Long term Euro outlook

Today the EU finance minister's meeting concluded with one more vague plan on how EFSF would be leveraged to support the trillions needed for EU banks/countries.  While politicians are making progress, market seems to be moving at lightening speed, with italian bond auction today producing yet another "higher than 7%" yield. This is the fourth such event within last 3 weeks. Market wants instant action, while politicians have the timeline of next year's elections on their mind.  There is a disconnect in timeframe of choice between these two groups, and the effects could show up in charts in the months ahead. Given the high correlation of global markets to the EU crisis, it is good to keep an eye on this chart. I have pulled up a macro view of Euro in the chart below.  Take a look at this weekly chart. It  reminds me of   ES daily chart from October to mid November, though not exactly  same formation of triangle that we saw in ES, couple of weeks back. 

Fundamentals are not pointing towards a prosperous EU  in 2012, but a recession and potential breakup of  EU are  being forwarned by policy makers.  So the speculative crowd has already  piled up on short euro, as central banks and other policy makers prepare  contingency  plans for the collapse of Euro.  Is this a repeat of 2008 but in another continent ?  In my assessment, all plans, currently under consideration, are simply a measure to buy more time for policy makers - perhaps another year, atmost. This would make sense, since policy makers around the world and central banks need some time to prepare for this global shock.  An uncontrolled  and sudden breakup of  EU would have global economic impact, and so world governments would be inclined to buy more time, and prepare for this event.   It seems only a question of time, and EU breakup seems the most logical solution, since no one can pamper the weak economies with freebie euros forever.  It will only drag france & germany, down the path that US is currently progressing in (viz. credit rating downgrade from AAA).

So, from a long term perspective, the speculative crowd definitely has the right argument, but timing this trade is the art.

Technical View:

The chart shows proper areas to initiate long/short  swing entries into euro. The red line has provided a safe area above which i will be looking for swing shorts. Alternatively, if one wants to attempt a contrarian trade with long euro, this triangle formation gives entries  below green support line (i like the shaded neckline support zone) with redline as the target zone.  But going long would be a high risk trade for the following reasons.

• From a technical perspective, when euro entered this shaded neckline zone, back in october 2008, a global crash followed.  This was again repeated in 2010 may, in both euro and global equities.  So, this could happen again in 2012 when we enter the shaded neckline area ?
• European credit markets are validating the fundamental views and future expectations.
• Last week euro tested the green support line and is currently bouncing back. How far this can bounce, depends on the measures taken by Dec 9th, EU leaders meeting.
• So, the only time to think about a long euro, as a contrarian trade, would be if  global leaders come up with a big bazooka to fire at the speculators, who have piled up on short euro trade. Given the unity we  see in washington and in G20 meetings, we can rest assured this is not going to happen soon. World leaders have a process that is very time consuming.  (Meanwhile, the bond vigilantes are targeting their bazookas at italy, spain and belgium, in the next round of fireworks.)
• So, the only reason i would be watching the  highlighted neckline support area is to alert me to a macro situation developing, for a potential crash in equities again (a repeat of  the magnitude of august 2011,  within this year, seems unlikely - i have come to expect these events  as once a year  routines :-)

Crash possibility - continued .....

Market Commentary for next week:

Fundamental news that supports my drastic analysis is found in headlines; Not much analysis was necessary to prepare for next week, given that all the primary drivers that i listed in last weekend commentary have turned negative now.

• Italian bond yields have gone over the 7% mark for the 3rd time this month. German bonds are also taking a hit.
• It seems certain that there will be a breakup of  EU in coming months.
• Recession that i forecast is arriving probably faster than my initial estimated timeframe of Q1 2012, into europe first, which will spread globally. The manufacturing data out of china, released this week shows the lowest reading in about 3 years. This is the leading indicator.
• The two factors that are capable of stopping the downfall now are fed and ECB  quantitative easing.  In my opinion, fed is unlikely to act this year. Empowering ECB is not in the best interests of germany, and this is the question mark going into the EU leaders meeting on December 9th.

Amid this fundamentals, i keep open the possibility of  a late rally in december, which would give some credibility to the consensus estimates of institutions, that i pointed out in prior posting. GS estimate is looking good now compared to others. :-)

Technical Analysis:

The crash possibility has come true. In prior blog chart, we have gone from one trendline to the next within days. With clear break of another support line, we are in danger zone again, like august. With the break of 1160 support of last weekend forecast, another down week lies ahead. I am forecasting continued selling, with a high probability go to 1100 area, by December 9th. So, the outlook remains negative,  for next  week. With high volatility, i am also expecting some support numbers between 1160 and 1100 area to play out.   So, i will pick couple of numbers in between,   which have acted as support in october, for day/swing trading purposes. As i post this note, ES is at 1157.

