 Good morning, welcome to CMC Markets on Friday the 13th of November and this quick look at the week ahead beginning the 16th of November and it's been a fairly impressive week for European stock markets. We got off to a really good start on the Monday and it was really building on the gains of the week before the FTSE 100 for example managed to post eight successive days of gains and we'll look at that in a minute. We'll look at the performance of the DAX, the Nikkei which hit its highest levels in nearly 30 years and more broadly look at the outlook for markets going forward after what looks as if it could well be an impressive week of gains. Before we get started do a little bit of a bookkeeping with respect to risk warnings and disclaimers allow you to digest these before we get cracking on the actual agenda for the upcoming week but also looking back at the events of the last few days. So we'll start with the Nikkei 225, it broke towards the upside on the Monday on the back of that really promising news of a vaccine candidate from Pfizer and beyond tech, 90% efficacy, very impressive, certainly I think makes the outlook for treating or inoculating against coronavirus that much more positive than it was a week ago but to see the way the markets have reacted to this news you'd think they've discovered a cure for cancer they haven't. What they've done obviously is there is a very promising vaccine candidate that on a limited numbers, a limited number of trials appears to have had a 90% effectiveness in preventing COVID-19. Obviously there are other candidates as well but as with anything I think when it comes to these sorts of stories the world the world headline is very very positive the reality of delivering it is somewhat different and we're having to deal with the here and now and having rallied for eight days in a row as we come to the end of the week it was perhaps inevitable that we'd start to see a bit of a pullback in European stock markets and certainly if we look at the DAX that's certainly what we are seeing a bit of a pullback yesterday a bit of a consolidation today and if we look at the look at where we were on Friday last week we were around about 12,500 so we pop back above 13,000 the big question is can we maintain that what I think is particularly significant about this particular move is it brought us back all the way from that very very key support level that I identified in the previous week of 11,360 but what it hasn't done is it hasn't pushed us back above the previous peaks and I think that is significant because I think ultimately while this vaccine story is very good news doesn't change the situation on the ground here right now and at the moment particularly in the last 24 hours what we've seen is that in France the number of people requiring hospitalization has risen to a record level here in the UK the number of people infected in a single day surged by nearly 50% to over 33,000 now those numbers could come down when the numbers get released later today but also in the US the situation is no less serious New York City is potentially looking at the possible closure of its schools while the Merrill Chicago Norrie Lightfoot announced to stay at home advisory for all Chicago residents for a period of 30 days which essentially means that she's asking everyone to cancel their Thanksgiving plans and stay at home other than to go to work go to school or go out for supplies food shopping and other essentials so that gives you an indication of where we are now and a vaccine it's not going to help with that and ultimately when you actually look at the ability to roll out these vaccines the UK has bought 40 million doses well that's enough for 20 million people because you need two doses then they need to be three weeks apart and then of course you don't really know whether or not there are any significant long-term side effects if there are and if there aren't how long does the vaccine actually last for how long after the two shots do you retain immunity is it three months is it six months or do you have to have to have injections every year so there are an awful lot of unanswered questions and I think for the here and now it's an absolutely really positive news story absolutely and it will affect potentially it will affect what happens in the first half of next year doesn't change anything now and at the moment in France the UK Germany are in various states of lockdown likely to remain so and there is a risk there is a significant risk that the expiry of these lockdown measures which are due to happen at the end of this month early next month could get extended by a week or so and I think there is a risk that that could happen rather than run the risk of having a spike in infection rates in the week leading up to or including Christmas I think there was a written you know I think there was a significant chance that these lockdown measures these limited lockdown measures as they are could get extended beyond the beginning of December maybe for another seven to 10 days so that the infection rate can come down significantly enough that we can then go out and hopefully enjoy some form of Christmas break where we're not locked down the big concern at the moment is when the lockdown restrictions get relaxed everyone goes out interacts with each other and the infection rate spike again two three four weeks down the line and that is the that is the line that governments are trying to navigate at the moment so when I look at these charts here that still remains very much range bound with decent resistance up around 13 and a half thousand so I think for further gains there we really need to see some significant evidence of a breakthrough this bearish candle here does suggest there is a little bit of a barrier around about 13200 so I think it