The London Open - page 186
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The madness continues I don't think I can remember a market like it.The reality is that the same accounts that were falling over themselvesto sell last year and at the beginning of 2009 are now knocking everyone over to find some bonds and some yield. I continue to hear that newissues in HG world are flying out the door quicker than you can say "newissue the name is X and the guidance is Y". We know its going to endin tears what we don't know is when and what is the trigger? I stillthink it's the central banks exit strategy and at some stage they aregoing to have to turn off the taps to the investment banks withoutupsetting mortgage holders and the all important equity markets. All Ido know is that with every bail out whether it be the banks, medicalinsurance, cash for clunkers or anything else, at some stage it needs tobe paid for. The market is now fully pricing in a V shaped recovery iegrowth to return to what it was 2 years ago and with that house pricesetc. Well call me stupid but how is that possibly going to happenbearing in mind the governments increased debt burden, Northern Rock andfriends are no longer dumb enough to lend honest borrowers 125%mortgages on a self cert basis and contrary to the markets main streetare still losing their jobs and not spending on their credit cardsanymore. I'll be honest the market is reminiscent of my teenage discoyears. There are a load of people on the dance floor freaking out to atune I don't recognise, every now and then I step on the edge of it do afew basic moves, feel slightly self conscious because I don't know thetune and step off it continuing to watch the freaks on it. That if youhaven't guessed is my trading style at the moment. I am just reallyscared the music will stop and the lights will be turned on and whoknows what I will be left with! I don't think there is any point sayingthis is a big week for data as the market ignores bad data and ralliesat the good You carry on dancing I'll stand at the bar with a beertapping my feet!
Morning all
Surely golf was more interesting than trading yesterday!!!
CABLE and EURUSD were flat as a pancake and the only real excitement was the silver crosses with the trend in EURJPY and GBPJPY later on in the afternoon. I do hope a few of you took them.
USDJPY as described in the video yesterday bounced off the MP with passion. A big reminder to never sell or buy into him as you will always come off second best.
So we are in search of our elusive silver crosses with the trend. Let’s see what this morning brings and not be tempted into high risk plays.
USDX has the DP below the price at present but is heavily boxed in with the 60min 20ma just above. Look for a solid 123 for a move off support around the 77.87 level and golden cross of the 60min MA’s
CABLE
• CABLE hasn’t moved from yesterday, with key resistance at 1.7000 and support around the 1.6885 regio
• The difference today brings is that the DP is above us rather than below us and CABLE looks all set for a move lower
• However selling the strongest currency against the 4 hour trend can sometimes be a pickle as we know it but it certainly needs a pullback
• The 84 CCI (4hr trend) is still green and the USD isn’t confirmed as yet as being back in an uptren
• Following our strict rules we wouldn’t touch CABLE short but wait for the retracement to happen and then jump back in for a long trade again with the Silver Crosse
• Technically the old break level in CABLE was 1.6585 & 1.6745
• Keep an eye on these levels, as they will offer small amounts of support for those looking at the retracement plays
• For those looking for an entry short should now wait for the bounce off the 60min 50ma and then the pullback to sell below the 60min 20ma. Remember to use the 15min trigge
• For those that want to be patient, simply wait until the silver crosses (with the trend) come back into contention
GBPCHF -
4 HOURLY - UPTREND
1 HOURLY - EARLY SIGNS OF POSSIBLE REVERSAL with 1 hourly Golden CrossCurrently Boxed between the 60 minute 20 Ma and the 4 hourly 20 MA.
Has formed a nice channel over night and will be looking for a break of the DP at 1.7970 for a move to the previous highs at 1.8030
Or a break of the 4 hourly 20 MA at 1.7920. A break through the 4 hourly 20 MA could see a move back towards 1.7870 then further to WP at 1.7800
1.7006 is key in CABLE...
Play off it until the break.
D
Well as I was tucking into my chicken tikka it looked as though it was
going to be another crazy up/tighter day. A few pompadours and a nan
bread later and alas we saw some selling. Very unusually Turkey sold
off first and then the corps and stocks followed suit. Is it the
beginning of the end, in my view no not at all. It is just a little
profit taking ahead of Friday’s NFP especially as the ADP survey
disappointed. I am now convinced that until we see the central banks
taps turned off the market will continue to have a buy on dips mentality
with fundamentals almost irrelevant (ie like 2006 and 2007). I was
going to waffle on about my theory as to why we are rallying. The short
story is as follows its all been driven by various stimulus which is
great, the key to a V shaped recovery is to return to ways of old. ie
happy to pay full whack for a car whether or not we have a clunker to
trade or not, for a hotel room in Dubai, for a 2 bedroom apartment in
Leeds etc. etc. If that’s the case then the V recovery merchants can
give me the bird. I still say the world isn’t as bad as it was 9
months ago however I still say the world has changed forever and whether
you like it or not debt in whatever form (consumer, corporate or
government) is either repaid or defaulted on either way its not good for
high growth. On that note I am off to order a new car and book that
holiday to Dubai.
