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Global Macro Update
By Nic Lenoir of ICAP
Certainly the market was eager after a long weekend! I am not too sure what prompted EURUSD and the Dax to take off vertically at 9.30AM for US equities' open: was it the excitement about the German president's resignation, a 50bps widening in Italy's sovereign CDS in early trading, follow through rejoicing at Spain's latest downgrade Friday afternoon, or the excellent news out of the Middle East on Monday? There was a piece in Barron's this weekend entitled "time to buy" (I am eagerly waiting for the day they will print something entitled "time to sell") so maybe institutionals were waiting for US equities to open to start gunning. It doesn't make much sense in my opinion. The move came out of Europe most certainly given what we observed, but nobody confirmed our suspicion that it was central bank related.
It doesn't matter as much given that everybody I talked to is absolutely convinced it was the case. And if we believe the close in the S&P future we also know what the market thinks of it. While I honestly thought we would not bypass the 1,083 overlap, I keep a bearish preference as we remain below 1,106/1,113 where we issued our latest selling recommendation. The Dax, after a 3% move up in less hours than it takes to play 9 holes of golf on no news, has held below the 61.8% retracement of the latest sell-off. As long as we do not bypass 6,023 we could still technically be in a bear move, and in fact we could be piling up before starting a 3rd wave lower. We would not be stubborn if the resistance is bypassed however. We equate this level with a break of 9,870 in the Nikkei. If that level is taken out on the upside we would recommend buying on the break in fact because if there is one market that does not fake H&S or inverted ones for that matter it is the Japanese market. But as long as those conditions are not met we keep our bearish outlook and our modestly in the money short recommendation in the S&P future or AUDUSD.
Similarly, we see on the hourly chart that the 10Y Treasury future tested support without breaking so we remain in a bullish dynamic which coincides with weak equities. Watch closely for a break to initiate Treasury shorts to play a pull back to 118-15 but as long as we stay in the bullish channel we have a 123-08 target.
The only market which did not play tricks on us today was Gold which seems to be confirming a move towards new highs after holding the overlap at 1,027 on a daily close.
Good luck trading,
Nic
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marl aaaaaa
what happened to the irc servar?!
'was it the excitement about the German president's resignation, a 50bps widening in Italy's sovereign CDS in early trading, follow through rejoicing at Spain's latest downgrade Friday afternoon, or the excellent news out of the Middle East on Monday?'
LMAO - great summary, thanks.
short global security
1.2213
gold stocks down today even when the s&P/dow where up.
your government is shorting the miners using your money.
Hathaway on Bloomberg TV saying that gold isn't about deflation or inflation, it's about the death of bretton woods. Behold
"nobody confirmed our suspicion that it was central bank related."
That's funny.
Maybe they'll issue a press release next time.
This is from a Dutch site:
http://www.tijd.be/nieuws/geld_-_beleggen_markten/-Beleggers_willen_enkel_nog_Duitse_obligaties-.8922448-3454.art
Only German bonds are able to get sold and all the others are being bought by the ECB!
Europe will crash before Friday.
I can feel it in my nuts
Ha! Thanks for that chuckle.
Are you sure it's not just a case of crabs?
Get the Nix!!!
Haha!
Sorry to hear that, sounds uncomfortable.
"I got a bad feeling about this one in ma nuts."
New opening bell ceremony.
Today's action felt real for a change.
Probably a head fake.
Well done Rahhhm & Company ;>
PPT and prop desks came to work with a raging hangover after the Mem Day bender. They'll shake the cobwebs tomorrow and find a way to prop the 10. No other options. I'll leave the Dow 10 hat in the closet for a while.
+1
Off Topic (sort of), please indulge me... Hat tip to Mish.
"China Denies Speculation about Diversifying from Euros; Oil in Euros Revisited; No Good Currency Choice Except Gold"
...last paragraph...
"No Good Currency Choice Except Gold
It's hard to have a real love affair with dollars, especially at this level. However, it is harder (for the time being) to have a love affair with the Euro.
With property bubbles in Canada, Australia, and China it sure is hard to like the Loonie, the Australian dollar, or the Renminbi (Yuan).
The essence of the matter is there is really nowhere to hide, except GOLD.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com/2010/06/china-denies-speculation-about.html
The U.S. Economic Collapse Top 20 Countdownhttp://www.puppetgov.com/2010/06/01/the-u-s-economic-collapse-top-20-cou...
Can someone please explain that Magic number that keeps reappearing on the S&P 500- You know 1070.71.
Is it Code ?
YES!
The zeros are naught, they don't count.
But every time you subtract 1 from 7, you get 6.
Don't you get it??
666!!!!
The Mark of The Beast!!!!!
Remember the S&P low of 2009. Yes!! 666!!!!!
He's here!!!
HIs name is....
Chumbawumba.
Sorry, Chumbawumba. I couldn't help myself.
I shit myself laughing!!!!!
Yes, its nixons ghost of october-10 of 71 when he took us off the gold standard...
LOL. This is good silvertain. In other news, expect a major decline Thursday/Friday.
Just a quick thank you to Nic. I really appreciate your willingness to lay out specific predictions on a regular basis. It takes guts to put them out there, right or wrong. Keep up the great work.
More generally, this site is one of the best things going for sanity in our current insane world. Thank you to Tyler, Marla, et al. We lurkers from the "lay world" very much appreciate learning from your gab...
I second the big thanks to Zero Hedge and all the bright and hard working staff.
ZH is by far the best site for breaking news and in depth analysis of all matters financial and political...Hell, you folks even cover breaking war news! Please keep up the good work.
"The move came out of Europe most certainly given what we observed, but nobody confirmed our suspicion that it was central bank related."
Who needs confirmation, Nic old boy? Just use your own brain. What are you looking for?
This? "In a press release today, The U S Federal Reserve admitted to blatantly manipulating the foreign exchange markets today. The Fed gave, as reason for their actions, an overwhelming desire to "paint the tape" and create the illusion of buying support at the critical 1.2150 level versus the dollar. When asked why this level was important, Chairman Bernanke replied that 'We are all Greek now'."
Just saw this:
Dennis Gartman: Euro Going Under $1.20 ‘Almost Certainly’"The euro will drop below 1.20 against the dollar because EU’s problems will not be easy to solve, Dennis Gartman, author of “the Gartman Letter,” told CNBC Tuesday."
http://wallstreetpit.com/30296-dennis-gartman-euro-going-under-1-20-almo...
Listen to this group talking about the euro,
http://www.cnbc.com/id/15840232?video=1509906198&play=1
Rick is going to leave! The dude is not drinking what the other are offering.
EURO sinking right now, I think it finally goes under 1.21 tonight heading to the 1.18 level against USD
Quit being a wierdo.
HAHA, just after I posted the Japanese Prime Minister steps down and off to the races for the EURO lol getting harder and harder to trade these FX moves with interventions and officials quiting at the drop of a hat OUCH!!!
Best just watch the averages, support and resistance, and channel lines. The new 'behind' the moves will always steer you wrong.
Above was in reply to jkruffin's post (drunk again...)
This is a daytrade market. Who the hell haven' got burned by antecipating theses move( gap up, gad down, sell off, ...)? the market can break either way. Just benefit from the huge intraday volatility and close all positions at end of day.
Barrons has become a completely worthless trade journal. All they do is cite the same forward earnings "cheapness" over and over again. I still have their "Buy GM" front pager a few months prior to bankruptcy. Goes right up there with my Worldcom, Enron, and Bri-Ex stock certificate memorabilia (would like an old Lehman and Bear).