Crash possibility

After some rest, i reconsidered the news releases, and macro issues.  Reconsideration of charts, in view of the macro risk analysis outlined in the prior post revealed a new outlook. Given the technical support levels outlined in the prior post,  a breach of critical support level is due this week.  Take a look at the chart below and the highlighted oval areas.  Here are the salient features i notice from this chart.

• Whenever  the support or resistance line in this zone is challenged in 2011, market has reacted very sharply in the days ahead.  The reaction in the days ahead  was strongly positive when it happened on Feb 1st, March 21st and october 14th.  But there are more incidences when the reaction was strongly negative, within days, upon break of the upper end support of this mid zone. 
• This chart creates the possibilty of a drop to 1160 within days, and increases the probabilities given in the prior blog. 
• The chart also tells us NOT to panic in the event of a crash day. Why ?  Because, it also tells us how to react to such a crash.  Controlling  emotions on a crash day is a critical part of trading successfully.
• How can you control your emotions ? By knowing a high probability event that is likely to follow in the event of a crash. Notice that, in each case, highlighted in the chart,  either the midpoint or the upper end of the crash day was tested within days.  So, this gives us a great way to play the volatility of a crash in both directions.
• It also reminds me that as long as i control my risk with moderate position sizing, i can endure the number of days that i need to endure to play the reversal test.
• It also reminds me that if  i am aware of the chart  comparing 2008 to 2011, predicting a turn  around  end of November/start of december,  then big institutions would know this type of analysis too.  So, the major turn around could be initiated with a drop, followed by a subsequence buy reaction in december. 
• The chart  gives us high probability support lines underneath, as i still beleive that we are in a bullish trend since october 4th, going into end of the year, as outlined in the blog with spx targets from institutions.  World leaders could step up anytime, to support markets, and market is not likely to go to 666 within weeks.
• If the scenario is to unfold, then we should see further decline of ES on monday. On the other hand, if there is a rally on monday, in the face of negative news, that would signal that the week is likely to head higher from the support area. So, this chart tells us how to prepare for a move in either direction.

Wishing you a happy thanksgiving week....

Past Week's performance:

While last weekend comment of " I see high probability(80%) for reaching my support levels during the week, and low probability(30%) for exceeding 1292."  proved to be right,  the expectation for later part of the week to close higher was not correct. Even though the bias posted on November 16th was incorrect, that 15 min chart on ES provided exact turning points, with 3 round trips between support and resistance, within the new triangle formation, within 36 hours of that post.  The long term plan got stopped out, while the crude oil trade did not trigger, since oil pushed higher without going down to my desired entry point.  Overall, i consider last week ideas to be successful, and somewhat neutralized the bad calls i had before couple of weeks.

Weekend Market commentary:

Europe continues to be the primary driver #1 for the markets, with US debt/spending cuts emerging again as primary driver #2 for the weeks ahead. On both these fronts, the news over this weekend is negative.  In europe, we have a greek leader who is balking at commiting to prior agreements.  In US, we have news that no resolution on the US budget cuts has been reached (WSJ). I will address these primary drivers in this weekend market commentary.

Current analysis on primary driver #1 is as follows:
During last few months, greece was the focus of european crisis with european leaders focusing their efforts on building a firewall around greece to protect italy/spain/france. But due to their delay in action, the contagion has already breached the non-existent firewall and italian  bond yields hit the 7% mark twice within the last 10 days. With this event, the focus now has shifted from greece to italy, spain and france. Last week, i also pointed to an analysis that forecasts a bailout of italy around christmas time.  But, this is unlikely in my opinion. Italy is a much bigger economy, and it would take longer than the 55 days that it took for portugal to receive bailout funds. There simply is no infrastructure and funds in place right now, to initiate italian bailout. News releases show that as a temporary measure, ECB bought italian and spanish bonds during last 2 weeks.  Overall, we can clearly see that the situation is worsening and not improving in the last 2 months. European banks are starting to feel the pressure, and the open credit line to european banks from ECB and fed is their only hope, since interbank lending  has diminished over this period. The failure of  MF global due to their european exposure  has created a fear and question of how much this will affect the US financial system. Data indiacates that US banks are not likely to take a dramatic hit like what happened in 2008, but market sentiment on this issue is what matters.

