Bank of Japan buys negative-yielding T-bills
QQE taken to its logical conclusion?
Yesterday, as the Japanese Yen hits its weakest against the US Dollar in exactly six
years (106.55), the Bank of Japan bought Number 477 Treasury Bills from the market
despite their yielding a slightly negative interest rate for the last two days. Traders
suggested strong demand for the paper was not what the bank had expected and
that perhaps the authorities wanted to show asset purchase goals would be met no
matter what the cost. Topsy-turvy world of twenty-first century finance.
Data out this morning show French July industrial output up just 0.2 per cent M/M
while in Spain it grew by 0.8 per cent annualised. A ten-year German Bund auction
this morning might be interesting.
Nicole Elliott
DAX 30
IG Index chart
No longer overbought as we dip below the trend line. We favour a dip to the
horizontal support line at 9600 today.
DAY TRADER: Short again at 9775; stop well above 9800. Initial target
9600 and then 9400.
POSITION TAKER: Stalled at 9800 and looking to go short on a close
below 9600.
SUPPORT
RESISTANCE
9665
9600
9500
9470
9700
9800
9875
9990
ii
Wednesday, 10 September 2014
FTSE 100
IG Index chart
Another day, another doji candle denoting instability at current levels. Like the
Dax, allow for a test of support at the horizontal line between 6760 and 6780.
DAY TRADER: Short at 6820; stop above 6900 and first target 6760.
POSITION TAKER: Small short position at 6800; stop above 6900. First
target 6600.
SUPPORT
RESISTANCE
6800
6780
6760
6700
6850
6880
6900
6950
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Wednesday, 10 September 2014
S&P 500
IG Index chart
Small signs of instability ahead of the FOMC meeting 16 and 17th September.
Yesterday’s close at the lowest level since late August may have rattled the
few, but more interesting is the potential broadening top chart pattern. A
weekly close below 1980 completes the formation.
DAY TRADER: Holding a small short position at 1980; stop above 2025.
Target 1945, then 1920.
POSITION TAKER: Also a small short at 1980; stop loss at 2025. Target
1915.
SUPPORT
RESISTANCE
1980
1965
1940
1915
2000
2012
2050
2075
iv
Wednesday, 10 September 2014
BRITISH POUND/US DOLLAR
IG Index chart
Now that US Dollar strength is front page news, having been eagerly awaited
for all too long, we urge extreme caution. Cable has good support at 1.6000
and is displaying a potential reversal basing pattern. Yesterday’s doji might lie
at the centre of a morning star three-candle pattern if we close near to 1.6200
today.
DAY TRADER: Watching more hopefully for attempts at basing against
psychological 1.6000 (also 50% retracement).
POSITION TAKER: Keep away if possible.
SUPPORT
RESISTANCE
1.6100
1.6060
1.6000
1.5950
1.6155
1.6185
1.6230
1.6285
v
Wednesday, 10 September 2014
EURO/US DOLLAR
IG Index chart
Like the Cable chart above, much has been said of the Euro’s demise yet
there are signs that it is trying to base ahead of known good support at
1.2800. Not there yet, but having a stab.
DAY TRADER: Watching closely for signs of basing against previous
support at 1.2800.
POSITION TAKER: Keeping out and powder dry for now.
RESISTANCE
SUPPORT
1.2900
1.2860
1.2780
1.2700
1.2955
1.3000
1.3050
1.3100
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Wednesday, 10 September 2014
GOLD
IG Index chart
Keeping well below the trend line that forms the bottom edge of the
symmetrical triangle yet forming a hammer type candle yesterday. This
suggests an interim low at 1247 formed yesterday and that we shall
consolidate above here today. A weekly close below 1240 is essential the get
prices out from the big range set this year.
DAY TRADER: Small short at 1270 and just missed taking profits at our
first target at 1240. Will raise this to 1255 today.
POSITION TAKER: Small short with the first target at 1200.
SUPPORT
RESISTANCE
1247
1240
1210
1200
1260
1270
1280
1300
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Wednesday, 10 September 2014
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Wednesday, 10 September 2014