Price moves are getting choppy here. We getting caught up between levels and instruments are losing their medium term correlations on the short term time frames. This is all indicative of a market losing direction. Its noteworthy that GS got stopped out of two of their recommended trades last week and have reentered again this week. The big obvious moves have been caught and now we in a dangerous area of many charts where price can chop up those too quick to enter and too slow to exist. Its an easy place to loose discipline and that always costs if you do.
Where is oil going? Where is the eurusd going? Are the eurostoxx leading the sp500 lower or will the sp500 pull the dax and euro stoxx50 higher. Why are the euro banks so lacking correlation with the US banks in spite of the efforts of the ECB? Why are US utilities breaking out if we have a cyclical recovery here? Can the US indexes continue to rise without the rest of the world joining and without the leads of the DJT and Soxx joining? Etc etc.. The market has many unanswered questions at present that needs resolution.
With all this in mind, given the breakdowns in correlations on the shorter time frames it makes calling the following micro moves very tricky and i would argue a fool’s game. Only levels and prices will inform us on the intraday at this stage in the market. The best headline i could offer is to say the markets are very very vulnerable to any negative shock.
Here the Swiss team:
The US$ index direction is complicated due to the euro carry trade. As yet price movements suggest the euro carry trade has participants. Risk off days see the euro rise strongly and visa versa which, given where we are with risk on weakness, it suggests the US$ index bull may see a counter punch before she reasserts in seesaw price action. The US$ vs other currencies is already showing signs of the bulls revival.
Here GS
Chop chop..
And here last week’s MS FX (this weeks i hope as a v2
And here LC
Correctly noting the choppy area of the chart we are now in.. Caution!
Fitzpatrick here.. looking for resolution also of some these big lead instruments:
From failed moves come fast moves. How this market achieves direction from here we cannot know for sure but a failure to continue a breakout of a key level would be a clear signal to allow entries. The 1998 scenario is still in play, just as is the exhausted bull with the US about to join the rest of the world in weakness scenario. We are in market limbo land for now with policy eyes to the BOJ and also Japanese PM. Seasonally and cycle wise its a reasonable time to be bearish, lets see.
All the best
Rich