Analysis of primary driver #2 is as follows:
Headline released sunday says the supercommittee in washington did not reach an agreement on the 1.2T  that needs to be raised, according to their agreement back in august. This clearly indicates divided political interests, going into next year's election. US leaders are more focused on the elections, rather than saving the country, in my opinion. World is obviously  going to see this partisan interests with a negative bias for the weeks/months ahead. The automatic spending cuts on federal budget has been triggered with this move, since an agreement by wednesday was required. These spending cuts will be across the board, affecting state budgets and numerous jobs. I want to point out that back in july, US debt issue started the downtrend in the markets. I also want to bring back our attention to the chart i posted a month ago, on October 18th, comparing 2008 to 2011. This chart indicates that November 30th would be a crucial turning point. Given all these factors, i expect the week to start on a negative bias, in asia. But, on the positive side, historicaly during thankgiving week, stock market has ended positive, and this data can be used to trade the volatility of the week ahead.

Analysis of primary driver #3 :
Back in July, my emails considered US economy as primary driver #3 for markets.  GDP estimate of Q3 is due on tuesday. While US economic data has been lately positive, showing  a recession is not immediately likely. This pattern is reminiscent of 2010 when many economists (and myself) were expecting a recession in Q4 of 2010; that did not materialize. Instead, US economy slowed down  dramatically in first quarter of 2011. I expect a similar pattern to emerge, with a slowdown showing up in first half of 2012, during which fed is likely to initiate QE3, in my opinion.  So, there is no immediate threat from primary driver #3, and reaction to GDP could be muted,  when compared to other macro issues driving the markets this week. Historically, during thankgiving week, stock market has ended positive, and this data can be used to trade the volatility of the week ahead.


So, in conclusion, we have two of the primary drivers giving negative bias and the third one giving us a neutral bias, with GDP likely to come in near expecations. Hence, my bias for this week is negative. The initial question to start the week is how low market will go this week, and what kind of a bounce is likely, if any.

Technical  Analysis of ES:

The  green support line in my intermediate term chart (see prior blogs) dates back to october 10th.  A break of this support last week is the trigger for further selloff, from a technical perspective.  I am estimating initial supports at 1185 and 1175 areas (as usual, allow about 2 point margin of error).  I am averaging these two numbers to arrive at 1180 as my first target for the week ahead.  I am associating a 95% chance to reach 1194 first, and a 75% chance to reach 1180.  The probability of reaching resistance levels of last week (1257 and 1270) are low at 20%. Intermidate resistance of 1238 ES is a possibility, if the market turns bullish near end of the week, with only a 50% probability for this number. I conducted the weekend analysis  and I  arrived at these numbers prior to the open of futures market on sunday, but unfortunately could not publish it earlier (typing up the market commentary took time).  Within the last 30 minutes, ES has sharply dropped to 1205, as i write this. Some people in the group have discussed with me a crash scenario for this week. In which case, you can see the inital support at fibanocci area of 1160-1155. But, i am neutral on this idea, given the chart i mentioned earlier, predicting november 30th as a turning point. In addition, serious support lines have not been broken yet, on my charts, to create the possibility of a crash in thanksgiving week. If i see signs of a crash developing, i will post it in the comments area of this weekend commentary.

Trading the opex of November

Volatility can be expected to increase on wednesday and thursday, due to options expiration.  Here is a chart i prepared that maybe of use in trading the rest of the week. The chart shows a neutral bias technically, in the symmetrical triangle.  I think there is more than 50% chance that the week will close above my support level of  last weekend analysis (1247), if the europeans dont drop a new bomb this week.  If the extremes of the triangle are exceeded, consult the green and cyan areas marked in the previous blogs.

I had not prepared this chart, at the time of prior comment on long 1242. But, once i saw this chart, it was clear, why the lows had to be tested near 1238, before pushing higher. Pardon my jumping the  gun, earlier :-)   Headlines in europe are not happy news today, and there is good chance that NY session will test below 1238  on wednesday futures.

A plan for building long term portfolio of 2012

I update my daily thoughts in the "comments" section of the weekend market commentary. In tuesday's comment, i expressed my desire to add to my long term portfolio. The reasoning is explained in this blog entry.  Last weekend, i  touched on the study i did on  2011 year-end target of  various institutional strategists.  I dug up some more into this to get further clarity, and here are my findings.

