Buy It- And If It Moves Sell It Quickly - Jul 29 10 9:04 EDT
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Buy It- And If It Moves Sell It Quickly
Excerpts taken from The Trader Advantage Program
Global markets are absorbing a period of weakness that has equity and commodity sentiment placed firmly on the short side of global trade, and breaking a three-year inverse correlation that has allowed the dollar index to also be sold lower. A technical swing point of note will be1105 holding as support on a weekly S/P close, which will help to stabilize things.
The move out of the Usd Up/Equity Down correlation, and vice versa, seems to have a lot to do with inflated Treasury note values, dropping U.S. yields, and question marks regarding the sustainability of American debt levels.
Ironically, a lower value Usd may help in the very near-term to balance the twin deficits of the Trade and Current accounts. The danger for mid-term Usd valuations really is in global investment attention drifting from the hypnotic pull of Usd-based Treasury markets being the most liquid of all bond arenas, and instead that speculative interest coming to the realization that the dollar safety blanket may be just getting a little thread-bare.
Forex Movers- Thursday trade is all about the European pairs with Gbp/Usd making another move to break 1.5650 and hold, with support in at 1.5500. Eur/Usd has opened and closed around 1.3000 for the last three sessions, and although looking capable of holding higher, the pair really needs a weekly close above 1.3050 to draw in speculative interest.
Forex Shakers- Aud and Cad still look benign when compared to the momentum seen from the European contingent, with both battling Daily chart SMA areas at 0.8950 on Aud/Usd and 1.0300 on Usd/Cad. The bounce off 87.00 on Usd/Jpy looks to have set in place a support area that looks tough to break, and 88.00 now comes into view.
The bi-polar market sentiment and high-frequency trading algorithms are allowing big swings to happen in the transitions between Asian, European, and North American trade. However, when all is said and done, and the trading dust has settled, there really is no market or asset class that is appreciating and holding any moves with ease.
Short-term attention spans are ideal in the current environment, which is one that that still favors the short side of the Usd, the short side of risk, the short side of safety, and the short side of demand. Rarely do traders witness a global market that is loaded to the short side of everything, because that means the counter-balance is cash, and cash that right now is firmly placed on the sidelines, watching the trench warfare unfold each day.
A lack of speculative cash in the investment arena increases the cost of doing inter-bank business, equates to leverage availability being low, and means that trends are hard to form. Attention gets drawn into whatever the next sound-bite headline will be as each global region opens and closes, with most intra-day moves being quickly reversed.
2010 is the ultimate in traders markets, and that is very unlikely to change until year-end book balancing forces the major players into positions. Bank early, pull stops, and leave a little on just in case the next news headline triggers the algorithms that can then test the previous session high or low.
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