Saturday, December 17, 2011

Weekend trading thoughts

It is practically impossible to write here all the thoughts that go through my mind. As a macro trader I have a lot to worry about over the weekend. Due to some time constraints I will discuss just a few points.

My favorite "general", the one by whom I gauge my SPY target, has been under pressure last 5 trading sessions. Time to worry? No, not yet. IBM has a distinctive pattern of making new highs and breaking down below steep uptrend, only to retreat down to and bounce off the longer term trendline. It does that time and time again, punishing late longs and letting more patient ones in. Following is the chart, a picture is worth a thousand words. My mid-January target is $207.

click on chart to enlarge

On Friday multiple sovereign rating downgrades and negative Eurozone-related news sent many longs for the exits. Weighing heavily on their minds was a possible French AAA rating downgrade by S&P after the close of trading. It did not let them think clearly in order to embrace Santa, who is coming to town next week. Well, if France is about to lose its AAA rating, then why is the 10 Yr OAT (French bond) yield not skyrocketing? Chart, please!!

click on chart to enlarge

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