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Thank you for your interest, I look forward to being of service to you in the future, please do not hesitate to post a comment or contact me if you have particular requirements for investment information.

Charlie Aitken

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How Watching Market Psychology Can Help You Time the Market

Elliott wave patterns in price charts reflect the struggle between the bulls and bears
By Elliott Wave International

 

Two economic reports hit the newswires Thursday morning (March 6). Both were important, yet each one had the opposite implication for the trend. The market chose one report over the other, and the question is, why — and what can we learn from that? Read more.

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Critically Crude

The cross-winds are swirling in respect of the Oil price, as confusion reigns.

In the words of a typical economist, “on the one hand,” OPEC appear likely to renew their recent production cuts, in particular from Saudi Arabia and Russia who are desperate for higher prices, whilst “on the other hand” is the new swing producer, the United States, who are equally keen to ramp up the shale production, if for nothing more than to alleviate the debt and job-losses seen within that sector.

So what’s an Investor or end-user to do?

At its simplest ignore the chit-chat, views (economist or otherwise) and even the fundamentals, as they are speculation at best and guest-work at worse.

We set out within our “Oil Price Collapse….Why the Surprise” just why we like charts, because they never lie, whereas fundamental analysis, although useful, is open to conjecture and extrapolation of the past into the future, with the overview going on to demonstrate how our charts gave ample warning before the Oil price slump.

So what of these cross-winds?

First up we show a chart of the long-term price of West Texas Light Crude, monthly data points since 1997:

Aside of it reminding just how severe was the 2008 price crash, note the black-dashed-line, as it’s very important. It’s effectively a support-line, which gave way last year and is now under threat once again.

This uncertainty was evident within our 5-year weekly data chart below, which provides colour- coded signals indicating Buy /higher Oil price (green), Neutral/uncertain (neutral) or Sell/lower Oil price (pink), which are supported by other technical observations  not shown here:

 

As can be seen, the dip below the aforementioned $30 black-dashed-line of early 2016, was flagged as a sell but quickly turned to neutral, which suggested a false-alarm. Also note, the most recent colour-coded signals have repeated this.

Adding to the mix is the $US Index, which of course is Oil’s currency, and in itself is throwing up shorter-term cross currents:

 

By inverting the Dollar index (turning it upside down) shows the negative-correlation between these two asset classes of the past few years, albeit that the relationship is breaking down of late.

Fortunately for investors or for those within industry sectors who need to make decisions based on currency moves and/or the price of Oil, we provide a very cost-effective service, which can be accessed via Here OR Here

Taking the guesswork out of your decision making may be critical to your business and to your financial health, so why not give these a try?

 

 

 

 

 

 

 

Investment Markets Overview — W/E 19th May 2017

“Bread and circuses” was how the government kept the Roman populace happy by distributing free food and staging huge spectacles, whereas today’s equivalent is the welfare state and to bomb someone as a means of distraction during problematic periods. Well, stock-markets took a hit this week, following the release of a memo by former FBI Director James Comey which alleges an obstruction of justice by President Trump, the man who sacked Comey a week earlier. The airwaves and financial media were full of speculation over possible “impeachment proceedings” against “the Donald,”

when surprise, surprise the US administration decided to bomb Syria. They could have saved themselves and perhaps more importantly the lives of innocents who always end up as “collateral damage” by browsing our mid-week socionomic comment, “Impeachment? Wrong time, wrong mood!” Interestingly, this week also observed the President’s first overseas visit since taking office, to none other than Saudi Arabia, the number one arms buyer from the US, the Brits and the French. The Washington and its tribune “swamp(s)” appear to be getting murkier, albeit that the attack on Syria may have appeased “elite” Republican Trump critics like John McCain who has yet to name a country that he doesn’t wish to bomb.

Adding to the uncertainty this week was Brazil, where the Ibovespa stock-index tumbled by 8.8% and its currency, the real, by 7.3% on Thursday alone, as political crisis returned to the country despite last year’s impeachment process to clear its swamp. To continue reading the main economic and market events of the week, supported by interesting charts, please read on and for a limited time period non-subscriber’s can access the full report via the “at your discretion” pay what you think it’s worth offer:

Subscribe to the Full Investment Markets Overview Newsletter which contains the following:-

Additional Commentaries:
•US economic data . . .
•Euro-Zone . . .
•The UK . . .
•Out East . . .
•The $US index . . .
•Within the commodities complex . . .
•Economic data due next week includes . . .

