Trade Wars propelling markets to new highs

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The title may seem a contradictory in nature. Investors understand the current US administration better than many of the main stream media have been portraying. Trump administration will make sure markets will get well over 3000 points before he hits the campaign trail. A minor pull back in trade tensions is all that is needed.


The SPX:CPI ratio is near its all time highs. Any slow down in inflation will propel SPX to new highs. FED stands ready to further push inflation in case if it drops below 1.5% and thus will give an impetus to SPX.

Broken Head and Shoulders for SPX

The index has pulled back from strong support at 2760. A close above 2900 will confirm a broken head and shoulders. Its powerful continuation pattern.

SPX: OUTSIDE WEEK PATTERN

WEEKLY BAR PAINTS A OUTSIDE WEEK. POWERFUL BULLISH PATTERN.

NASDAQ : OUTSIDE WEEK WITH RISING VOLUMES


John Murphy points out the above chart. The NASDAQ shows strong rising volume with a outside weekly candle.

Dollar Index


Dollar index drops to the 200 DMA at 96.5 but has rebounded today. A break and close under 96.4 will lead to further weakness.

GOLD: Bearish pattern forming at overbought levels

GOLD has been rallying and closed above the upper bollinger bands of the 100 DMA. However it has failed to continue higher and today has dropped inside the bands. A close below 1330 will mean uptrend seen in May is at risk. This could trigger falls to 1250.

German Industrial Production

Industrial production in Europe┬┤s powerhouse economy Germany fell back in April, official data showed on Friday, in the latest sign manufacturers are suffering from global uncertainty and trade wars.Output at producer firms fell 1.9 percent compared with March, federal statistics authority Destatis said in figures adjusted for price, seasonal and calendar effects -- the first drop since January.

As always we wish all clients, safe trading. We are living in uncertain terms with new normals being established. Nationalism and Right wing economics is continuing to push and pull the old order. In times like these, one needs extreme care and sophisticated risk management to protect and growth their capital.

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