2016 has been a year of surprises.
At least for some.
Brexit…Trump….disillusion with financial centres around the world….even Leicester winning England’s Premier Football League has added an element of shock in an already chaotic world.
But not everyone has been caught out by 2016’s freak events.
An article published by financial analysts Bloomberg on 1st November 2016 was titled ‘The US Stock Market Isn’t going Clinton’s Way’.
It went on to explain how the S&P Stock Index has signalled the outcome of every presidential election since 1984.
The article stated…’A gain in the benchmark for American equity in the three months prior to the vote has seen the incumbent party win 86 percent of the time since 1928. Right now, the benchmark gauge is down 3.6 percent since Aug. 8 with just a week until the vote, a fact that in isolation augurs well for Donald Trump’.
This is an example of how technical analysis can be used to spot upsets in the market and where price action can be a guide to future movement.
So what is technical analysis telling us for 2017?
It is being speculated that 2017 could be a milestone year in the fight for world supremacy between the US and Asia.
A slew of investment banks including Deutsche Bank AG, Citigroup Inc, Morgan Stanley and Societe Generale reckon the pain for emerging markets will intensify in 2017, citing, in part, the rising cost of servicing dollar debts and higher Fed policy rates.
At the heart of the challenge… a tighter U.S. trade position in the coming years, which would shrink the pool of dollars floating overseas and make it harder for emerging markets to settle cross-border trade and service hard-currency debts.
Chinese companies on the other hand have been on a record acquisition spree, buying into everything from blood plasma to airline food. An unprecedented $234 billion of overseas purchases have been announced so far this year—nearly triple the amount during the same period in 2015.
World Brands such as Lexmark Printers, AC Milan Football Club and Caesars Slots Casino’s have been acquired by Chinese Buyers.
So again 2017 is set to be a very interesting year. Volatility could be both low and high at different times of year in stock markets such as the S&P and Japanese Nikkei and also currencies such as US Dollar, Mexican Peso, Sterling and Euro could see large swings as new governmental policy, speeches, tweets and referendums all lead to market movements.
From a trading viewpoint market movement is the main ingredient for profitable opportunity, so we are looking forward to a busy new year.
For now we wish you and your families a very relaxing Christmas and a Happy New Year.
Burlington Management Team