1. GS                      1200         (1300 in a year)
2. Wells fargo        1250-1300 (averaged to 1275)
3. credit suisse       1270          (1340 for 2012)
4. morgan stanley   1238
5. BofA-Merrill Lynch  ??       (1350  for 2012 end)
6. JPM                   1475
7. Barclays            1420
8. Blackrock          1350  (possibly revised lower recently)
9. citigroup            1325
10. oppenheimer      1325 (held all year long)
11. HSBC, Deutsche bank, UBS ???

Removing  extremes of  JPM, barclays and GS, the average of rest = 1297.  As you can see from the charts, market is in coiling phase, as it awaits news from europe.  It could break in either direction, but  it would take serious news to break to the downside hard. Based on the above facts, and  my own analysis, my conclusion is that market will close the year at 1248 or better on the spx futures, as high probability (70%). Even though serious risk remains, as discussed in weekend market commentary, with proper risk management strategy, it is possible to build a bullish position for 2012 january earnings season (and beyond).

We had 2 days of Market hiccups, with about 28 point ES swings between my weekend analysis numbers each day. (1271-43, 1234-62 at closing of tuesday).  Market is trading   with a strong support at 1214 on the ES.   News out of europe needs to be monitored everyday, since  a breakup of  EU is on the table and a crash is possible, any given day. I assume that atleast 50% of the risks are already factored into market prices. All it would take is a piece of news from europe, given the high risk fundamentals.  But, one must take risk, to get the reward. Keeping cash in portfolio does not get us anywhere, given the intrest rates.  I see more volatility in bond market lately compared to equities. So, for a long term portfolio, equities offer better value.  My plan calls for additions to my long term portfolio at equally spaced intervals until the strong support.  This means, i will add more longs in november when ES reaches 1214, 1224, 1234 with a stop loss at 1212 area.  The target for this trade  is a minimum of 1248 ES, with a high probability to reach the consensus estimates of the institutions, by january earnings season. I have to mention that i see 1214 ES as a low probability (20%) for November.

Meanwhile, my swing/day trading  strategy remains  the same -  buying the green zone and selling the cyan resistance.  Volatility is a double edged sword, rewarding those who have the right analysis, and punishing those who dont have the right analysis (like JPM :-)

Crude Oil - next target

On october 25th, my post called for a long crude position.  Some of you may remember that i had mentioned 2 months ago  that a long crude position can be considered only if  $89 was broken to the upside.  Soon after breaking this critical level,  crude oil tested the $89 level one more time and pushed higher. This was the first signal. But i waited for confirmation and issued the buy idea later on, with a minimum target of 97.  Last week this target was exceeded and crude closed near  the next critical barrier of  $100 level.  This level has acted as a pschological barrier several times in the past.  As i write this, crude is retreating from $99.4 high that was reached last week. I am closing out the crude position on monday, to possibly re-enter the long side at a later time.

Long entry  for swing trades = between $96 and 95, spread.
Stop loss  on this next long entry = 94.5.
Target =   initally  at 104-107 range,  for year end. This will be fine tuned later.
Gain on previous trade = 99 - 92 / 92 = 7.6%  in 3 weeks.

Global power shift in our lifetimes....

Market  Commentary:

European crisis continues to be the focus of global markets.  Soon we can expect the US debt crisis added to the headlines.  I spent the weekend researching into european bond yields.  As you can see from the headlines, italian bonds are now the target of bond vigilantes, with the 7% mark seen as the symbolic level, which was hit last week. I expect this to be continued focus of markets over next few weeks. So,  I thought of an idea of correlating this 7% signal  with past incidences of 7%  yield level hit on greece/ireland/portugal. 

On friday, i discussed with some of you,  this idea of seeing how the time lines evolved from this 7% signal day  into the point where these countries had to take bailout fund from the ECB/IMF/EU.  Because this would tell us when we can expect  some kind of resolution (through bailout) for italy. Someone in the email group was kind enough to give me a web link, where another person had thought of this same idea and published his analysis. Even though i do not agree with his conclusion that we can expect italian bailout to happen around christmas time, i liked his research. Rather than presenting my own analysis, i give you the link to his research here. If you are interested in  what we can expect over the next 2 months, check this webpage at http://ashraflaidi.com/articles/charting-euro-macro-yields-libor-spreads.asp.

