Wednesday 23 September 2015

Samurai Summary: Top Tweets 23/09/2015

Following on from the global selloff yesterday on concerns of a drastic Chinese economic slowdown, manufacturing PMI data released today showed that Chinese industrial production dropped more than what was expected creating yet another volatile Asian session with investors running for safety.

Many fear that the stimulus that has been injected into the Chinese economy thus far has not taken hold with further drops expected in the months to come. However in saying that we must bear in mind that even if Chinese authorities continue their stimulant process which I have no doubt they will it is still early to ascertain whether those measures have worked their way through the system. In theory it would have done so immediately but we're not working in a perfect world.


So I said I'd be following the USDJPY currency pair closely as I suspected the close correlation between itself and equities could provide clues to the directions of markets in the near term. This chart by J.C. Parets shows that there has been a consolidation after a steep sell down with the important point here being the low being made.

I believe we could possibly see another leg to the downside for equities and this chart backs up my belief. However its also important to note that this particular pattern, symmetrical triangle, can go either way so we can't rule out any upside. Let's see how this one unfolds...
Another dreadful day for Volkswagen as it's all hands on deck to clear the air after it was made known to the public that the company had lied to US emission regulators by switching on software programmed onto the vehicle's computer while it was being tested then turning off when it was done thus not reflecting the accurate reading.

It appeared as if CEO Martin Winterkorn had resigned earlier yesterday but those rumours were squashed causing chaos in dealings with Volkswagen shares. The feeling at them moment is there is going to be a clean of top management but replacements are not known which is making investors worrisome.
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