really depends on how price action how prices react when we get back above 13200 because for the past four to five months we've really struggled in and around that area if we look at the S&P 500 the Friday the Monday price action was much more significant and notable we did make a new record high but look at where we closed we weren't able to sustain any of those moves and even though we did try and retest the 3600 level we weren't able to get back above it so it's going to be very very important in terms of the DAX in terms of the S&P 500 how we react in the event we're able to get above 3600 and I've said this all the time particularly when it comes to Dow theory if the DAX breaks higher I want to see the S&P 500 break high yes we've seen the Nikkei break higher I make new 30 year highs and certainly there is a significant and it's made significant progress in that regard but ultimately that hasn't been matched by the price action in the S&P and the DAX and what's particularly notable is how the NASDAQ has behaved we weren't able to retake the peaks of the summer and what is even more interesting is even though we made a new high we actually closed on the lows of the day suggesting that maybe we've seen the peak in the NASDAQ and that we could well be we could be well overdue a significant correction in tech stocks so keep an eye on that level there but certainly that that bearish candle on the Monday in spite of the vaccine news tells us that potentially we could well have seen a short-term peak in the NASDAQ even if we don't see it and so for example the S&P and the DAX but the fact that we haven't as yet broken those key resistance levels is a warning sign to me not to get overly bullish when it comes to looking at equity markets one plus point is that the FTSE 100 has broken out of my long sideways downward channel which is very very positive news and has gone back to retest 6,400 now don't hang out the bunting quite yet yes we've broken to the upside and we've broken above the 200-day moving average but let's not also forget that the FTSE 100 has a very decent proportion of cyclical stocks and it's got airlines and it's got travel and it's got oil majors in it's got banks in it and what we saw as a result of the vaccine was or the vaccine news was growth growth potential for 2021 could potentially be quite a bit higher which means that potentially for the here and now while the short-term health deteriorate the situation is deteriorating in the longer term in my capacity sooner rather than later airlines have taken an absolute battering in the past few weeks largely on the basis of they've had to revise down their passenger capacity from around about 50% of the levels that we saw last year to around about 20 to 30% as we head into the year end this vaccine news is likely to see those capacity constraints right lifted upwards that's why you've seen a bit of a decent rebound particularly in airlines particularly in travel stocks and particularly in the oil majors as well because if airlines are able to lift their capacity sooner rather than later then obviously energy demand will go up which will bode well for the global economy that's why you've seen the rebound more pronounced in the FTSE 100 because when you extrapolate the potential for a vaccine out into the future then the economic activity in the future could actually be fairly significantly higher than was the case about a week or so ago so we've seen a bit of a breakout in the FTSE 100 and while the DAX has managed to recover all of its losses year-to-day if we look at the FTSE 100 we can see that we're still well below the levels that we were at the beginning of the year so FTSE 100 has significantly underperformed which means it has the potential to rebound an awful lot more than say for example its European counterparts so on a on a valuation basis FTSE 100 stocks are much much cheaper now obviously Brexit is one part of the reason for that the UK EU trade talks they look as if they're going to get extended again potentially beyond the 15th and 16th of November the sides are still as far apart as ever when it comes to fishing rights and level playing field but on the more positive side the departure of Dominic Cummings could offer that you know the departure of Dominic Cummings as the Prime Minister's Chief Advisor could offer a ray of hope in terms of maybe some form of compromise on the UK side as well as the European Union side so that's helped to support the pound as well over the course of the past few days maybe there'll be a change of emphasis there with respect to the FTSE here we have seen a little bit of a little bit of a reversal here but I think as long as we're able to stay above 6,250 and below 6,400 we could have the makings of the beginning of a little bit of a flag or a pennant consolidation before the next move either up or down so if it moves down it'll be a failed flag if it moves up then we could see a move back to 6,600 but the fact that we're above the 200-day moving average in the 50 days starting to roll higher suggests that maybe we could we'll be starting to see the beginnings of a significant rebound in the FTSE okay so we talked a little bit about what's gone on over the course of the past few days and by and large it's been another positive week for stock markets the big question now is whether or not that can continue as we look ahead to the week ahead and we've got a host of fairly important data coming out this week starting with the latest Chinese retail sales numbers which are due out on the Monday the 16th of November we've also got US retail sales due out on the 17th of November and UK retail sales on the 20th of November we've also got the latest UK public finances numbers which are expected to be pretty ugly but the UK is not alone in having pretty