The game of spot the 09 registration number goes on.
Apparently almost 325,000 cars were registered in March with the new 2009 moniker but I have to say that none of them seem to have been acquired in Chelmsford, Essex. In a rather light hearted attempt last weekend, as I drove into London, my wife and I attempted to spot our first new car (such is married life). Rather surprisingly even though the roads were very busy for a Sunday our, admittedly, poorly monitored game was to no avail.
Either my eyesight is even worse than I thought or there is something wrong with the registration data. In times past, to get cars off the forecourts, dealers used to ‘pre register’ cars and then sell them off as second hand with a small discount. The suspicion growing in my consciousness is that a similar trick is taking place now and that the sales data might not be a true reflection of consumer interest. The numbers were pretty bad anyway (down some 30pc YOY) but if the survey from ASDA the other day, showing over 50pc of the population fearful of losing their jobs in the next six months, is correct then major ticket item expenditure is probably well down on the essential items list.
On the other hand maybe I just missed them all.
As feared in yesterday’s comment markets seemed unable to pick up on the recent move higher and the Dow traded down throughout the session to close almost 200 points off. My target support at 7730 was avoided (just) but early action this morning is seeing prices down at 7700, under the recent trend rally line, and investors will be worrying that the move higher over the past month will disappear in a puff of smoke. One of the problems at the moment is the speed with which events unfold into price action. We are just 400 points off the recent highs in the Dow and still 1300 points above the lows and yet the TV punditry and comment is all about ‘dead cat bounces’ and returns to a bear market. In reality the markets remain very range bound and the US markets found that the 8000 to 8100 area was just too big a resistance level to get through just yet. It must be remembered that this very range acted as a very solid support in January with day after day trading and retrading the 7900 to 8200 price span. This type of price action builds up very strong volume resistance to moves in either direction.
The Far East has come in for a pounding overnight with the Nikkei off 250 points and the Hang Seng fully 600 points into red territory (a fall of 4pc). While action in the Orient has a disturbing tendency of being completely ignored by Europe and the US it would be a brave man who tried to pick a bottom of this little reversal just yet. As mentioned in yesterday’s comment Credit Swaps are still very pricey and have not fallen in line with the equity market rally. This indicates that a lot of very clever people are not happy with unfolding events.
The FTSE is called some 60 points off in early pre-market action at around the 3870 level as market makers try to factor in the US and Far East weakness. I would like to be able to say that this seems quite aggressive given the fact that the FTSE was looking quite firm in the face of afternoon weakness in the US but if investors take fright then we may be in for another rout on the off. Bottom picking is always a dangerous game but if the FTSE remains above the 3860 level for the Easter break then the momentum may be regained on everyone’s return. Unfortunately with markets closed in the UK for four days there may be a short term temptation to liquidate positions in fear of something happening whilst we are all away.
On the currency front my fear that the Euro was looking a tad tired seems to have been taken up by the markets in spades. The EUR/USD fell 2 cents yesterday and is another 80 pips lower this morning trading at 1.3185. Support at 1.3310 failed to hold yesterday and now the bottom of the last bear move at 1.3100 will be the next natural target for sellers. As mentioned the failure to make headway on the move higher seems to have opened the way for the sellers and with more emphasis starting to be focussed on the European and Far Eastern Banks (and the fact that there has been a distinct silence from many on bad debts) we may find that the Dollar and Pound start to make headway (not because of any particular confidence in them but because of failing belief in the others).
Gold remains just under 890 the major resistance/support level. Buyers will be hoping for a return above the 890/900 level soon otherwise liquidation of long held positions might start in earnest but sellers will also be worrying that there has been no follow through of the breach of the major 890 level.
Click here to go to Capital Spreads
Simon Denham is COO of London Capital Group and Capital Spreads. We do not endorse the information and analysis available in this comment and it is provided purely for information purposes only and is delivered as a personal view by the writer. Under no circumstances is the information in this comment to be used or considered as an offer to sell, or a solicitation of any offer to buy. While all reasonable care has been taken to ensure that the information contained herein is not untrue or misleading at the time of publication, we make no representation as to its accuracy or completeness and it should not be relied upon as such. The investments referred to herein may not be suitable investments for all persons accessing this page. You should carefully consider whether all or any of these are suitable investments for you and if in any doubt consult an independent adviser. We accept no liability whatsoever for any direct or consequential loss arising from use of the information on this web page. Please see our Terms and Conditions.