This morning, we are greeted with a massive selloff from the open in Europe, as all the Fed minutes gains for the Eurostoxx has been erased, and then some. I am still a believer in this bull market, but how much we bounce will depend on how we trade over the next few days. If we can keep going up despite Europe, that bodes well for the remainder of the year. If we struggle to blast through SPX 1970-1980, that will be a worrisome sign.
Thursday, October 9, 2014
Europe Weakness
Europe is spoiling the Fed party. Just as Janet Yellen is refilling the punch bowl, Draghi is MIA as Europe goes into recession. Yesterday was a massive move on a dovish Fed. I cannot say its a game changer, because I expected that from this Fed, and it didn't surprise me, but so many were leaning in one direction, the slightest bit of good news was like rocket fuel, squeezing the shorts and causing underinvested fund managers to add long exposure.
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13 comments:
FTSE pummeled. No end in site for this pullback.
Could this be your 20+ days correction? Meaning more downside?
Probably QE ending really change the game? Less dip buyers. More shorts.
Yes, it looks like it could be the 22 day whopper of a correction instead of the 13 day correction. There is a big difference between the two, and based on how poorly we are trading after the dovish Fed yesterday, and Europe falling apart, it looks more like a 22 day correction, which means we probably can get down to ES 1890.
QE ending doesn't really worry me, because for all intents and purposes, it was only running at low levels for the past few months anyway. What worries me is Draghi not coming out with more QE noises, which could force the European market to panic to get his attention.
Any suggestion what is the strategy for today? Thx
I would look to buy in the hole. Looks like we're digging that hole as I write this. Perhaps down to ES 1905 for a last capitulation flush.
Divergence on the daily FTSE chart. Bounce may be imminent.
Then again I have been crushed every tine I think we are near a bottom. Small postion only.
Is it true that a down Fri is normally followed by a down Mon and the same for an up Fri? I am thinking whether to get long Fri or next Mon, if SPX ever gets to 1,900.
VIX very high. If it does not start to come down from there who knows where it is going :)
Down Friday is usually followed by an up Monday. An Up Friday has very little predictive value for Monday. I prefer to get long on Friday on a down day rather than wait for Monday to buy. We are close to the bottom, just a matter of how much more choppy trading we have before liftoff. At these levels, it is good risk reward to get long for a swing trade.
Out of my small posityion. This thing is a bit to scary now.
Yes, it is getting scary, that is what usually happens near a bottom. We could flush down more, it is a different ball game if we do.
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