Paul  krugman of Princeton University said "This is the way euro ends - not with a bang but with bunga bunga". I find it to be an appropriate assessment, and looked further into the debt levels of  European banks and countries.  Rough estimates are 26T of bank  assets in europe and 10T of  government bonds.  With a simple assumption that some of these banks will fold (like dexia), we are looking at losses of trillions in banks, without even considering the 50% haircut of greek bonds.  So, to cover these losses, how much have the political leaders have come up with ?  1T of  funds in EFSF,  combined with a few hundred billions in  ECB and IMF.   During last G20 meeting, france requested china to contribute. China may give 100B, according to current rumors, but only if western powers agree to elevation of  china in  world power (3 different options have been put on table by china towards this, in past few years). They might drive a tough bargain on this demand, going  into  the next few G20 leaders meeting. So currently there is no help from G20.   Even if they contribute, there is a huge gap between the trillions needed and less than 2T in credit available from all sources (EFSF, ECB, IMF, G20).  In summary, this presents the gravity of the situation going into 2012.  This structurally weak economic situation  of the western nations can not be rectified with  monetary band-aids.   In my opinion, we are witnessing global economic power shifting  from the west to east, until a proper balance is reached in economic and trade realities (through currencies), hopefully over this decade.

Naturally, top economists and strategists agree that ECB needs to print euros sooner or later, to cover the rest of the debt. ECB printing only means that germany and france would bear the burden of  this as the strong countries.  There is strong opposition in germany against these forms of help to other countries. Without external funds (read china, G20, ECB), in the long run, there is no way to get out of this bad debt situation. 

The only other option is a smaller  EU, without the weaker economies, which is currently being discussed.   So, in either case,  the pundits conclude that euro is going down, in value.  Market seems to be highly short euro, already.  Now, if we want to join the bandwagon, at what point in euro should we join these big speculators ? I took a look at euro chart, and decided to take some long term position of short euro, as this is as high probability as it gets, in trading a long term trend.  I will publish my euro chart in the next blog by tonight.

Meanwhile, here at home, earnings season has ended. While earnings this quarter have been better than expected, beating the expectations of past 3 quarters, the revenues have fallen dramatically overall.  Also, i noticed that since 2009, this is the first time earnings overall have been guided downwards by companies.  This shows that the majority of companies are likely to see their earnings come down in 2012 (recession fears in europe showing  up in international company balance sheets).

Technical analysis of ES: 

S&P 500 is near its 200DMA which is monitored by lot of long term retail investors and smaller money managers. All of  spx stocks are near overbought area, in my opinion.  I spent some time searching into analyst expectations for year-end target of spx.  Since earnings season just finished, these numbers came out just in last 2 weeks, as updates. They range  from 1250 to 1325 in the sample of about 11 institutions that i looked into.   I am guesstimating a consensus of around 1290 (throwing out extreme numbers).  My weekend analysis, has this assumption, built into it.   This number can be fine tuned as we progress week by week, since news out of europe will trump everything else into the year end.

Short term chart shows resistance at 1292, 1273 areas.

Short term chart shows support at  1247 area and 1232, in the green zone area. 

So, 1273 will be the stop loss area for my call last  thursday/friday (short around 1266). The initial target for these shorts are around 1247 and 1232 as high probability.  Given this projection, if monday morning session rises up above 1271, i can take bearish bias and if  monday is a downday going towards supports, i can take a bullish bias, either monday close or tuesday.   Going into the week, i obviously have a slightly bearish bias, as per my call last friday.  I see high probability(80%) for reaching my support levels during the week, and low probability(30%) for exceeding 1292.

Keep in mind that my record over the last 4 weeks is 2-2 on the weekly calls, at a reduced win ratio of the prior 11 weeks (90%).   Also, my daily calls have been over 60% inaccurate, due to market volatility, and have performed worse than my weekly predictions. I will publish my euro chart in the next blog by tonight, for a long term trade.

November 2nd week trading plan

Market  Commentary:

I wish i had posted this earlier on Sunday, for the benefit of futures traders of overnight session. By the time you will read this, you will already see ES dropped for europe open, and now it is around 1239, as i write this.  Not only we have some headlines that will create uneasiness among traders, the market has been overbought to end the october to remember.   Among the headlines that create uneasiness in me (and perhaps for short term traders around the world)  are the following:

