in theory, for me anyway, a bit of a, a second referendum referendum is happening now, the general election. So yeah, you can try and, and say all this for the economy and health, all these, uh, these promises of what they will deliver, but ultimately I feel it will come down to, do you want us to leave? Uh, if you do, Conservatives. If you don't, uh, Labour or Lib Dems. But yeah, a decent, uh, article there. Here's the recent polls. Conservatives have a strong lead. Labour just over the last couple of weeks have taken over from a brief change of the guard with the Liberal Democrats there. Brexit Party have been pushing lower. If you want a Conservative majority, uh, for the opportunity to go long pound, you want that to continue for the Brexit Party. If they do start to take some of these seats that they're still running, it just puts the spanner in the works and overall would be pound negative as well. But a decent article there just to have a watch on. As well. Quick final look over that calendar just to build up that morning. You've got some final numbers out at 10 AM, not expecting much. A data slate at 1:30 to keep an eye on, and then to wrap things up, industrial production 2:15 as well. Stocks are just pushing lower this morning. The DAX, uh, coming down to its pivot as we've been tested right now. Safe havens just having a bit of risk off to start the day. Uh, but let's remember, stocks are on all-time highs going into the weekend. I wouldn't fancy having any, um, short— new short-term positions still held on, uh, as of course, uh, it wouldn't be the biggest surprise in the world if this deal, Phase 1 deal, meets a stumbling block and we gap lower on the weekend. It would not be a surprise. But for now, FOMO taking over, the buy on the dip is still there. Any questions, as usual, please do let us know. Hope you'll have a good trading day and even better weekend.