Stockmarkets rally, just as I forecast

The sharp rally in stocks caught the pundits by surprise, says John C Burford. But chart-following traders saw it coming.

Stockmarkets rallied hard on Friday following the Bank of Japan's (BOJ) desperate move to implement negative interest rates. This followed European Central Bank boss Mario Draghi's equally hopeful last throw of the dice in December to force EU headline consumer inflation up off the zero line.

The central banks' obsession with their 2% target has always been something of a mystery to me. When consumers are finally enjoying stable (and lower, in the case of energy) prices, why would anyone want to increase them again, given that wages and salaries remain stable? Of course, I do see why. It is because they want asset prices to be keptelevated. After all, central banks have gorged on bond buying and do not want to see their values plummet.

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John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.