I took a break last evening in the middle of Jesse Stone and looked at the overnight futures market.. Yep, still falling and down 70. The market didn't like the news out of the ECB any more than I liked that latest Jesse Stone saga. By the end of the show, the Dow futures were down 92. By the time the Morning Squawk was posted, the futures were down 165 Dow points. Be still my beating heart!
Mr Market opened right around that level, and has bounced around that level since. All major indexes are lower by 1.25 to 1.5% All of the indexes, with the exception of the Transports, have now violated their short term uptrend lines, and have some room to decline further to more substantial support levels. I hope to see a little more bouncing around today so I can get an idea of where to upgrade stop loss prices. In the mean time, use the existing stop loss prices.
Oil is down 3.51 at 96.58 and Brent is down 3.14 at 109.25. Gold is higher, printing new highs for the Euro conversion, trading in Dollars at 1511.10, while Silver is slightly lower at 34.85 Copper is also weak, trading 3.97. The rest of the commodity complex is down with the exception of coffee which continues it climb higher.
The Euro is declining in line with the re-emerging debt problems faced by Greece, Spain, Ireland, Portugal land now rating reductions for Italian debt. The local elections in Germany, Finland, Ireland and now in Portugal are offering little evidence that any solution short of some kind of restructuring is unlikely. The Euro is trading off nearly 1% at 1.400 while the Dollar has surged nearly 1.25%, trading at 76.32. The Dollar has now overthrown the downtrend line established since last June, and I would say overthrown it with confidence. Given the huge Dollar short positions driven by the carry trade, it is entirely possible we may be on the verge of a Dollar short squeeze.. Man, talk about a liquidity issue!
The Bond market of course is responding to the unwinding for the risk trade, with a flight to safety in the U.S. bond market. (yes, of course I know what Bill Gross has to say about bonds. I also know what Rosie has to say about bonds) The 10 year Note is again trading under 3.10%, and likely heading for sub 3% rates. The long bond is up over 3/4 at 4.25%
No change today in the Momentum Change signals for the major indexes, however I have posted a new Buy signal for the GLD which was triggered on 5/19. Momentum has definitely flipped to the up side, but I doubt it will be enough to trigger new highs... at least in the near term.
I will be posting new stop loss prices this afternoon after Mr Market has had a chance to move around a little.
Best to Your Trading!
Bill
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