Mr P…….
Good morning
Not the easiest weeks to be honest, with Non Farm Employment Change ahead of us on Friday. USD currencies have been very stagnant since Monday with little room for safe trades, as pullbacks are always on our minds.
Zak will be joining us each day (for around 15mins) talking about his best setup and levels to work off.
It’s the last day for me, as I will be flying back to London tomorrow. James, Zak & Hemal will be looking after you all (for the next 10 days), which gives you all a break from me!!!
Its interest rate day in GBP and EUR and we are not expecting any drastic changes from 0.50% and 1.00% respectively.
CABLE
• Key support now at 1.6890 (last 48 hours) and key resistance at yesterdays high at 1.7041
• 4 hour chart suggests no trade unless you buy off support and sell at resistance
• Otherwise we wait for the breaks of these levels
• The 15min chart does however suggest a triple top below the key resistance from yesterday high. A break through support does suggest GBP could weaken a little 1st thing today against the USD.
• The previous 15min trend reversal is at 1.6955 so a break through here would be below the DP and 60min 20ma suggesting a pullback towards the DS1 level (1.6910) ahead of the major support at 1.6890
EURUSD
• Horrible looking chart to be honest (60min & 4hr
• Can’t trade for me at present as key support (1.4352) below and key resistance (1.4446) abov
• Simply buy off support and sell at resistance and wait for the breaks
Verdict
• USDJPY boxed in,
• USD as a whole confused since Tuesday but weak
• GBP bid but needs a little pullback
• EUR bid but again needs a little pullbac
• Our rules suggest we trade with the trend so I see nothing at present that I want to through a lot of cash at. Been like that most of the week
The calm before the storm...
GBYJPY could defintely be the cracker.
Enjoy my friends
D
The madness for now seems to have passed. The last couple of sessionswe have seen a decent bunch of profit taking across the desk although atthe moment this has not been reflected by spread moves, unchanged on theday. No exciting news in my world although it is worth noting that thelast few new issues in EM haven't been the no brainer everyone thoughtthey would. The best example being the new Petronas deal that at onestage was doing an impression of a Chinese A share IPO with an 18bn bookbut ended up more like a badly behaved Labrador. Its worth noting thatthe BOE continue to print money despite the alleged green shootseverywhere. This is bad news as it means they still fear that moneysupply is still on the decline despite the printing presses working overtime. Of course the good news is the more money they print the higherthe markets will rally and the bigger the bubble will get as the money,instead of being passed onto small business's, consumers etc ends up instocks and corporate bonds. Clients still seem to have cash so dips atthe moment remain a buying opportunity. Although I think data islargely irrelevant at the moment (QE and liquidity is more important)the market will chill out tomorrow morning in anticipation of NFP.
Morning all
Enjoy the GBP weakness and Reuben get on that USDCAD after the break on the 123.
Enjoy and see you all on Tuesday.
D
Well unlike Usain Bolt at the 100metres today was more like a marathonin a diving suit in comparison. Painfully slow and despite better datathe green shooters have hit the wall and are suffering from a minorstitch. I still say that this is a blip and profit taking relatedhowever the signal that the taps are being switched off is definitelynot helping matters. I had to chuckle to myself at the Bloomberg surveyfrom just last week that had investors feeling more bullish on equitiesthan they had done the last time the market collapsed in 2007. Flow wasthe same as the past few sessions ie real money selling (but in smallervolume) and retail buying. Although I believe we will see buyingeventually into this weakness one thing I would say is that if this doesturn into a proper, "squeaky bum time" sell off EM technically speakingis in a pretty good place. As discussed previously bonds are in saferhands than before, unlike the HG world where we have seen recordissuance. The reason I mention this is that despite the record issuanceof HG debt there are less dealers than there used to be plus limits areat best unchanged to what they were a year or 2 ago. My point being, ifwe see some decent selling of HG new issues, dealers (most of whom havemade budget for the year) will be less inclined to put their ars*s onthe line and buy paper. The result will be a repeat of what we sawlast year, ie a liquidity driven sell off not necessarily related tofundamentals. If HG sells off it will have a knock on effect on EMwhich initially in my view will outperform. This evening for the firsttime in a while I'll be watching channel 505 to get a sense for where weopen tomorrow, a continuation of this will at least make the day becomemore like the 10,000 metres than a marathon!