 Returning to the “bread” analogy to today’s welfare state, this week also saw the release of the UK political parties’ election manifestos ……

Charts:
1.  Indices Weekly
2. US GDP & CPI V US Ave Weekly Wage
3. UK Retail Sales V UK Ave Wages
4. Japan GDP V Japan Deflator
5. Commodities Weekly

Table:

13 Indices, 11 columns of detailed information, for accurate analysis

                         “What goes up, invariably Falls at a quicker Pace” 

Click Here to view Details of the full version of this Newsletter which includes full text and detailed

 

Inpeachment? Wrong time, wrong social mood!

Impeachment…..Is defined as a charge of misconduct made against the holder of a public office and they do not get any higher in the United States of America than the office of The President.

The airwaves and financial talk-shops are abuzz today following the allegation that President “the Donald” Trump asked the former FBI Director James Comey to drop a criminal investigation into one of his former top aides and, if true, did this amount to an obstruction of justice? A memo penned by Comey comes a week after he was fired by Trump and relates to a meeting they had last December, as the FBI was examining the role of Michael Flynn, who subsequently resigned as the National Security Adviser in February. The memo, as cited by the New York Times, suggests that Trump told ComeyI hope you can let this go,” going on to say, Flynn was a “good guy.” The memo follows a recent Washington Post report that Donald Trump had breached the trust of one of its allies during a meeting in the Oval Office with Russian foreign minister Sergei Lavrov and Russia’s ambassador in the US, by revealing information regarding a possible Isis plot to target airliners using laptop computers.

The allegations within both the memo and report were denied by White House officials but either way it’s upset the markets and over-shadowed any upbeat expectations following recent Trump initiatives such as the tax reform plans.

As for the impeachment speculation we look to the charts, as charts never lie, plus they do a pretty good job on analysing the collective social mood, and to a student of Socionomics, mood governs events, so charts are a very useful tool. In fact we used charts of the Dow within the March 2016 “Trump Card” overview, which observed the following:

“The mid-1970s was also a turbulent time for American politics, as Republican President Richard Nixon resigned from office in 1974 whilst facing an almost certain impeachment over the “Watergate scandal.” It is also interesting to note that oil prices were rocketing, following the 1973 Arab oil embargo, whereas today they have collapsed, following a debt-fueled over-capacity binge. “Tricky Dickey” picked a bear market to orchestrate the break-in, whereas the philandering “I did not have sex with that women Clinton, Bill that is,” picked the near peak of the 1990s mega bull-market, in December 1998, to avoid impeachment and acquitted on a lack of votes, particularly from the Democrats:”

:

At its simplest, for Nixon the social mood was negative, hence the chances of impeachment were high, whilst for “Teflon Bill” stocks were high, mood was positive and frankly the herd was making to much money to worry about Clinton’s alleged philandering.

Fast forward to today and stocks are at all-time highs, akin to Clinton’s impeachment talk:

 

So there you have it, it’s the wrong time and the wrong collective social mood to think about impeachment, but that’s not to say that we are not in a period of market correction, in fact our colour-coded guides are suggesting just that.

Perhaps now, dear reader, is a good time to try the “At your discretion” option in respect of our Investment Markets Overview. You pay what you think its worth.

 

 

 

 

 

 

 

 

The £Pound in Your Pocket!

When Harold Wilson commenced his first stint as the British Labour Party Prime Minister in 1964, he inherited an unusually large external deficit on the balance of trade from the Conservative administration and despite fighting the markets for a couple of years, the inevitable devaluation of the £GBP came in 1967, when Wilson famously assured the public that the “pound in your pocket had not lost its value,” stating within his next sentence that “prices will rise!”

Fast forward to today and, aside of awaiting the monthly “Dog and Pony Show” called the Bank of England Monetary Policy Meeting, an interesting report from Lloyds Bank PLC hit the cyber-waves. Entitled “Value of the fiver declines by 96% in the past sixty years,” the report states that “£5 in 1957 would provide same spending power as £113 today.

So who’s to blame?

Politicians’ of course and in particular the intervening governments of the day, as ultimately they are responsible for economic policy, albeit as evident from Wilson’s remark above, most of them are clueless about the true workings of the economy and the markets in general, deluding themselves that ever increasing levels of debt and stifling regulation are the way to prosperity.

Of equal and perhaps more responsibility for the devaluation is the Bank of England, who for 20-years now have been “independent” of  political influence over monetary policy, including the setting of interest rates, inflation targets and financial stability, three areas over which the 4500+ team of “highly qualified” individuals employed at the bank have consistently failed in their objectives

Exhibit 1 above shows the UK base-rate, the rate that the MPC decide on and the one that no-one outside of the banking industry under certain conditions can borrow at, Yet everyone eagerly await to identify change.

