Monday, July 11, 2011


Today is the day when "traders sell the screens", meaning whatever they see when they come in the office they sell. Except for Gold, US Dollar and treasuries, everything else is down. All news flow over the weekend was negative: from Greece to Italy in 60 seconds, to Chinese inflation at 7% and not showing any cooling, to no US debt deal (surprise, surprise), to NY Times about tough Qtr for banks. RISK OFF day is here...
That said one can't panic, one to remain calm and collective, to follow the plan, and look for opportunities.

Euro: Speaking of panic. All officials' comments over the weekend and this morning are a full-fledged panic mode. From emergency meeting, to German Fin Minister's comments, to Mrs. Merkel's "euro is safe at any cost". Any cost?? Whatever it takes?? And Greece will get another package?? And crap hits the fan fast in financial world... Italy is the worry folks, do not make mistake about it, we got a problem no country except US and China can deal with there. Not a chance though, we and China have our own fires to put out... Rome is burning!!!
Technicals: sliced through bottom of triangle by 100 pips. Nobody cares about any support here, longs are bailing and shorts are pressing further. WS2 @ 1.4010 is near, hedge funds like those extremes to fish for reversals, but maybe not today. If you are long - you are in despair, if you are short - your euro disintegration dream is here, and you are fully in charge. 200 dema and dsma are your targets and you are simply trailing your stops, and wisely scaling out I hope. No credible pullbacks for new shorts, except if you are an intra-day scalper.

SPX futures: Houston we have a problem. Below YL, sliced through WS1, below 8 dema, and heading for 21 dema, 50/100 dsma, and WS2 laminate as I type. Same scenario, lucky shorts are trailing the stops, could be a trend day, again with very shallow pullbacks for new shorts to be initiated. The only reason we get a rally and pull out of the gutter would be the start of earnings season tonight with AA report after the bell. That said, world-wide financial Armageddon is in the back of traders' minds, just say Lehman a few times in a row, you will panic instantaneously.

Oil: bounced off support around 94.55 50% fib, and consolidating just after NYMEX pit open. Hourly bottoming formation maybe a help for some stabilization, but should the equities continue to fall, it will follow.

Gold: glorious rise without pullbacks continues. 1559 is a few points away, 1577 is next. It is trucking and running on all cylinders, and ain't stopping here for nothing.

Conclusion: RISK OFF everywhere. But I refuse to panic, and want to look for opportunities. Beware of quick reversals and stay alert to broad European-wide solutions. No need to be a hero though, wait for your signals, whatever they may be. That said , NOT going against the market but with it is more rewarding most of the time. Find the trend and go with it.

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