The negative sentiment high momentum failure of Xmas rally has continued so that we are now at some key levels across many asset markets inc currencies and commodities and equities. Momentum is sufficiently strong and leverage has been sufficiently high that stop hunting can certainly occur here but we are over extended and sentiment is at wash out levels so that any unexpected good news would lead to a rapid reversal of recent price action although the V shaped reversal to higher highs is unlikely. We need to reestablish some price supports and get a sustained big again under this market so that the pattern that emerges is unlikely to be a V unless the news and policy makers come out uber strongly.
Here GS:
GS calling out the 1885 level for stops but a possible move down to 1849 or so without signifying more than a correction for equities. Eurostoxx 50 29230 (we hit 29230 on Friday).
And here CS
And here Fitzpatrick’s latest with some soothing words of “its just a normal post fed rate hike correction” :
We bounced off the 1867 level on Friday but given the weakness of the bounce we probably need to test her again!
And LC
And here for now MS on their fx strat:
Almost the entire pack staying long US$. Until that consensus is blown over buy data disappointment, expect weakness in Gold.
I have some more reports to add to this note in the coming days.
I also want to make participants aware that the Swiss Team are on a break until the 26th of Jan. I seem to remember they often take a break post their annual outlook documents.
All the best
Rich