stretched public finances pretty much everyone else is got the old monetary hose pipe on in trying to mitigate the effects of the current pandemic so let's first and foremost start with Chinese retail sales and these will be the numbers for October retail sales growth in China finally appears to be gaining some traction after several months of caution and concerns about a second wave in the last two months improvements in imports growth improvement in services PMIs suggest that the loss of confidence as a result of February lockdown is slowly returning and the lack of a second wave thus far in China has prompted a pickup in demand in not only the auto sector but also in terms of retail spending raising demand from the likes of Apple in the Chinese markets and as a result in as a result on the last couple of months we've seen the first solid month of positive retail sales growth with a rise of 3.3% in September that followed a very modest 0.5% gain in August so the first two positive months this year for retail sales have happened in the last two months now I would expect this to improve further in October not only because consumer confidence and PMIs have been improving but also because it was the golden week holiday at the beginning of the month in China and that's likely to have brought out Chinese consumers not in their droves but certainly I think in much greater numbers as we look towards year end and obviously in November we've also had singles day on the 11th of November so the the potential for some decent October and November retail sales numbers is likely to remain quite high year-to-date Chinese retail sales are still down 7.2% but I expect this to come down with respect to retail sales in October where expectations are for a rise of 5% though we could come in higher than that if golden week sales prove slightly firmer than expected in the terms of the US dollar the US dollars had what I would call a little bit of a mix week we did have a little bit of a push to the downside but on Monday we saw a very very sharp snapback in the CMC dollar index going to remove that resistance level there the fact that we snapped back so strongly and posted a bullish engulfing pattern here a bullish reversal suggests that we've potentially seen the bottom in the dollar for the very very short term so that level there I'll just draw a circle around it there we go so this green candle here is a bullish reversal it suggests that we could well see a little bit of a rebound on a breakthrough 980 back towards the levels that we saw towards the beginning of the month and this level here that generally tends to be a fairly bullish signal for further dollar gains going forward so what does that mean well it essentially means that euro dollars going to go lower so if we look at euro dollar and I'll quickly quickly bring that chart up there we've once again found that the air is a little bit thin above 120 let me just remove some of these these lines here because I think they're a little bit surplus to requirements let's just move that and move that there we go and do a little bit of analysis while I'm talking but what we what as I say what we can see here is that there is certainly potential or a move back towards around about 116 12 given the fact that we were pretty much unable to move back above these highs here and what was important here is we posted a bearish reversal which would suggest that as long as we stay below this trend line here bearing in mind we got a bullish reversal on our dollar index the next likely move on any rebound in euro dollar is likely to do back towards these lows around about 116 12 it's now become quite apparent that Joe Biden will be the next president of the United States and the big question will be what if any sort of fiscal stimulus is likely to come about between now and the end of the end of the year personally I think it's highly unlikely does that mean the dollar is going to remain strong very very difficult to say I think if we get a little bit of risk off then the dollar could gain from that and by risk off I mean weakness in equity markets at the moment equity markets thus far today as I'm talking to you are looking to end near the top of their weekly range which is fairly positive the big question then being how much further can they go in terms of the retail sales numbers in the US we've seen very much of V shaped recovery and from the big big decline seen in the first part of the year we've seen five months of solid gains and I think it's quite likely that we will see a six month of growth the big question here I think in the face of rising infection rates in the US the tightening of restrictions in New York and Chicago whether or not that is the beginning of further rolling tighter restrictions going forward as various state governors state authorities basically bear down on rising infection rates to protect hospital capacity ICU capacity the big question is whether or not we will see that manifest itself in weaker November numbers but certainly in the context of the resilience in the labor market with an unemployment rate now at 6.9 percent we could well see another gain for retail sales with a gain of 0.6 percent expected albeit that's quite a bit lower from the 1.9 percent gain we saw in September so looking at your dollar we can we can say here that ultimately this range still remains intact we're pretty much playing 116 120 on the wide of it I think and that's likely to continue to be the case let's look at let's look at our old frame cable I've always you know for the past few weeks I've been saying by the different cable by the different cable I remain of that view irrespective of all the noise around Brexit talks EU trade talks and what have you we are now well above the levels that we were a week ago we've broken