Give anarchy a chance!

Give anarchy a chance!

As John Lennon almost sang:  “Give anarchy a chance!” and that is precisely what we are staring at here in Blighty.  The Labour party blowing itself to smithereens and in danger of splitting into at least two splinter groups, and the Brexiteers are in open warfare as they try to elbow Farage out of any EU negotiations.  He is the man that started the whole thing off as member of the EU parliament, by the way.

The fight for Tory leadership will be dirty.

I have never heard this question posed: If two-party parliamentary democracy has got us into this state, why does everyone believe this system has the answers to get us out of it?  I believe the UK has reached a state where faith in politicians is so low that anarchy could be an effective system.

After all, the meaning of anarchy is a group without a leader – and how can anyone vote for their leader any one of the sorry career political bunch that makes up the current political front-runners?  Has the nation finally reached a point where we do not need or desire a leader?

The Brexit campaign has galvanised many previously disinterested citizens into taking a position uninfluenced by any leader.  They made their own minds up!  How novel.

When at school, I could not understand why anyone  would consider joining a political party.  Surely, some of the policies (even if genuine) would be good and some bad.  How could anyone vote for a policy they do not agree with, I asked in my youthful naivete?

And it is precisely this dilemma that is wrecking the Labour party as I write.

But it is just one more step along the road to social unrest that I have long predicted.

And with Scotland stirring up trouble by threatening to have another independence referendum, this thing could get real nasty.  You can be sure to hear encouraging noises towards Scotland emanting from the EU.

And one other point before I get off politics: what if the Brexiteers within government now drag their feet regarding the immigration issue they were instructed to solve?  Many Brexiteers would not take too kindly to that, to put it mildly.  I see this as a flash-point in the not too distant future.

I dwell on these point because they have such a great bearing on the markets.  Luckily, VIP Traders Club members stayed out of any trouble – and even made hay on several open positions.  But trading from now on will be tough – very tough.  Here is an example:

I have been following NEXT (LSE) for COTW and on Friday, the daily range was a high of £68 to a low of £36 – a range of £32 in one day. This is no penny share – it is a member of the FTSE 100, for heavens’ sake.  Here is the chart:

But it ceratinly looks like a penny share! Sometimes, my tramline methods just don’t work.  And this is a great example.

Behind the scenes, the Chinese yuan is tumbling against the dollar.  I covered this cross a few posts ago and it has zoomed up since them:

Remember, a falling yuan makes imports from China cheaper and puts added pressure on domestic prices.  Note the Fibonacci resistance levels are being blown away.  My next target is the old high around 6.760. This move must have the Fed in panic mode (to add to the Brexit Blues) because it heralds lower US inflation – and with the rampant dollar, lower exports.

The Chinese are now pulling out all the stops to devalue their currency – will the West take that lying down?  Of course, Brexit has encouraged capital flight out of China into the dollar – and has given yet one more push towards dollar dominance.

With sterling in freefall, EUR/GBP has been zooming.  In the past few days alone, it has rallied from 76 to 84 – a surge of 8 cents in just three days.  Here is the weekly chart:

But it has run into the Fibonacci 78% resistance level.  And the rally off the February low has a clear five up impulsive pattern.  When wave 5 ends, I expect an A-B-C pull-back as the euro weakens substantially (which will be shown up in EUR/USD).

Last time , I showed the USD/CAD cross which will rocket when commodities pull back, as I expect.

The bottom line: we shall be presented with some excellent trading setups in several currency crosses in the next few days/weeks.  I shall put VIP Traders Club members into them.

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