Today’s Key Market Drivers: 12th October 2018
“The S&P 500 & FTSE 100 are the first of the big 5 to close below key levels.”
Global stock indexes may have suffered two of the worst days of 2018 with the Dow Jones falling over 1300 points in two trading sessions and the tech-heavy Nasdaq now officially in a correction mode, but only one of these powerhouse stock indexes have closed below the key technical levels that I posted on the TrainWithAndrew social media channels yesterday. The US Dow Jones, US S&P 500, UK FTSE100, German Dax 30 and Japanese 225 are five of the largest and most actively traded stock indexes in the world. Each one of them except the S&P 500 are trading right at key 200 EMA levels on the daily or weekly charts and I am not convinced global stock indexes are going to fall into correction mode until 3 of the 5 are below these key levels.
Traders continued to sell down stock portfolios with both European and US stock indexes down around 2% but the buying pressure on the safe haven currencies was not as strong on Thursday and the US Dollar actually weakened against many of its rivals as investors diversified money away from US Dollars and into currencies such as the Pound, Euro, Aussie and even Kiwi Dollars. The latest US inflation data also missed estimates adding to the weaker demand for the Greenback. There is just not the demand this week for US Dollars as there was a week ago and it’s telling me that the top end of town is worried higher interest rates in the US will impact US company earnings and potentially the US economy. Trump is telling the market it’s the Fed’s fault stocks are falling sharply but Trump isn’t telling the market his trade tariffs are also impacting trader sentiment.
Do I think stocks will continue lower and safe haven currencies continue higher? Yes, however, the key stock index technical levels I speak about must be broken first and when they are the stock market has the potential to capitulate and may erase any gains it has made in 2018.
No base currency that trades against the Yen is going to escape a stock market correction and Europe is the biggest economic region of the world and recently there has been some nervousness surrounding Italy’s budget deficit. If stock markets continue to sell off and accelerate lower the Euro may come under nervous selling pressure again and I want to be short if it does.
No key economic data number today is going to take the attention away from the major theme which is falling stock prices and there is no high impacting economic data anyway. I doubt the theme gripping financial markets will change today as traders will be mindful of holding any large new positions heading into the weekend.
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About the Author: Andrew Barnett
Andrew is a professional trader and successful investor who has a strong focus on education. He is a regular Sky News Money Channel Guest and one of Australia’s most awarded and respected financial experts and is regularly contacted by the Australian Media for the latest on what is happening with the Australian Dollar. Director at LTG GoldRock, Andrew Barnett, guides thousands of traders around the world in the live market on a daily basis, advising them on buy and sell directions, as well as trading his own personal account. Andrew, a regular keynote speaker at trading and wealth-creation events throughout the Asia Pacific region, is an authorized representative registered with the Australian Securities and Investment Commission (ASIC).
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