• Greece has created a comma and continue, as opposed to the ending period that the world was expecting after the G20 meeting.  There is going to be a new government, and an election in greece, which creates the possibility of a default sooner than expected by markets.  So disorderly default is the very scenario that european  leaders are trying to avoid, since it creates the possibility of euro collapse, without a firewall around greece, and banks taking serious hit from the default.
• G20 has not done anything really, to create stability and assure global markets. China, as expected by me, is refusing to step up to the plate, and continues to extract juice out of the western nations, in the form of currency manipulation. US has its own debt to deal with and does not have the resources to help Europe. So, who is going to play ball ?  Lack of unity among world leaders is what i see, for now.
• France  and Italy are in the headlines as they create further austerity measures, to keep their bond markets stable; but this is going to affect their economic growth in 2012 and beyond.   Italy is already getting headline attention, as its CDS and bond yields climbed higher in recent weeks, and political instability becoming a possibility in italy, due to the austerity measures that are required.
• But not all is gloomy, since there are some positive things home front.  US companies are continuing to show the earnings, and fed stands ready to do further stimulus plans, if  things  worsen  in 2012.  So, the question is which dip should one buy ?

Technical  Analysis of ES:

I still standby  my bullish view of  1350 ES by  April, 2012 (as posted on oct. 30th).  But, for the short term, my analysis shows that market needs to work off the overbought conditions and  stabilize.  At  levels of 1250-60, i  was thinking that the downside risk is more than the upside potential;  My estimate is that  ES will see 1220 this week as high probability with a possibility to go lower.  At 1280 and above i will be a seller with swing trades for this week.  If i see 1190 area, i will be initiating long term buys, with due consideration given to news of that day.

The last blog posting forecast a test of the cyan line, creating a head and shoulder pattern, which did not happen, because the news changed within 5 hrs of posting that, and Greek PM withdrew his call for a "referendum vote", upon pressure from european leaders.  But, the probability is higher this week, for a test of that cyan line.   At the minimum, i am expecting a test of the  bottom green line, in my previous chart, and that area would be an area to watch carefully during intraday trades.  And i will be a seller at the top  yellow  line in the same chart.   As i finish writing this, ES is already at 1235, with a fast drop, and is near the top green line.

Grimm reaper moves to europe

Market  Commentary:

Volatility is the only thing grimm reaper assured for 2011. My expectations for a positive november is in jeopardy due to the shock given by greek PM, ahead of the G20 summit.  I dont know if it is just a political ploy ahead of an important meeting, to influence world leaders. Or it could be a political ploy ahead of the confidence vote on Mr. Papandreou  due on thursday. Early news bits on wednesday was already dire, in my opinion, and was not given enough importance in wednesday headlines;  because ADP employment data came out positive and Mr. Bernanke has assured that fed stands ready to act fast with further help, if needed at any time. So, market was able to hold the green channel on my chart, for wednesday.  The situation just turned even more serious tonight, with Sarkozy saying  greece will not get the aid it needs in november (because the greek PM wants the people to vote on it, and it is currently scheduled for December 1st week).  Keep in mind all this could change in next couple of days, if the G20 pressure  greece PM and the opposition. I expect some serious pressure on greece during  G20, to settle down things fast.   Italian bond yields are already  soaring, as the next target, and G20 needs to stabilize the markets and investor confidence. Will china step upto the plate as the top economy of coming decade ?

On a seperate note, marketwatch pushlished an article which shows that when 1st day of  november is down 2%, the rest of november corrected an additional 1.5% or more. I am not giving up my bullish view target of 1350 for Q1 2012 yet, since additional  news and developments out of  G20 meeting in next couple of days would be crucial for market direction. If the referendum indeed will happen, and only in december, then it would be risk off mode, until that time.  With a new development out of europe almost every single week, this is an ideal futures/currencies  trader's  market, because only they can take advantage of the 24hr markets and news releases.

Technical Analysis:

The previous blog chart, with its buy ideas were successful for Nov. 1st and 2nd. ES came within 1 point of that bottom green line support, which was ideal buy. I viewed the action of  Nov. 1st as  consolidation, and i was expecting a push upto the yellow line on tuesday.  Tuesday didnt see any serious buyers step in, and i saw more of consolidation rather than serious buying following the consolidation of 1st. So, given the news, i expect more selling to happen, atleast to the cyan support line as first target for thursday/friday. If that line breaks, technicals would be damaged, for next week. I will  reaccess  news breakouts, once the cyan support line is reached. When i started writing this note,  and completed tonight's analysis  ES was at 1224, and it is working towards the short term support at green base now, around 1211, which was support on November 1st.

All other markets are highly correlated these days, and can be expected to react to this news.  US treasuries have already made a sharp move down over past 3 days.