above 130 170 80 we need to get back above that and push back towards these highs here but if we look at if we also look at the CMC sterling index we can see a similar sort of thing playing out here as well if I just change that font so you can actually see it make sure it's easier to read and get rid of these active pointer we can actually have a much greater idea of where we are in terms of the trend now looking at this oscillator it's telling you it's a little bit overboard it's a bit messy but overall if a price if the price is telling me one thing and the oscillator is telling me something different I take notice of the price action the price action is the be all and end all for me oscillators moving averages and what have you a complementary to the overall underlying analysis of the price action here the trend is very much to the upside yes we've seen a little bit of a correction back down from the peaks that we saw earlier this week nonetheless if we do get any further weakness as long as we stay above this trend line here and ultimately the bullish scenario the optimism that I have around sterling is likely to continue to remain that's certainly borne out by the way euro sterling has behaved over the course of the past few days now this is a little bit messy so I will try and clean it up a little bit for you let's just close the cable chart and we can look at euro sterling so again this this blue line which I talked about last week this horizontal this this sloping trend line from the highs it's thus far continue to remain intact more importantly the 1500 day moving averages has also acted as a little bit of resistance now what's significant here is we broke this trend line here personally it's not as significant as it might be because of the extent of the rebound that we saw from the 88 60 area so I'm going to get rid of it I don't need it anymore it's surplus to requirements if we look at this 88 60 level here you can see how crucial this level is we've tested it on one two three four occasions what's significant about it is when we rebounded off it we closed well away from it so this suggests to me that there's an awful lot of pent up demand down there there's a lot of buyers still around that 88 60 level and ultimately that means that it's going to continue to be a tough nut to crack but as long as any rebounds stay below this trend line here on the 50 day and 100 day moving average then the underlying trend remains intact but this is a warning sign here that potentially we may have seen a short term base and if we break through here we could go back to test 91 and a half 92 at the moment we're below that but the fact that we pushed down so aggressively and then rebounded so aggressively means that sentiment around euro sterling is still very volatile and no one really wants to hold positions significantly large positions one way or the other hence the extent of that rebound after we failed to crack 88 60 but you know make no bones about it 88 60 is a big big level if we break through that it's going to trigger stops quite aggressively and we could get a really big move lower so we really do need to be primed for a potential breakout there now in terms of the actual pound and certainly certainly with respect to what we're looking for going forward what I would say with respect to the pound is it's a big week in terms of the UK economy again public finances retail sales the recent extending of furlough by the Chancellor of the Exchequer Rishu Sunak to the end of March suggests that we're very much in this for the long haul vaccine or not and I think that the fact that the government acknowledges that is while not particularly pretty for the public finances it's probably a necessary evil when it comes to supporting the economy and trying to avoid any long-term economic damage as we head into 2021 I think the more most important numbers for me away from the headline number of 200 billion pounds of borrowing so far with potentially another 35 billion for October it's the retail sales numbers because given the fact that we're now locked down in England here and an awful lot of the rest of the country Scotland Wales and Northern Ireland are in tier three restrictions or even tier four if you're in Scotland how the UK consumer goes into year-end is going to be a very key determinant of the extent of the bounce back any bounce back that we see in 2021 so UK retail sales been a positive story we've seen five consecutive months of decent gains since the relaxation of lockdown in the spring this however could be as good as it gets as we head into year-end now in September we saw an increase of one and a half percent now the October numbers could go either way and why do I say that because even though we saw a significant tightening of restrictions throughout the month of October for example pubs and restaurants saw their takings down 33 percent and obviously that will feed into the retail sales numbers we also saw a pre-lockdown surge at the end of October which prompted the British retail consortium retail sales survey to book a 5.2 percent gain from a year ago so you know depending on how much demand at the end of October was brought forward from November then we could well see a retail sales number of minus 0.3 0.0 minus 0.4 or even it could come in flat but I'm certainly not expecting a largely positive number it's likely to be a last hurrah before the government decided to unlock the economy sometime before Christmas in December so that's UK retail sales not really expecting great shakes there if it comes in around about zero I think we'll probably have had a result so certainly certainly certainly looking at that now in terms of earnings I think it's going to be a big week for a number of companies Vodafone being a case in point if we look at