Stocks confound but trouble ahead for the Pound !!

Good morning all ! Been 2 weeks since my last post where im sure you will remember my Doomsday prediction for the stock market IF we broke the key 17710/20 level in the Dow Jones (A) ... you will i'm sure have noted the low a day later at 17110.6 !! I missed the ensuing rally but i wasn't going bear turned bull , market graveyards are full of long term bears/bull turned short term bull/bears turned bankrupt !! I wasn't going down that road !

We did , at the time , have a short Nasdaq position with a tight stop (4510) Triggered on the 8th July.

Stocks continue to confound me ... No doubt technically we have broken to the upside on all the major indexes... We have broken out of a 2 year trading range to the upside (B) and we have held the breakout .

We will watch with a close eye how this breakout shapes up .... still a little too much back slapping and self congratulating on social media for my liking ... the 3rd week of July is historically a shocking week for US Indices and with the market at a very key and important level i'm keen to get short on a break back down into the range ... watch the Twitter feed or subscribe on the right hand side to make sure you don't miss any alerts !!

Our other position has fared a lot better and the more i read the more bearish of #GBPUSD i get . A tertiary hashtag search on Friday eve showed an FX pair that has dragged in value buyers again .. The Bof E holding rates on Thursday seemed to be the final straw for a lot of hot money wrong level shorts and a false upside  break almost straight after the announcement dragged a lot of longs back in with pretty much all of my sentiment metrics now pointing to a very spec long position ..  New updated chart below ...

We have now had 2 failed retests of the long term downtrend (1.3480/90) and still sit well below the post brexit high of 1.3534 (29/6/16) ... I think we test the recent multi year lows early this week and i am re iterating my call for significantly lower levels once we clear the 1.2800 level . Sell any rallies with a stop on a decent clear of the long term downtrend .

Good luck and happy trading .... updates as always via our twitter @Contrarycalls .

GAN.

A quick update after a couple of very weird trading sessions in financial markets ! Clearly the GBP bear is working ... i have no inclination to unwind a the moment ... The "New" FX market is loaded with piano catchers (Dip Buyers ) and as i said last week Cable over extends its over extension ...Ultimately this is a real mess and with no clear political solution we are further away from BREXIT than we were last week although we have to ultimately go down that route ...its the uncertain uncertaintitys .. its an investors night mare .

Stocks continue to trade , well , differently ... last nights asia session looked for all the world like we d get our selloff but again dip buying and all round back patting and we held some key levels ... Although i still wouldn't be surprised to see a MASSIVE SELL OFF in equities from here ... So much bad news NOT in the market ... Nasdaq 100 target still 3800 watch 17710/20 in the DJIA .. this might be our trigger for my selloff .. if it gives way easily we will see 1k off the dow over 1/2 sessions ...

Enough of this .. back with an update when it deserves in the meantime please subscribe using the form on the left if you like what i say ... any comments appreciated and follow the new twitter feed @contrarycalls

Good Luck

Uncertain Uncertainty

Well that really was some week !! The opposition Labour party seem intent on keeping BREXIT off the front pages with an infight that to me has no clear ending and The ruling Conservative party are playing hot potato with Article 50 ... Politically the greatest loser this week bumbling Boris Johnson who clearly never thought he'd "win" the leave vote but would garner enough good will in defeat to mount a challenge for leader once Mr Cameron's time was up and is shown up as a political chancer who didn't really believe what he was campaigning for ... anyway enough of this ...

 The markets ... Stocks... a huge win from Tuesday onwards for the BTD (Buy the Dip) brigade ... it happened again .... As i mentioned last week for this to be the beginning of a new bull run we need a significant sentiment shift and by that i mean i want to see doom and gloom posts i want to see crash predictions . My timelines across social media this week were 85/15 bullish stocks biased ... various twitter sages patting each other on the back having successfully caught another piano... Pundits lording the FTSE 100 rise to yearly highs (More a factor of a currency devaluation on an index whose earnings are heavily skewed away from the UK) and more complacency .. even more than last week if that's at all possible.

We have 2 positions , lets start with our nasdaq short .... heres the updated weekly chart ...

Note the lower low and lower high here on the weekly ... still holding the downtrend with this coming shortened holiday week clearly going to be very important ... 4510/15 is the top of the channel for the coming week and i'm using this as our stop ... we did takeout and close above the major averages last week but something just doesn't feel right (Sentiment Sentiment Sentiment) ! Clearly world stocks took their Q from Europe this week and the amazing rally in the FTSE 100 (A mixture of currency deval and a good old fashioned squeeze) .. Very interesting to note stocks massive underperformance relative to treasurys as measured by the etf TLT ... This has been a very leading indic for stocks and the kind of underperformance seen this week suggests to me that this puff up fails and we fall hard ... my first target is still bottom of the range 3800 .


And so to our second short .. GBP USD (Cable) ... updated chart below ...

An almost perfect technical setup ... The down trend support , broken early in the week then held any upside perfectly ... we still need to push below the major 20 yr support with some real conviction ... a days trading below the level should be enough but price action stinks ... The UK is in a real mess and no obvious path out which leaves the market with its one major fear ... UNCERTAINTY ... The longer this mess drags on the lower we will go ... Governor Carney managed to pull the rug out of any rally by talking rate cuts late on Thursday and i'm not expecting this rhetoric to change anytime soon ... Market trades value long and very vulnerable to firstly 1.25 then over an extended period to 1 ! Stay short add to shorts on rally back to trendline !

I'm just in the process of setting up my twitter account .. please feel free to follow me @contrarycalls for shorter daily updates on positions and general rants  and subscribe to the blog on the right hand side of this page to make sure you don't miss any updates ...