Rajoy (Spain) is receiving calls to resign due to the corruptions scandal. Berlesconi is weaseling back into power in Italy. Draghi is mired in the Italy bank scandal. Oy Vey. Things change quickly. Europe has been calm since Draghi pledged support for the euro and provided the OMT Bond-Buying program in the late summer and Fall, however, the program is not helping unless Spain requests a bailout. Cyprus will require a bailout as well now. The nervousness over new problems in Europe causes the euro to drop from near 1.38 Friday to under 1.35 last evening. The euro is at 1.3565 right now.
Months ago, the European bond yield summary appeared every day on this site since Europe was falling apart. Perhaps we are returning to heightened tensions. Italy 10-year yield is 4.43% coming up to test the 4.5% level. The Spain 10-year is 5.40% and has received the largest move higher over the last couple days. The Spain stock market is down about 8% over the last few days. If the Spain yield crosses up over 5.5% that will signal warning lights. At 5.75%, the sirens will sound and at 6% Spain may have to relinquish their sovereignty and receive help from the OMT.
10-Year Yields:
Greece 10.97%
Portugal 6.47%
Spain 5.40%
Italy 4.43%
France 2.29%
U.K. 2.13%
U.S. 2.00%
Austria 1.98%
Finland 1.86%
Netherlands 1.85%
Germany 1.66%
Japan 0.79%
The Netherlands, Finland and Germany remain the safe havens. Watch the Spain-Germany spread and the Italy-Germany spread. Watch Spain and Italy yields moving forward as well as the euro. For now, the calm heads remain, U.S. futures point to a higher open, but pay attention over the coming days.
K, do you see the market dropping more then before a rise as u mention spx @ 1485.
ReplyDeleteReason i ask , is i have some shorts underwater which i am waiting to dump as soon as we get a bigger drop.
Thanks
Well, you have to make that decision yourself Anon. The markets are very bullish right now, with long traders only looking at good news and ignoring bad news. Newspaper headlines are printing bullish headlines. The consensus is higher due to all the money pumping, perhaps a pump like the QE2 pump that sent markets higher from late 2010 into 2011. No one knows is the truth of it.
ReplyDeleteKeybot the Quant remains long so the robot is always right but Keystone continues to look to the negative side moving forward. Tops are tricky business as seen on this site the last couple years. Rolling tops typically occur so it takes time to for price to ease on over to the down side. Bottoms have been occurring more as V bottoms.
The current thinking is that price should test the 20-day MA at 1485, this is a critical moving average you have to watch for all positions held. So the markets can only be taken day to day. If price ventures lower, it would be a bounce or die move at 1485. It appears that price wants to test some lower numbers but the markets should come back up again. Keystone continues to think that a market top will be formed right now, in Q1, say between now and the coming weeks, and then lower prices may come about for the remainder of the year. The CPC put call is useful to gauge the amount of fear, or lack of fear. A CPC over 1.20 is typically a very attractive time to bring on long plays, so that could serve as a reset area for any portfolio. Keystone's short positions are underwater but are going to be held for a while, but they do serve as a hedge for Keybot's long side.
For the immediate VST, watch UTIL 475.49, now printing 473.30 at 9:40 AM EST, so the bulls do not have much juice despite the strong market pop. The broad indexes will run higher if UTIL 475.49 gives way. If markets turn higher, sometimes it is best to play the long side to try and scalp a trade or two, (if net short overall and have more of a preference to be short), then those trades can be exited and recycled into shorts if the markets run up for the next top.
Thanks KS ,
ReplyDeleteI understand its my call, but your view does help be, always good to get another view, esp if u emotional about the positions.
My position is currently 7 short , 4 long, so net short 3 . The longs are there to hedge my shorts,
So my plan is to try to even my longs and shorts , to try and cut my short positions asap.
So if the market goes up my longs give me profit, as soon as it drops i plan to take the profit of my longs before it goes negative only to go long lower, thereby allowing be to still maintain even longs and shorts, and to keep doing this until i get to a point were my longs = shorts and then get out Break even.
Hope this makes sense..?
Sounds like you have a good plan. Review all your current trades against the 20-day MA. If long a ticker, you want price above the 20-day MA to be a happy trade. If short a ticker, you want price to be below the 20-day MA. It may be helpful to see where all your positions are in respect to the 20 to help formulate the continuing strategy. Trading takes patience sometimes, so sometimes it is best to let everything sit and simply study the market action. An old saying in trading is that 'trading positions are like a bar of soap, the more you handle it the smaller it gets'. These remain tricky and treacherous markets, very difficult trading for many weeks with all the mixed signals and daily central banker and political circus. Keep on truckin'.
ReplyDeleteKS, that is so true, the more i fiddle with my trades the more i end up lossing, so sometimes best to jsut leave it- very wise words.
ReplyDeleteThank You.
Indren