The purple-line is the UK year-on-year inflation rate, aka CPI, where its obvious that the 2% annualised inflation rate has hardly ever been achieved, whilst the red blue and black lines show the “market- lending rate” for a term of 3-months, 2-years and 10-years, the latter being the anchor for UK mortgage rates if taken on a typical variable rate contract.

The main take-away from this chart, aside of the failures alluded to, is the fact that the MPC base-rate “follows” the market rate, both up and down. In other words the Bank of England has never made a pro-active decision in decades, they “re-act” to market rates, and market-rates, dear reader, are set by us, the human herd made up of borrowers and lenders who decide what an acceptable risk/return number is.

Exhibit 2 below zooms in on the base-rate versus the 2 and 10-year market rate where you will note that the market-rates are changing trend. In fact they have risen by a respective 70% and 80% since August 2016

That tells you that the return on lending was too low versus the risk of lending  and one look at the massive increase of UK government, corporate and personal debt over the past decade in particular, should surprise nobody.

With the UK in the middle of an election campaign it’s likely to be no policy change from the Bank of England today, which actually poses a question on its so called independence when the market-rate is calling for change. Either way, the UK interest-cycle has changed and the pace of the change will likely accelerate and have implications for inflation, house and stock-market values and of course that “£pound in your pocket.”

I

 

 

 

 

 

 

 

Investment Markets Overview — W/E 5th May 2017

“793”…… Global merger and acquisition (M&A) deals have been completed this year as of the end of April 2017, according to “dialogic” who collates the data involving publicly traded corporations. This is 20% lower than the comparable period of 2016 and is the lowest number since 1998, which given that stock and bond markets are not far off their all-time highs is a surprise. The hesitancy is muted to be due to Brexit and the uncertainty over US tax-reform, which may have some merit, although a “look under the bonnet” reveals that the “value of deals,” is up by 13.9% YTD, at $US480BN, much due to acquirers’ having to pay a higher multiple of about 6% more than at this time last year. Talking of deals, the “art” of which played so favourably for “the Donald,” when it was candidate Trump, was left wanting during the negotiations and settlement with the US house and Senate over the $US1.1 TR spending bill. Whilst it keeps government open until the end of September,  the Democrats achieved most of their priorities whilst rejecting most of the President’s, including money to begin building a wall along the U.S.-Mexican border and $18 billion in cuts to domestic agencies. Time will tell whether the “Washington swamp,” really is too set in its corrupt ways or if the deal-maker is biding his time within a wider game-plan. Either way, whilst it will unsettle the markets it will be the markets that provide the catalyst to “clear the swamp.”

European stocks led the parade this week, belying any French election concerns, whilst the major US indices were dragged higher by an ever narrower handful of stocks. As shown below, it’s been another brutal week for commodities and in particularly for the “economy bellwethers’,” Copper & Silver.” For more on the week’s main data, supported by interesting charts and comment, please read on and for those who missed our last minute French election socionomic comment, it’s HERE:

Subscribe to the Full Investment Markets Overview Newsletter which contains the following:-

Additional Commentaries:
•US economic data . . .
•Euro-Zone . . .
•The UK . . .
•Out East . . .
•The $US index . . .
•Within the commodities complex . . .
•Economic data due next week includes . . .

 So, the Federal Reserve officials left its “target” interest rate on hold this week, within the bounds of 0.75% – 1%, whilst providing little direction  ……

Charts:
1.  Indices Weekly
2. US SPX Index V US Citi Surprise Index
3. UK London Rental Price V EU Rentals
4. OZ Base Rate V OZ 10-year yield
5. Commodities Weekly

Table:

13 Indices, 11 columns of detailed information, for accurate analysis

                         “Interest rates Fall and then they Rise” 

Click Here to view Details of the full version of this Newsletter which includes full text and detailed

 

Y “€ur” Know Soon Enough

French voters face a stark choice in Sunday’s presidential election between joining the wave of populism that has swept across the European and American political landscape over the past year or an attempt to renew the governing principles that have guided their country for decades, albeit via a 39-year-former untested Socialist turned Centrist.

With the nation’s traditional governing parties eliminated in the first round, this election campaign has already caused great uncertainty, although you wouldn’t know it from the polls, which have consistently placed the centrist Macron as the next French President, despite the polls seen to be wanting ahead of the Brexit and Trump “surprises.”

Il ne faut pas vendre la peau de l’ours avant de l’avoir tué,” translates into “don’t count your chickens before they’re hatched.” So what could cause an upset?

The turnout level will be key to the outcome, particularly with over 40% of the first round voters no longer having a candidate in the race. Will they now vote in line with the polls or will they not bother voting at all? Adding to this uncertainty is that Monday is a French public holiday, V-E day, hence many may prefer an extended week-end break?

Neither of the B & T events were a surprise to Socionomists’ as it’s the collective social mood that will decide the outcome, as mood governs events, with a Nation’s stock-index being the best “barometer” of the mood.

So without further ado, what is the French CAC 40 “saying:”

We look to the charts, as charts never lie, albeit that the French barometer only represents 40 underlying blue-chip stocks, but from it we can observe the following:

 

  • The CAC has gained 25% over the past year, retaining the green buy panel and confirming the “mood” as increasingly positive, supporting the “incumbent” had he been standing, but now Macron, the closest “fit” to him, being the Socialist Party deputy secretary-general and the Minister of Economy, Industry and Digital Affairs under François Hollande’s government from 2012 – 2016, when Macron resigned.

 

 

  • Note also the “gap,” highlighted by the red arrow, and the increased distance between the index and its 50-day moving average, which suggests a likely 7% correction towards the 5000 level.

 

 

So this supports the probabilities of a Macron victory on Sunday, with a likely stock-market correction shortly thereafter.

 

The €uro has been under pressure for all sorts of reasons, including the very threats to its existence and to the whole EU project, following the rise of populism. But as with their stock-market counterparts, currency relationships “wax and wane” to the beat of the collective social mood and are patterned because of this:

 

A 2-year study of the Eur/$US demonstrates this, showing a 1-year sideways trend following an earlier steep fall. Furthermore, the YTD rally for the € (neutral and buy panel) helps explain the “cock-a-hoop” reaction from the EU establishment following the recent Dutch election, including the “hard-ball” rhetoric now employed against Britain in respect of it’s EU exit.

For guidance on the fortunes or otherwise for the €, stocks and geo-politics in general, you may wish to visit HERE, HERE and HERE.

 

 

 

 

 

 

 

 

 

 

 

 

Investment Markets Overview — W/E 28th April 2017

 

“3% annualised GDP”…… Is the expectation/hope/dream set out by the new US Treasury Secretary Steve Mnuchin this week, as he and his fellow ex-Goldman Sachs colleague and now White House chief economic advisor Gary Cohn, set out “the biggest tax reform in American history.”  Tax cuts, set to slash corporate rates from 35% to 15% and the current number of federal individual income tax brackets to three from seven, will be funded by a “pick-up” in economic growth says Mnuchin, whereby the increased revenue that he hopes for will pay for the cuts, known as revenue neutral. Aside of it being unclear whether any of Trump’s proposals will pass through Congress unmolested, especially the 2015 Bipartisan Budget Act, which suspended America’s debt ceiling and lapsed on 15 March, there is the little matter of where the 3%+pa economic growth is coming from. Subscribers’ will note from a long-term chart of US GDP, shown within the US economic data section below, that this magic level was last exceeded in 2006 and before that in late 1999. Any analogy between the Reagan era and now is a “dream” and should be quickly discarded by one major difference. Federal debt in the early 1980s was around $2 trillion but is now 10 times that, at $20,000,000,000,000, a massive weight on the economy at 105% of GDP. For a reminder of the other main differences between then and now, and just why 3% annualised GDP is a pipe-dream, you may wish to visit the 1st February knowledge share on “Trumponomics versus Reagonomics.”

Stocks had a decent week despite the anticlimax following the Trump tax-ream’s lack of detail, with Europe leading the charge, buoyed by the usual upbeat “smoke and mirrors” of the ECB press conference and despite the “war-drums” echoing towards North Korea. For more on the week’s main data, supported by interesting charts, read on:

Subscribe to the Full Investment Markets Overview Newsletter which contains the following:-

Additional Commentaries:
•US economic data . . .
•Euro-Zone . . .
•The UK . . .
•Out East . . .
•The $US index . . .
•Within the commodities complex . . .
•Economic data due next week includes . . .

  It isn’t just retail sales and GDP that is slowing down fast in the UK, house price inflation is as well ……

Charts:
1.  Indices Weekly
2. US GDP Reagan V US GDP Now
3. UK Retail Sales V UK GDP
4. Japan CPI V Crude Oil Price
5. Commodities Weekly

Table:

13 Indices, 11 columns of detailed information, for accurate analysis

                         “Prices go up, and then they come down” 

Click Here to view Details of the full version of this Newsletter which includes full text and detailed