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9th April 2018

Bulls need to build on the rise today.

Today post here

Still all looks quite bearish bigger picture to me. This year so far has basically been the inverse of 2016. I remember at that time, the headlines were all about how it had been the worst start to a year on record and how that was going to be bearish. Newsflow was all about bad earnings, China being screwed, oil going to $10 and higher rates. Then all of a sudden we just stopped going down, moved sideways March to June and then the bullish breakout after Brexit. That was because the media narrative was wrong.. fed delayed rate hikes whilst over central banks pumped more LIQUIDITY, China added more fuel to there debt bubble and oil bounced. All of that helped EARNINGS recover...

2018 got off to the best start in years, and the narrative was all about how 5% up in January equals 20+% up for the year. Earnings were going to increase on tax cuts, there’s a ‘global synchronised recovery’ underway, rates are rising but it’s not a problem yet as a recession is 18 months away.

To me the price action and charts are saying that narrative is wrong.. the growth cycle has topped out as evidenced by the PMIs and retail sales. LIQUIDITY is being withdrawn, and rising rates/falling growth mean that EARNINGS aren’t going to grow after the initial tax cut boost. Then you have all the sideshow in Washington on top, but to me that’s probably secondary. Not convinced we rally much even if a trade war is averted.

So all in all, this market has risen for years on mostly tepid economic news (2009-2015) which proves that all that matters is liquidity and earnings. Now we have an expensive market and I think both are/going to deteriorate which is why it’s finding rallying hard.

FTSE pattern is clear.. long consolidation between June and December 2017, moving averages bunch up and tighten... fake break out for 3 weeks in January, rejected 7600+ and promptly sold off straight back through last years trading range. 200 dma rolled over, 50 dma crossed under. It’s going to take a lot to reverse this. I’m actually favouring much lower prices whilst under 7300... but got to take each day as it comes, current range is clearly 7110-7220, big gap down to 7030s under 7110 to be filled possibly.

Have just done a post on a broker that can be used if you don't want a lot of money tied up in a UK trading account following the ESMA margin increase news. Read more here.

Thanks for that post MCGCapital. Bulls trying to break 7220 again as I am writing this.....

Quote from Nick on 9th April 2018, 4:28 pm

Have just done a post on a broker that can be used if you don't want a lot of money tied up in a UK trading account following the ESMA margin increase news. Read more here.

Any idea of how using these would effect your tax position? Spread betting is subject to tax in Australia but not sure if it would apply if you live abroad

i’m toying with signing up as professional with IG but weighing it up at the mo

The way I look at it is if tax is a consideration you are better off with a UK based SB account and just put extra funds in. Offshore broker is better if you have a small account and don't want to bet big, ergo, tax will be minuscule anyway.