It is risk off in financial markets today. It is not surprising, as US debt ceiling news over the weekend displayed how unorganized is the approach to this most important issue of the year (and I am not exaggerating here). It will be a domino affect if not resolved, quick and painful decline in bonds, stocks, commodities, risk currencies, and a total havoc will set in the markets. If you think this will be allowed, you are to write a Stephen King-like novel fast and sell it before August 2. Just ain't gonna happen folks. Constituents are calling their congressmen as I type and are telling them that whatever that 3rd party forms after no deal by August 2 and US debt default, they will vote for it. All Mr. Obama had to say was that SS checks will not be printed comes Aug 2. Phone lines in Capitol lit up like crazy...
Let's look at technicals. Stock indices are testing last week's lows as I type. Both SPX (below 50 dsma now) and Dow futures broke marginally below July 12 low, but NDX futures are still holding July 14 low thanks to AAPL and GOOG. Financials are leading the decline (understandably so), they will be the hardest hit should US or Europe decide Armageddon is the path of the future.
Oil is not playing around either and is heading for last week's low test. If no hold there, double top folks will scream louder in NYMEX pit.
Gold is in heaven and running all the stops above 1600. Do not short it please, wait for a top to develop. Once it does we will have 20-30 point slide, to punish "Johnny-come-latelies". Continue trailing your stops, longs. Uninterrupted 130 point ride from 100 dsma continues.
Forex risk currencies are in a dumpster against USD, JPY, and CHF.
Follow developments out of Washington and Europe closely. Should those issues be resolved and earnings not disappoint - we will have a rally to remember. In the meantime trailing stops for shorts is the plan.
Watch IBM earnings report after the bell. Crucial news for the leading market segment - technology.
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