By Chris Becker
Another turbulent week on risk markets, and not withstanding the rally on Friday night on Wall Street, stocks are looking down the barrel of a full correction as they fail to make new highs in this “recovery”. Trump’s new trade war is not helping, but the real impetus is interest rate normalcy with the new Fed chief revealing the more hawkish bent and thus pulling the rug out from stimulus punch drunk stock and bond markets. Watch out below!
Looking at stock markets first, on its return from the NY Holiday the Shanghai Composite gapped up significantly, with a follow through to almost reach 3300 points but last week saw an almost complete reversal as this level turned into significant resistance. The weekly chart below shows a lot of hesitation around that level with momentum not yet positive, so I’m wary of a follow through this week. Support at 3000 points remains the uncle point:
