It's Weak, But It's Not That Weak Yet
Submitted by Nic Lenoir of ICAP
Bears I talk to this morning have a bit of a spring in their step this morning. Certainly it's not everyday the market sells-off and spends more than a handful hours in negative territories. Here are a few charts that show that the next few hours will be key / 10 ticks will be key.
We need a daily close below 1,130 in S&P futures to confirm weakness. As the charts show, Dax is on support here and need to accelerate lower in order to break the recent uptrend. Similarly, EURUSD and AUDUSD are both weaker today yet still not threatening the uptrend.
As I type the S&P is breaking below 1,130: If we close below this key level I think the odds of a significant bear move having begun will be quite high.
As stated last week: it begins and it ends with the USD. Long after almost everybody understood this, investment banks have been pushing that liquidity is the main catalyst for risk assets and are now trampling each other with quantitative easing projections. This will be the object of a later update as several books could be written on the topic in order to paint the overall picture.
Good luck trading,