Vodafone we can see here that when they reported it in July the numbers show that the business performed better than expected in the first in the first quarter and the rebound in the share price does appear to have reflected that we've seen a nice big breakout from this potential base down here potential double bottom so you've got 114 to 101 that's around about 13p that would seem to suggest that this break higher should take out the 200-day moving average and push up towards 130 and these peaks here but I think the big question for Vodafone is whether or not their roaming and visitor revenues have started to pick up in the wake of the relaxation of lockdown fixed services revenues have also showed some fairly decent gains I think the big question with respect to Vodafone is because they're taking on the likes of BT and Telefonica 802 I think there will be some hope that the recent decision to add Amazon Prime and YouTube premium to its mobile entertainment plan on top of Sky Sports TV and now TV has added quite a few numbers to its bottom line and helped pull the share price back up from the levels pulled back up towards the levels that we saw in mid-July so keeping an eye on whether or not that breakout can be sustained let's look at EasyJet we've also seen a breakout in the EasyJet share price over the course of the past few days obviously that's the Monday vaccine news so that's fairly positive back above the 200-day moving average EasyJet have also bolstered their finances in the last month or so by raising over a billion pounds in terms of leasing back selling and leasing back a number of its aircraft to bolster its balance sheet that now looks like a fairly prudent move given the recent COVID news or the recent vaccine news because essentially what it does is it puts them in a fairly decent position hopefully for when it's able to boost its capacity so another thing is obviously it will help I think reduce the cash burn if it's able to start lifting lifting lifting restrictions and improving the number of its flights that it does on a daily basis so above 700p looking fairly positive as long as we can stay above that and the 200-day moving average then we could we'll see further gains for the EasyJet share price obviously rising infection rates aren't going to help in that regard but we know that's going to happen anyway it's really about what's going to happen in the first half of next year that I think investors will have their primary focus on we've also got Royal Mail what a Lazarus-like comeback we've seen from here back around around about 270p after hitting a low of 120p back in March now you may recall all the way back in the day when the Royal Mail IPO'd at 330p I thought at the time that was a little bit overpriced but it went all the way up to 600p so you know how wrong was I there but having said that I always felt the business model was a little bit suspect and certainly recent events have proved that to be the case that being said the outlook for Royal Mail certainly looks an awful lot more positive now than it did a couple of years ago we've changed CEO so hopefully industrial relations will be better and also we've we've seen the Czech billionaire Daniel Krtynsky take a stake in Royal Mail as well so that was just to me that I think a much more consensual industrial relations policy could actually see these shares continue to move higher however I still struggle to see whether or not there's much traction much above 300p but certainly if we look at the direction of travel here the fact that we've managed to push above 280p and we've got the peak season and various lockdowns and what have you parcel traffic Royal Mail should see a significant uptick in parcel traffic as a result of these various lockdowns while while people stay at home so hopefully these first half numbers that are due out on the 19th of November should reflect that new reality easy jets um numbers four year numbers are out on the 17th of November by the way I feel I neglected to mention that when I was talking about easy jet earlier but that's for all my group and I'm going to finish up with Walmart because obviously they've just they've just agreed a deal to Salasta so they should have a nice little windfall of around about six billion pounds boosting their coffers and they've been another retail success story in the US along with Target who are also reporting next week Walmart's Q3 numbers are on the 17th e-commerce sales have they've been a big winner as have Target that's one thing that an awful lot of US retailers have done well it has realized that one billion dollar loss has Walmart on the sale of its Argentina business but certainly I think even though it's seen a big increase in business costs it's actually seen a much better increase in e-commerce sales they increased 97% in Q2 74% in Q1 so it'll be very interesting to see whether or not they can sustain that sort of increase in Q3. Just briefly talking about Halfords first half numbers on the 18th again they've been a big winner from the pandemic in terms of cycling, sailor bicycles but also in terms of sales of car peripherals so roof racks and roof boxes roof racks as people have stayed at home also sales of batteries bulbs wiper blades and what have you is more and more people instead of getting on a plane got in their cars so Halfords should see some fairly good numbers as well so I think that pretty much I think that pretty much brings me more or less to to the end to the end of this particular webinar so I'm hoping that you will found this very useful ladies and gentlemen once again I'd like to thank you very much for your patience and for listening and I will speak to you all same time same place next week in the meantime I wish you all a very nice weekend and a good week trading thanks very much