Boeing, Boeing and more Boeing. That pretty much sums the past week. Two Boeing 737 MAX crashes, prompted questions over the airworthiness of these planes. To a point where flyers actually cancelled their flights as they checked the plane they were going to fly pre-flight. As of today, it seems there is a software upgrade which is to be released to fix the issues.
Boeing stock got hit.
Let us look at the more…sinister side of this story. As many of my readers, and social media followers know, I have outlined a case why these markets have to be propped up and managed (pension funds, baby boomer retirements, and President Trump-election and China trade war).
A day after the Ethiopian flight crashed, the FAA came out saying that the Boeing 737 MAX was airworthy…these investigations usually take a few months to do and come up with conclusions. To put it bluntly, Boeing stock had to be protected, and it seems the FAA was doing its part. Boeing is a big part of the Dow Industrial Transports and the S&P. Big moves in Boeing will affect these indices.
The day after, the British Civil Aviation agency, as well as the European Aviation agency, grounded the Boeing 737 MAX, saying that the investigation on why the planes crashed would take months to conclude. The Canadian minister of Transport also grounded the plane, and President Trump did the same. Now, deals for the Boeing planes are being dropped by Aeroflot of Russia and also some Middle Eastern airlines.
These are the times we are living in. Managed markets. President Trump needs these markets to go up for his re-election, but more importantly, to have a position of strength to deal with China. Treasury Secretary Steve Mnuchin met with the 6 banks in December 2018 to keep these markets propped. You will hear me repeat this many times, but this is the truth.
Speaking on China, it seems we now have a concrete date on when a deal should be concluded by. 3-4 weeks has been said. Again, we shall wait and see. We do not have a deal until hands are shaken and pen hits paper. You all know my take. The Chinese are the ones negotiating from a position of strength, not the Americans.
The Brexit battle continues, with Theresa May’s days looking numbered. She will not win the next election. A no deal vote was reached, and the deadline for a working deal by March 28th has now been pushed back to June it seems. Again, Europe is falling. Democracy is just a phrase to keep the people happy. It really is about the elites and what they want. We have seen 4 votes in Europe be turned over (Greece, Catalonia, Portugal, and Italy), will Brexit be the 5th?
British politicians who are apart of the European Parliament will lose out on incomes (and their jobs) if Britain leaves the EU. Also, I believe the European elites want Britain to remain, because they know the troubles Europe will be facing. A debt crisis is coming, and they know the German taxpayer alone will not be enough to bail out some European countries. The British taxpayer is required.
North Korea is now having second thoughts on whether they should stop their nuclear program after, what seemed as progressive talks, with the Americans and South Koreans. Will be interesting to follow. As I have said, this is all about China. North Korea, with or without a deal, provides a good foreign policy excuse for the American navy to enter Chinese sphere and block her shipping lanes.
We have an extremely busy economic week ahead, but the big one will be the US Federal Reserve interest rate decision on Wednesday. US economic data still keeps coming in quite weak, stoking possible slow down and recession fears. The Fed will continue to be dovish.
- Tuesday: RBA Minutes, BoJ Policy Meetings, ZEW Economic Survey, GBP Avg Earnings (Jan).
- Wedneday: FOMC Rate Decision, Brexit Parliamentary Vote, NZD GDP Q4, GBP CPI (Feb).
- Thursday: AUD Employment Data (Feb), CHF Interest Rate Decision, BoE Rate Decision.
- Friday: CAD Retail Sales (Jan), CAD CPI (Feb).
Let’s hit the charts.
We have been watching this S&P 500 zone for quite some time. Has been rejected 4 times, and on Friday, we broke through this resistance zone. If we can hold the 2800 zone, we will be going much higher…maybe eventually making all time new highs. 2900 level up ahead is interesting before a potential break into new highs.
The UK FTSE has been holding the range for sometime. A classic range play.
The Aus200 showing a different side of equities. We are forming the reversal type pattern that I like to see after an uptrend or a downtrend. We are making what looks like a head and shoulders pattern. Again, this is only triggered if a break occurs. One to watch. The 6100-6105 zone is also a flip zone, so I would wait to see a break below that before taking a full position.
Oil has a a tale of two tales. On the daily, we have had our breakout, with OPEC cuts providing a fundamental catalyst. However, the follow through was not the greatest. Also, we are perhaps ear the end of an uptrend as we have multiple waves already. However, we are holding the breakout zone for now.
On the 4 hour and lower, if we see the 57.35 zone break, then we can see a move lower after a failed break out. We will wait and see.
EURUSD looking great on the 4 hour chart and the 2 hour chart. We have created a double top at a flip zone area after an uptrend, and I am awaiting a break of the 1.13 zone.
Every week, I do look at the futures of currencies, and this week, three have caught my eye: The Swiss France, The Euro, and the Japanese Yen.
The USDJPY showing interesting signs of a potential fall lower. A nice uptrend wave, and now we have approached a resistance zone and seem to losing strength. I will be watching for a break of the 111.00 zone.
USDCAD is a potential set up for Dollar strength or reversal this week. We have created a double bottom at a support zone. Technically, the 1.3360 zone is where the swing lower high is that needs to break before we can say this downtrend is over. I will be watching to see if we get a close above that zone which also confirms a higher low.
Three yen pairs caught my interest this week. I am just going to post them since they look very similar. A nice uptrend wave, and then a topping/range structural pattern.
I have some reservations on GBPJPY because the waves are quite volatile. It does not provide for a nice uptrend…this is due to the Brexit talks and there is more to come this week. Be very picky on entering GBP trades.
Not the best in terms of clean trend, but AUDNZD is showing a head and shoulders bottoming pattern forming. I will watch for a break and then analyze the pair when it happens.
CADCHF was a trade I took last week after the break of the 0.7550 zone. We have now ended the uptrend wave and look to be continuing our downtrend wave. We have yet to create our first lower high, but it seems the lower high swing we will be playing with is here back at the retest of 0.7550. To confirm the lower high, we need a lower low which happens when we break 0.7450. A continuation play that looks quite nice.
Bitcoin and other cryptocurrencies are showing some signs of life again. I am watching the 4250 zone. Why? Because technically, that is the wing we are working with, the lower high. Although you can argue that the 3540 zone was the break of the swing.
Following market theory with the 3 stages of a market, we have our downtrend and range/bottoming pattern, and the uptrend is the final stage.